MacNairs + Wilson

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Contrasting Views on Inheritance

Families have contrasting views over what the older generation should do with their money, new research has revealed. The over-50s want to save their money and pass it on as an inheritance; while adult children would rather their parents spent their money on themselves.

Parents Want to Leave Inheritance

The study, by Saga Money, found that more than eight in ten children say they would rather their parents spent their money in retirement than leave them an inheritance, yet four in five parents say they are concerned about leaving an inheritance for their children. Just under half believe so strongly in the importance of leaving an inheritance they say that they will not spend frivolously in retirement to ensure there is something left behind for their children.
 
Around a quarter of people over 50 say that they plan to spend their money to ensure that they have a good retirement, rather than leaving it to their children as an inheritance. A third say that they do not think they will have anything left to pass on, with women much more likely to say this than men presumably because they have spent less years contributing to a pension to cover their costs in later life.
 
Property is apparently the biggest asset that forms part of inheritance - seven out of ten parents said the bulk of the inheritance they leave to their children will come from their home, rising to three quarters of those aged 50 or over. Almost half of parents say that savings will form a big chunk of their children’s inheritance. 
 

Inheritance Discussions Important

“Inheritance can be an emotive issue therefore it is important for parents to discuss inheritance with their children, but they should not feel obliged to leave an inheritance,” commented Alex Edmans, head of the Saga Equity Release Advice Service. 
 
“People also need to think about the tax implications on the inheritance they leave,” he added. “With so many people planning to leave property to their children, it would be worth them considering whether to spend the money built up in their property first and leave their pension for the children to inherit.  Much more money can be passed on in pensions tax free, than from property.”
 

Inheritance and Retirement

Although many children would rather their parents spend their money during retirement, for some people receiving an inheritance is an important part of their own retirement plans.
 
A recent study from the US found that people who have received an inheritance are twice as likely to feel prepared for retirement as those without an inheritance (38% vs 17%).
 
The study, by The Associated Press-NORC Center for Public Affairs Research, found that 51% of adults age 50 and older say they have received at least one type of monetary gift or loan from a parent or other relative since turning 18. Around 44% have received an inheritance from a family member or other loved one or expect to receive one in the future.
 
In addition, 59% of older adults who have an inheritance say they are more excited than anxious about their retirement, compared with 47% of older adults without an inheritance who say the same.
 

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