Too Many Children Relying On Inheritance That They Will Never Get

[jfk]

Article in The Telegraph finance section here

Too many children relying on inheritance that they will never get, according to research

The majority of Britons expect to receive an inheritance from their parents, but in reality four out of ten 10 will not get anything, according to new research.

A fifth of those polled are counting on their parents' inheritance to help them get out of debt

Researchers found that 75 per cent of 20 to 35-year-olds expect to receive an average nest egg of £78,000 when their parents die.

But they are set to be disappointed as 37 per cent of parents intend to spend all their money during their retirement and will have nothing left to pass on.

The study of 2,000 adults found that a fifth of children aged over 20 are relying on their parents' wealth to secure their financial futures.

But 49 per cent of parents aged 50 and over have already had to dip into their savings to get by.

And four in 10 have already been giving their children handouts to help them with college fees, driving lessons and rent payments.

Stacey Stothard, Corporate Communications Manager at Skipton Building Society, which carried out the research, said: ''Despite the ongoing economic conditions, it really is a high risk strategy for people to be resting their financial hopes on estimating their parents' wealth and then assuming it will all be coming their way.

''The sad reality is when times are tough financially for them, they're also tough for their parents, so it comes as little surprise that many have had to dip in to chunks of their savings to get by.

''What's more, many parents who can see their children struggling financially are increasingly sharing their money with their children while they're alive and well. It goes without saying that this will impact on any inheritance later on.

''The knock on effect could see children sleepwalking into a financial nightmare, basing their financial plans on something they actually might never receive.''

The study shows that 68 per cent of people expect to inherit their parent's house when they pass away, while 32 per cent think they'll get the car.

But 67 per cent are convinced they'll receive cash, and 54 per cent aren't making any financial plans for a comfortable retirement.

Indeed, a fifth of those polled are counting on their parents' inheritance to help them get out of debt, while the same percentage hope they'll finally be able to step foot on the property ladder.

A quarter of people aged 20 to 35 hope they'll be able to pay off the mortgage with some inheritance, and 15 per cent are banking on having it to put their own children through university.

Paying off student and car loans, helping their own children with a house or car and holidays are just some of the other ways kids intend to spend their inheritance – if they were to get any.

But as the statistics show, seven in 10 adults aged 50 and over think savings are better spent now, as and when the family needs it.

As such, while 84 per cent of parents would love to be able to leave thousands of pounds to their offspring in order to carve out a comfortable future for them, they have chosen to spend much of the money on the family now.

A quarter says their grandchildren are actually more likely to benefit from any money which is left when they pass away.

And while 57 per cent of people know their children are expecting to receive inheritance, 95 per cent think they need to become more responsible for their own future.

Stacey Stothard added: ''Rather than second-guessing their parents financial matters, people should never ignore the benefits of investing a little time into fully understanding their own.

''The inheritance debate is never straightforward, and no matter how tough things are, it's always much better to live within your own means, and base your financial plans on your own circumstances, rather than relying on speculation about others.

''What is worrying from this research is that a fifth of respondents are relying on an assumed inheritance from their parents to help pay off debt. Clearly if this doesn't materialise, the impact could be very severe.

''No matter what your financial circumstances, it's much better to recognise where you are and to review your financial affairs regularly, rather than place a dependence on benefiting from someone else's. Doing the latter is a big gamble, and in today's financial climate, it might not pay off.''

Edited at Telegraph.co.uk by Richard Holt

[The Ayatollah Buggeri]

But they are set to be disappointed as 37 per cent of parents intend to spend all their money during their retirement and will have nothing left to pass on.

And a significant proportion of the 63% that don't will probably end up spending a significant proportion of it unintentionally, on care home fees etc., and/or will themselves die with significant outstanding debts.

[interestrateripoff]

40% to get nothing, seems a bit optimistic.

[debtlessmanc]

Article in The Telegraph finance section here

Given that 50% of people already leave estates below the £6k probate threshold, I wonder where these stats come from. Perhaps telegraph readers only?

[Starla]

On the bright side, if you're like me and have estranged parents with nothing, then your expectations are crystal clear, a sum total of £0. At least I've planned for it. My Uncle has bought himself a beautiful 2nd house on the coast, about 200ft from the cliff edge. He reckons by the time it goes into the sea he'll be long gone and it's the kids inheritance anyway. Or not.

