It is already well documented that baby boomers (those born in the aftermath of World War II) have been a blessed generation, by and large, enjoying continuous employment, good pensions and widespread home ownership.
By contrast, millennials (those born between 1981-2000) are more familiar with gig employment, changing pension arrangements and soaring house prices. In fact, a recent report by the Resolution Foundation’s Intergenerational Commission indicates they are only half as likely to own their own home as their baby boomer forebears and have accumulated less wealth that their predecessors at the same age.
However, it also points out that while the baby boomer generation is gradually dying out, its accumulated assets do not die with them and that means many millennials will be in for an inheritance windfall.
The downside of this increasing large wave of bequests is that due to increased life expectancy, the Foundation estimates that the most common age at which millennials inherit will be 61, too late in life to impact on home ownership.
The report says: “Even for millennials who can expect an inheritance, this may happen far too late to help them onto the housing ladder, and may be more use for grandchildren’s home ownership. These wealth boosts will come not at the expensive child-rearing stage of their lives when a larger home is more necessary, but when they are approaching retirement.”
A positive alternative is for the outgoing generation to pass down assets during their lifetimes rather than hanging on to capital until death with their estate paying large sums in Inheritance Tax. Passing down during lifetime also helps next generation as they get help earlier.
Financial planning advice can establish if the older generation can afford to gift during lifetime or not by analysing asset bases, income levels and expenditure requirements. Very often it can be shown that they have more assets than will ever need so lifetime gifting can be a very efficient method of saving tax and assisting the next generation.
If you are interested in a professional review of your assets and accumulated wealth and would like an assessment of your ability to pass down wealth sooner rather than later, we are Chartered Financial Planners and can help you identify the possibilities and opportunities.
In addition, we can also help those receiving late-in-life inheritance to plan, manage and grow their new found wealth.
Please call us to arrange a free, no obligation preliminary chat.
The Financial Conduct Authority does not regulate Estate Planning.
The value of investment can fall as well as rise. You may not get back what you invest.