Parents 'prefer pre-inheritance'

The majority of parents would rather help their children and grandchildren before they die, rather than leave them an inheritance, research showed today.

Around 82% of the over-55s said they would prefer to offer their offspring financial support during their lifetime, instead of leaving them a legacy when they die.

At the same time 44% of over-55s questioned in the UK study said they would consider releasing some equity from their home in order to help their children or grandchildren get on to the property ladder or to contribute towards the cost of their education.

Insurance giant Prudential has dubbed the trend "pre-heritance", and it believes it will become increasingly common.

It said people who were currently in their 50s had benefited hugely from rising house prices, particularly those who had been in the same property for the past 20 years or more.

The group estimates that people aged over 50 collectively have equity worth £570bn (€834.2bn).

At the same time rising house prices have pushed increasing numbers of people above the inheritance tax threshold, meaning it makes better financial sense for people to help their children now, rather than leave them money on which they will have to pay 40% tax on anything over £263,000 (€385,000).

Parents have also watched their children struggle to get on to the property ladder, with the average first-time buyer now in their 30s, as well find money to fund the increasing cost of further education.

Ali Crossley, director of Prudential’s Equity Release plans, said: “We believe the trend towards pre-heritance will become increasingly common.

“It makes a lot of sense to be able to give financial support at a time when it’s needed, for things like weddings, education costs and helping to get our kids on the housing ladder.

“Our research shows that parents would rather help while they’re still around so they can enjoy the fruits of their financial assistance.”

She added that similar research carried out by the group last year had found that just under a third of parents would be prepared to release equity from their home to help their offspring, a figure which has already risen to 44%.

People living in the Midlands were most likely to want to help their children while they were still alive, with 89% saying they would rather give financial assistance now, falling to just 70% among people in the South.

Londoners are most keen to unlock equity from their property to help their children, with 53% saying this is something they would like to do, compared with 38% of people in the North.

:: TNS questioned 616 people over 55 during May.