The majority of UK adults expect to receive an inheritance at the age of 52 but new research from Canada Life suggests inheriting earlier in life has a much greater impact.
Almost six in 10 (59%) of those who received an inheritance or gift aged 25-34 and 60% of those aged 35-44 said it had a great deal of impact. This falls to 36% among those aged 45-54 and just 27% among those aged 65-74.
Canada Life said fewer than half (48%) of people surveyed believe they will receive wealth at the age when it would benefit them most.
The research found younger recipients were more likely to use wealth for transformational life milestones. Those receiving wealth between 25-34 were most likely to use it to fund a deposit for a home (30%) and those aged 35-44 years old to clear debts other than their mortgage (30%).
There are also differences reflected in the type of transfer received, with impact greatest for those receiving lifetime gifts while the giver is still alive. Nearly two thirds (61%) of those who had already received a lifetime gift said it had a great impact on their life, compared to 33% who had received an inheritance on death.
Lifetime gifts were also more likely than an inheritance to be used for a home deposit, (25% compared with 10%), education costs, (20% compared with 5%) and repaying debt, (41% compared with 32%).
The research showed that lifetime gifting is becoming more prevalent, with over a quarter (26%) of those aged 18-34 having received a significant financial gift from a living relative versus just 7% of those aged 65 and over. Advisers are also seeing the shift, with eight in 10 reporting having more gifting conversations than ever.
However, Canada Life said families face tension around how much they can afford to transfer without compromising future financial security. For the majority (55%) passing money on when they die remains more popular than lifetime gifting (28%) because they cannot be certain how much they may need for themselves in later life.
Among those who expect to pass money on only at death, 45% said they needed to retain their money to meet costs while alive, while 25% said people are living longer and they might still need the money and 13% cited future care costs.
Rose St Louis, chief customer officer at Canada Life, said: “The majority of Brits intend to pass wealth on in some form, and lifetime gifting is becoming more common. Yet the prospect of living longer is creating a difficult trade-off between supporting younger generations when it matters most and protecting your own financial security in later life.
“The unknown scale of potential care costs alone provides good reason for this uncertainty – particularly if those costs are set to stretch out further if we are to live longer. As a result, families simply do not know what they can safely pass on during their lifetime.”
St Louis said starting the conversation about wealth transfer early means people can make a flexible plan that can adapt as circumstances and priorities change.