[davidg]

Skiers : Spending the Kids InhERitance

My dad left me his car, a 6 year old Peugeot C8. Cost him about 30K. It was barely roadworthy and costs a grand to insure and 100 quid to fill with petrol which it guzzles with its 3.8l V8 engine. After a year my friendly local garage may finally have found a buyer at 2K!

[motch]

spent several days around somerset/dorset/wiltshire recently, plenty of boomers/retirees spending well in National Trust type pricey coffee shops and cafes in touristy places.

[cybernoid]

Better kill them quick before they spend it

[R K]

Who do they think they are the Bullingdon Boys?

[longtomsilver]

I secured my inheritance when my father died last month. Just saying.

[winkie]

spent several days around somerset/dorset/wiltshire recently, plenty of boomers/retirees spending well in National Trust type pricey coffee shops and cafes in touristy places.

Good pensions die along with you.......what can replace them......home equity of course....in the future most people would have spent most of it.

[SarahBell]

My parents decided to leave it to the grandchildren. Miss us out altogether. Fair enough, we shouldn't need any money from them as we're all independent adults.

I know someone who has a small trust fund but will be rich beyond his wildest dreams when his step-pops dies. He's doing nothing with his life though, just waiting.

[57percent]

"I'm extremely rich, but all money money's currently tied up in my mum's house"

On a serious note. I'm in the opposite boat. Parents saved all their lives on small, hard earned wages (plus huge HPI).

I'm desperately trying to talk my mum into p*ssing it up the wall. Would depress me a little if they left much over.

[fluffy666]

My parents decided to leave it to the grandchildren. Miss us out altogether. Fair enough, we shouldn't need any money from them as we're all independent adults.

I know someone who has a small trust fund but will be rich beyond his wildest dreams when his step-pops dies. He's doing nothing with his life though, just waiting.

I'd never want to rely on an inheritance like that anyway, quite apart from the ghoulish aspect you are basically planning your life entirely around someone else's actions. If I had someone waiting on me like that I'd be *so* tempted to leave it to the Home For Bewildered Gerbils.

I can easily see inheritance skipping a generation in our family as well, I can see the kids needing it much, much more than we do.

[SarahBell]

I'd never want to rely on an inheritance like that anyway, quite apart from the ghoulish aspect you are basically planning your life entirely around someone else's actions. If I had someone waiting on me like that I'd be *so* tempted to leave it to the Home For Bewildered Gerbils.

Yes it's horrid to think of someone wasting their life waiting. And the way olds are lasting it might be years and years.

[honkydonkey]

My house is mortgage free thanks to my inheritance. My parents are still alive and well too, double bonus (and sensible parents thankfully)

[crashmonitor]

My parents decided to leave it to the grandchildren. Miss us out altogether. Fair enough, we shouldn't need any money from them as we're all independent adults.

I know someone who has a small trust fund but will be rich beyond his wildest dreams when his step-pops dies. He's doing nothing with his life though, just waiting.

I agree with you, better that you get through life having made it yourself and not be have to rely on inheritance money. The mother-in-law is getting through hers in a residential home, so that route is out. My parents are divorced and like you I am not a beneficiary, as they are aware of my self-sufficient status.

It doesn't bother me in the least, what annoys me is bloody man and woman child who expect and even get steamed up over inheritance tax. 650K not enough for them tax free.... chance would be a fine thing for most.

Edit. with regard to grandchildren, for which you are being passed over for. It does seem to be the way things are going. It probably makes sense. My partner's mother got private education, and a house bought for her when she was in her twenties. She didn't see fit to pass on this advantage to her daughters in their twenties (she was very much silver spooned between birth in 1933 and into the 1950s). My partner was secondary mod. educated and living in poverty through her twenties and I was pretty much the same. We are very well off now, so this generational miss thing probably makes sense. It would have made an enormous difference thirty years ago, it would just join the stash now. Wasn't the done thing for grandparents to leave you anything back in the 80s, even if they had money to give.

Edited May 2, 2013 by crashmonitor

[Quicken]

Strange age groups to choose: 20-35 and over 50. With life expectancies currently, it's the over 50's who are more likely to be expectant of an inheritance. I hope my parents live happily into their 80's.

Anyway, I liked this bit.

And while 57 per cent of people know their children are expecting to receive inheritance, 95 per cent think they need to become more responsible for their own future.

Nice!

