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Children’s inheritance – spend it or surrender it?

Old people jumping

Nearly two thirds of under 35s expect inheritance from their parents and over half want it before they reach the age of 40 – what an impatient lot. Should we be spending their inheritance or giving them a helping hand?

Research from Skipton Financial Services has found that children and parents have some very different ideas when it comes to inheritance.

While many are expecting inheritance soon, the over-50s (i.e. their parents) have different ideas. Over half of them expect to live off their children’s future inheritance to fund their own retirement and more than one third are admitting that passing money on will put their own finances under strain.

The key question here is should parents (who, lest we forget, have earned the money over the years) actually enjoy spending it while they are healthy or should they make sure that a hefty sum is passed on to their kids when they die? The truth is probably somewhere in the middle and parents will often help out where they can, contributing lumps sums towards various requirements or when the kids get in a fix.

The kids aren’t alright

Kids are struggling – and it’s often parents who have to bail them out. Whether it’s money to put together a deposit for a property, putting them up while they go to uni, student debt, cash for a wedding or help through a period of unemployment, it’s usually to the Bank of Mum & Dad that youngsters turn to.

There’s also the spectre of Inheritance Tax (IHT). It sometimes makes sense to pass on wealth before it officially becomes an ‘inheritance’ as gifts made more than seven years before death are exempt from IHT.

Is early inheritance the answer?

The report found that one in five adults has already received all or part of their inheritance. It makes sense when you consider that, at the moment, IHT applies at a rate of 40% on estates worth more than £325,000 per individual (£650,000 for couples).

But handing over your hard-earned cash too early might scupper retirement fun. My mother is in her mid-60s and is still pretty healthy. Over the last year she’s travelled to Canada, Portugal and France. She’s able to have a comfortable retirement and spend the money earned by my dad during his working life to make sure these trips are affordable. Isn’t this the way it should be?

As the son of a ‘baby boomer’ I’ll arguably be in a good position to both receive some money and, hopefully, in turn, pass on an inheritance to my kids to give them a sound financial footing. But I might change my mind when I retire and trips to the Kensington Oval in Barbados beckon.

So, is this just another manifestation of the ‘I want it now’ generation or are there good reasons to give your children a ‘pre-inheritance’ now to help them navigate life’s increasing challenges?


Careful planning from an early age puts the current retiring generation in a position to fund some of their children’s capital requirements and some activities. It is unlikely in the extreme that my children will be able to do the same (I do not believe I could if starting out today) and I am happy to spend some of my wealth/income on them to help towards a reasonable life style especially on fast depreciating items. It is my intention to leave the minimum possible to be double taxed via inheritance tax.

It is not their inheritance until I say it is.

Mark says:
20 August 2011

Considering that older generations were in a way better position economically than Gen Y is now, I think there is a moral obligation to help. Personally, I think one of the defining characteristics of this generation will be of underlying resentment, disillusionment and anger towards the previous, for sacrificing their children’s future in exchange for yet another holiday cruise.

We are making up for the low standard of living we endured when young.

Mark says:
21 August 2011

I think there’s a lot of truth to that statement.

Rose says:
21 August 2011

I don’t have children but find it abhorrent that people are expecting their parents to give them their “inheritance” while the parents are still alive. To me, that’s almost as bad as the looting of shops in the recent riots! If parents choose to do so without any pressure, then that’s up to them. I’ve recently seen an instance where a teenager has verbally attacked his mother for spending money on clothes etc for herself (telling her she’s spending his inheritance!), after years of putting her husband and children before herself.
The majority of elderly parents have worked all their lives for their money (whether out at work or as a mother in a home with very few modern conviences), had very little themselves until well into adulthood (sometimes not until children left home) and deserve to be able to spend on themselves in their retirement, for as long as they’re able. Many people under the age of 60 have had many “consumer luxuries” during their lifetime, often provided by their parents, and shouldn’t be looking to their parents to continue or increase their consumerist lifestyle!
No parent should feel blackmailed into giving their children substantial amounts of money, especially when the parent could live for many years and could quite possibly outlive the child!

