Specialist Inheritance Lawyers Urge Families To Seek Advice As Monetary Sums Grow In Size
Latest figures have revealed that the wealth gap between generations in the UK is continuing to widen giving rise to more inheritance tax issues for families.
Inheritance experts at leading national law firm Irwin Mitchell Private Wealth say the results are no surprise and are increasingly advising on the most efficient way to protect loans and gifts between generations.
The Office of National Statistics’ (ONS) latest findings on intergenerational wealth found that between 2014 and 2016 those who were 45 and under were the age group most likely to receive monetary gifts or loans from friends or family to the value of £500 or more. On average they also received the highest amount of gifts or loans.
But it was the 55-to-64 bracket that received both the most amounts of inheritances and the highest value inheritances. The study found inheritances received from spouses had the highest value and were given the most to those aged 55 and above.
Gifts and loans were found to be most commonly given to the 25-to-34 age group, with 11% of those surveyed having received a gift or loan above the value of £500 during 2014-16.
The findings complement the research undertaken by the Intergenerational Commission, whose final report in May suggested radical changes such as abolishing inheritance tax altogether in a bid to end intergenerational wealth inequality.
Expert Opinion“The latest ONS stats reveal a widening wealth gap between generations that is difficult to remedy without action from the government, which could take years or even decades to implement.
“Many parents and grandparents find themselves in the position of wanting to help their child or grandchild out with a deposit for a house, contributing to the expense of a wedding or helping with their children and future heirs.
“There is also the matter of the ageing population which has contributed to the growing wealth gap that the ONS stats reveal. An older population means children are receiving inheritances later – and monetary gifts are more useful during the lifetime of both the child and parent to help with major life milestones.” Sarah Phillips - Partner
Specialists at Irwin Mitchell Private Wealth say that this wealth gap will continue to widen, with increasing amount of money being gifted or loaned as older generations accumulate more wealth – and these loans will need legal protection as the sums get larger.
Sarah Phillips added: “It’s important that cash gifts and loans are undertaken in the right way – particularly when the numbers involved are high. There are a few options families can seek advice on.
“Many think that transferring money between families is without risk, but with loans in particular if there is not a proper schedule and legal protection in place then parents or grandparents can find themselves out of thousands of pounds.
“It is always worth seeking a solicitor’s advice if you plan to loan a large sum of money over a period of several years, in case one of the parties’ circumstances change or if the relationship goes sour. In some cases a pre-nuptial or post-nuptial agreement may be worthwhile putting in place between couples to protect the family inheritance received by one party in the event of something going wrong.
“If older generations do not want to gift their children or grandchildren money outright because of concerns over a partner or other reasons, they can put the funds into trusts or loan notes to protect assets for the long-term benefit of the recipient and any children they may have.”