The thorny issue of inheritance

A third of millennials don’t trust their parents not to spend ‘their’ inheritance

A significant number of Brits in their thirties and forties, around one in three, express worries about their parents’ spending habits and financial management, feeling that their potential inheritance could be lost, according to our latest research. 

A similar number expressed a lack of trust in their parents’ ability to handle finances responsibly, fearing they might squander it. In fact, a substantial 41% of respondents went as far as labelling their parents as “spendthrifts,” observing that they consistently spend money, which the younger cohort believes are selfish spending habits that neglect the next generation’s financial well-being.

In a landscape where asset prices, particularly housing and global stock markets, have outpaced wage growth over the past two decades, younger generations find themselves generally less affluent than their parents’ cohort. This disparity, coupled with wage stagnation against inflation in recent years, implies that individuals aged 35 to 50 may rely more heavily on anticipated inheritances than preceding generations.”

In fact, nearly four in ten individuals aged between 35 and 50 feel it’s their parents’ duty to secure their financial future through inheritance, a sentiment not shared by the majority of those over 65, with less than a quarter agreeing. These conflicting perspectives often lead to tensions, with many admitting they had engaged in heated arguments with their parents regarding their anticipated inheritance.

To secure their financial well-being in the long run, millennials must proactively plan for their future, considering the possibility of inheriting less than anticipated. Similarly, if older generations intend to leave behind meaningful legacies, meticulous planning is essential.

Are the over-65s spending their savings frivolously? 

Twenty-one per cent of the younger cohort questioned their parents’ indulging in pricey purchases, feeling as though it’s using up ‘their’ money. Over a third also expressed their frustration with their parents’ more luxurious purchases, such as designer clothes, luxury holidays each year and extravagant cars. 

Despite this apparent friction, more than half over 65s say they are diligently saving for their children and grandchildren, with two-thirds regularly contributing to savings accounts. To help ensure a substantial inheritance, seventeen per cent have cut back on their holiday expenses, while 16 per cent are planning to extend their working years beyond the official retirement age.

On the other hand, 40%  express that they aren’t going out of their way to accumulate wealth solely for the purpose of leaving an inheritance for their children. Consequently, seventy per cent of those aged 35 to 50 report consistently setting aside funds in anticipation of potential shortfalls in their parents’ inheritance.

Impatient millennials, the cost of living crisis and conflicts in the family

One criticism often levelled against younger generations is that they’re perceived as impatient, and this was borne out by our study. Many millennials said that they aren’t prepared to wait for their inheritance, while a further four in ten expressed the belief that their parents should provide their inheritance early to alleviate the cost-of-living challenges, rather than upon their passing. Those questioned identify paying off a mortgage, funding their retirement, and setting up a financial safety net for their children as the primary intended purposes for inheritance.

Given the contentious nature of inheritance discussions, it’s unsurprising that 16% report having experienced or anticipate experiencing conflicts with family members who are vying for a larger share than deemed fair. More than half have engaged in disputes with siblings, while over a quarter have had disagreements with their own mother regarding future financial assets.

The causes of these conflicts are various, but almost a third attribute them to perceived favouritism in the distribution of money or assets, while around a third cite allocation to a parent’s new partner instead of themselves, and 23% feel that immediate family members were disregarded in favour of more distant relatives.

However, younger Brits can take solace in the fact that a large majority of older Brits intend to leave their entire estate to their children, with 72% planning to divide it equally among them. Furthermore, this commitment to fairness persists regardless of the children’s ages or whether they were born from a subsequent relationship, with 90% of those over 65 agreeing.