[hellsbells]

Well I've been left bugger all from my parents and family and very unlikely to ever get anything from that route (not that I would want to, I am the black sheep of the family and "disowned"). However I've been offered my very recently departed father in laws bench-vice and lathe - I am totally chuffed to bits - something useful that I will keep using until I pop my clogs also.

[juvenal]

See my post in "IO Mortgage Timebomb" regarding the hurdles to be jumped before the eager hands grasp the money..

Edited May 2, 2013 by juvenal

[Sour Mash]

Lots of people seem to be getting their inheritance early with BoMaD funding a large deposit to buy a ridiculously overpriced house - thus getting them onto the debt train.

Personally, I find the notion of people depending upon inheritances or parental intervention to get themselves out of trouble to be shameful. You should make it through life on your own merits instead of waiting for your parents to pop their clogs. What are those people going to leave their children if the only way for them to avoid penury is an inheritance windfall?

[TheNoSnowMan]

Lots of people seem to be getting their inheritance early with BoMaD funding a large deposit to buy a ridiculously overpriced house - thus getting them onto the debt train.

Personally, I find the notion of people depending upon inheritances or parental intervention to get themselves out of trouble to be shameful. You should make it through life on your own merits instead of waiting for your parents to pop their clogs. What are those people going to leave their children if the only way for them to avoid penury is an inheritance windfall?

+1

I, personally, would rather have my parents alive than have their money because they're dead. Only greed and selfishness would make you think otherwise.

[Mrs Bear]

I agree with you, better that you get through life having made it yourself and not be have to rely on inheritance money. The mother-in-law is getting through hers in a residential home, so that route is out. My parents are divorced and like you I am not a beneficiary, as they are aware of my self-sufficient status.

It doesn't bother me in the least, what annoys me is bloody man and woman child who expect and even get steamed up over inheritance tax. 650K not enough for them tax free.... chance would be a fine thing for most.

Edit. with regard to grandchildren, for which you are being passed over for. It does seem to be the way things are going. It probably makes sense. My partner's mother got private education, and a house bought for her when she was in her twenties. She didn't see fit to pass on this advantage to her daughters in their twenties (she was very much silver spooned between birth in 1933 and into the 1950s). My partner was secondary mod. educated and living in poverty through her twenties and I was pretty much the same. We are very well off now, so this generational miss thing probably makes sense. It would have made an enormous difference thirty years ago, it would just join the stash now. Wasn't the done thing for grandparents to leave you anything back in the 80s, even if they had money to give.

I had a lovely old great-grandfather who died at 96 when I was about 14. He left all the g-g-children £10 each. To me it was riches then - you could almost buy a skirt, a top and a pair of shoes for that.

Husband of a friend of mine had a father who b*ggered off when he was very small. He didn't see him for donkey's years. To compensate he then left a lot of money (he had done extremely well) in trust to the grandchildren - enough to enable them each to buy a reasonable London property outright. But he left nothing to the son, who could have donesingle with it. Always struck me as colossally unfair. Though might add that they lawyers handling the trust charged through the nose and (presumably deliberately, since there was a ripoff charge for every call and email) took forever to wind the thing up.

[The Ayatollah Buggeri]

I could end up with quite a bit, or I could end up with nothing. Parents divorced, both own their homes in a relatively expensive part of south London. As far as I know, both are debt-free. One inherited a six-figure sum from his mother (my grandmother) last year, and does not have any expensive tastes (again, that I know of). If they both live independently for the rest of their days and house prices are still at their ridiculous levels when their times come, I could inherit the best part of a million (before tax, at any rate). But if they both need private sector home help, assisted living, and/or to live in a care home for the last decade of their lives and there's a full-scale HPC in London, I could inherit zero.

I'm assuming, and planning my life on the basis of, inheriting zero. Anyone in a similar situation who does otherwise (i) has a somewhat callous streak, and (ii) risks getting a nasty shock.

Edited May 2, 2013 by The Ayatollah Buggeri

[olliegog]

+1

I, personally, would rather have my parents alive than have their money because they're dead. Only greed and selfishness would make you think otherwise.

+1

my mother died 5 years ago (at 90) and had been in a care home for about 4 years so there was not a lot to split between my sister and self

happy that she was looked after in her old age.

have told my son and heir - everything I leave big or small will go to him but sensible chap he is not relying on it - he has already had a deposit for a reasonably priced semi.

intend to spend over the next 20 odd years when I NEED something as my wants are few.