More than 11million people have received cash from an inheritance in the past decade, new findings have revealed.
The average age for someone to receive an inheritance windfall is 47, research from equity release adviser Key said.
People in Northern Ireland, the South West of England and London are more likely than others in the rest of the country to have had an inheritance windfall.
At the other end of the spectrum, people living in the South East and North West of England are the least likely to pocket an inheritance, while nationally, only 22 per cent have benefited from one in the last 10 years.
Did you receive one? Over 11m people have received cash from an inheritance in the past decade, Key said
Nationally, more than one in five adults has received money via an inheritance, rising to nearly one in three among those aged between 65 and 74.
More than half of people who received an inheritance in the past decade were left money by their parents, while 19 per cent received the cash from their grandparents.
Around 16 per cent were left money by uncles or aunts and 13 per cent received cash from family friends.
Cousins were the source of inheritance for 11 per cent of inheritance recipients, with siblings leaving money in nearly 9 per cent of cases.
In terms of how inheritance money is spent, around 34 per cent, or 3.9million people, opted to invest or save some of their inheritance money.
Roughly 1.1million people used inheritance cash to buy their first home, while 1.7million paid off their mortgage, according to Key.
Around 9 per cent of people put some or all of the inheritance cash in their pension.
Should a ‘pre-inheritance’ become more widespread?
Recent figures show that HM Revenue & Customs raked in £5.4billion from inheritance tax receipts in the past tax year, marking a ‘slight’ increase on the previous tax year, according to the findings.
However, HMRC’s inheritance tax coffers have remained largely flat over the past four years following the introduction of the ‘Residential Nil Rate Band’, which allows spouses or civil partners to transfer allowances tax free.
The RNRB has increased each year since 2017 and from 6 April 2020 was hiked to £175,000 for individuals, or £350,000 for couples where the first to die leaves everything to the surviving spouse. This means that an individual could have an estate of £500,000 before any inheritance tax is due.
But, top brass at Key, which works in the field of equity release, believe it would make sense for people to receive inheritance windfalls from relatives or loved ones at an earlier stage.
Will Hale, chief executive of Key, said: ‘Intergenerational wealth transfer is a major issue for society as a whole and for the financial services industry, and the scale of inheritance shows why this is the case.
‘The average amounts received can be substantial and life-changing, especially if residential property is involved.’
He added: ‘The idea of inheritance arguably works best when the person receives the support at a time in their life when it can do the most good for their long-term financial security.
‘However, with the average age of inheritance sitting at 47-years-old – when people are more likely to have built up assets – we are seeing more conversations happening about providing people with a “pre-inheritance”.’
What will you do? Experts at Key say ‘pre-inheritance’ should be taken into consideration more
Mr Hale suggests that a ‘pre-inheritance’ enables people to receive a cash injection at a time when they may need it the most, meaning their relative or loved one can also witness the impact the money has made.
This reflects his firm’s interest in one potential ‘living inheritance’ option, a lifetime mortgage, which is the most popular form of equity release.
Equity release can be used by homeowners over the age of 55 and can potentially help people unlock cash form their homes and use it to help themselves or loved ones.
But this form of borrowing can involve paying no or only some interest, with the cost of the loan instead rolled up and the total amount repaid on death or the sale of the property.
Costs have come down in recent years but can still mount up over the medium to long-term, eating into the amount that can eventually be passed on at death.
However, no form of ‘pre-inheritance’ or equity release should be taken lightly and anyone considering it should receive proper professional financial advice before taking the plunge with something like this.
Another potential drawback to consider is that equity release will reduce the amount of inheritance your beneficiaries could otherwise receive.
Not everyone will be a suitable candidate for equity release, and a reputable adviser will be able to help you understand all the potential pros and cons involved in your individual circumstances.
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