Inheritance & Inequality
‘Today’s elderly have much more wealth than their predecessors’. This is the unsurprising opening sentence to the Institute for Fiscal Studies’ new year report on inheritance and inequality across and within generations. This is primarily due to the increase in home ownership and house prices. However, the report goes on to state that today’s young adults will find it harder to accumulate wealth of their own than previous generations did. Young people today are faced with declining pension benefits, the inability to afford high house prices and the stagnation of household incomes.
Interestingly the report also states the finding that those with the highest lifetime incomes are also those who have inherited the most across the course of their lives.
So what you decide to do with your wealth will be key in providing for the younger generation. Making sure your Will is up to date is obviously important, but it is also worth taking professional advice on inheritance tax planning. If you are in the lucky position of being retired, but having spare income, there is a little used inheritance tax exemption for ‘regular gifts out of excess income’. This is in addition to any annual exemption and the seven year rule. Regular gifts outright or into trust, if well planned, can significantly reduce the inheritance tax payable on your estate and maximise what your children are going to inherit.
The good news is that younger generations now stand more chance of receiving an inheritance. Just take professional advice so that this is maximised.
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