Hi. I couldn’t agree more. My parents are 69 and enjoying their retirement and good luck to them, they deserve it after working hard all their lives. It is up to me to make my own way in life! I like to see Mum and Dad having a good quality of life, travelling and having fun. They have more than done their bit over the years.

While I’m sure both of my parents would offer to help if I was in a tough financial situation, I’m lucky enough to have never needed it. I think even if I did need it, it would be seen as them doing me a huge favour for which I would be grateful rather than something I would expect. That just seems shocking.

My Dad had a chat with me about inheritance a while ago, and said that he intends to die with only one penny left in his bank account – good for him. I’m more than happy to make my own money, and I think that one of the best things my parents can do with theirs is to use it to have fun and buy things that they want for themselves – they’ve earned it. And now I’m earning *my* own money, which I will use in exactly the same way when I retire.

My parents have never had any money, they have only helped me out when I was skint at uni or given me a place to live for a short time when unemployed. The way I see it is that they struggled ridiculously to bring me and my sisters up in the world. We missed out on a lot of things kids would feel “entitled” to now, but we never felt we missed out at the time.

As a result of this, I know that I will never be as poorly off as my parents were, enabling me to stand on my own 2 feet and sort out my own mess when it happens.

I suppose there is not too much that can be said to youngsters today as they are growing up in a world where everything is so crazily expensive. When I went to school/uni, there were still tons of wealthy parents ready to splash it around whenever their kids want it so I don’t think that there has been a modal shift in attitude, just that disposable items and consumer goods are now so expensive, kids cannot see another way to accumulate the wealth that is required to “just get by”.

But when you hear that their “essential” items are iPhones, my sympathy ebbs away

Not knowing how much longer we shall enjoy life on this earth, our intention [for so long as we are able to] is to spend our income at just slightly less than the rate at which it accrues and save the surplus. Then we shall probably have to dip into our savings to fund the major items that seem to just keep coming along [replacement furniture and equipment and car repairs] thus further reducing our income. Eventually, our income will be too low to support our standard of living and we will have to get a smaller property that is cheaper to run but any thought of letting our children have a slice of our wedge is out of the question – that will have to be invested at the best rates going at the time to eke out our pensions income. It’s worth remembering that when one of us dies, the expenses don’t suddenly halve. Any inheritance will not crystallize until after the second death.

evie says:
23 August 2011

Having reached retirement (almost) without ever inheriting anything – my mother is still going strong- I don’t think my own children are expecting anything for the foreseeable future, although I am happy to pitch in when necessary. Life is more expensive now than when we were in our twenties, and unfortunatley it is nowhere nearly as easy to land a decent job or buy a house. However I fully intend to spend what little I have while I can enjoy it – I have worked for it, and my children can – and do – work for their own. Any son or daughter who expects parents to sacrifice so they they can live it up should think again. In any case, with the cost of care, there will probably be nothing left!

There is no such thing as children’s inheritance before a parent is dead. Until death it is parental investment and savings and doesn’t belong to anyone else. It is entirely up to parents what they choose to do with it and I would encourage an enjoyable visit to a casino for a good night out.

silverthread says:
28 October 2011

We have always taught our children to spend carefully and we modelled it. We never went overboard at Christmas or birthdays and definitely made sure not to get into debt. Our children don’t expect anything from us but, of course, sometimes it makes sense that we offer funds for large capital spending such as house extension, rather than they having to take out a loan. However, we always set up a repayment plan, interest free, on their request. We are not rich and we need to save for when we get old. We give what we can and when there is a need, otherwise we enjoy our old age and our children are happy that we are having a good time.

cressyang says:
19 November 2011

i think kids get things easy enough, having to work for something makes you appriciate it more so therefore i think no parent should feel they have to leave money etc on the event of their death they should spend as and when they like

I recently had a conversation regarding my thoughts on what to do with our inheritance when I pass (I’m 72). I was a little surprised and somewhat dismayed to find she was counting on having her share to pay off some of her mortgage. She has a decent job a house of her own (which we loaned her the deposit). I gave another daughter and son. I now feel under some pressure to be careful what I do when my wife (who has terminal cancer) passes.
I wished I had never had this conversation.

It should have read ‘i have another son and daughter’