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Warning Over Reliance on Inheritance Expectations

A new report into intergenerational wealth transfer has found that over 11 million people aged between 25-45 in the UK expect to receive some sort of inheritance from their parents or grandparents, with nearly half (5.1 million) of these expecting to inherit at least £50,000 in fixed assets or money.

The report by Sanlam UK found, of those 5.1 million likely to receive over £50k, the mean average value of the inheritance expected is £233,000, which would equate to £1.2 trillion. Interestingly, however, the report also suggests that four in ten (38%) of those set to receive this inheritance haven’t yet spoken to the gifting party about their plans – suggesting that there could be a mismatch between their expectations and reality.

According to the report four out of five (81%) beneficiaries of inheritance expect to receive money, while just over half (51%) assume they will receive fixed assets of some kind. A further 16% say they expect to inherit a business that their family member owned or part-owned, and a similar number (15%) say they will be receiving the heirlooms of significant monetary value.

“Clearly, the recipients of this wealth – many of whom straddle the line between millennials and generations Xers – are relying on their inheritance to act as a financial panacea,” said Sanlam UK CEO Jonathan Polin. “This is understandable in the context of rising debt levels, stagnant wage growth, and spiralling property costs, all of which have had a deleterious effect on disposable income.”

“That said, overreliance on inheritance could be risky, especially if it affects the younger generation’s level of engagement with savings and investments today,” he added. “As a first step, families need to have full and frank conversations about inheritance – this will help ensure younger generations have a realistic expectations of what they are to receive and can prepare accordingly.”

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