The amount that of money which will pass to their children will rise fivefold as baby boomers start to pass on their wealth.
A new report from HSBC, called ‘The Age of Inheritance’, shows that in the years to 2050 the amount of money left by baby boomers will rise significantly. Much of the increased estate size is down to the housing boom of the late 20th century, however the report also concludes that this is unlikely to be repeated and as a result estate sizes will fall in the following 15 years to 2065.
The report suggests that estate sizes will peak in 2047 at an all time high of £238,000; in that year it is predicted that £1.1 trillion will be left.
Following the peak it is then thought estate sizes will fall to £155,000 in 2062, as a less affluent generation begins to pass away.
Expectations
The report also found that eight out of 10 people aged over 35 are expecting an inheritance from their parents.
However, it shows that only four in 10 people over the age of 55 have actually received an inheritance, which suggests that children may be overestimating the size of their parent’s wealth.
Christine Foyster, head of wealth development at HSBC, said: “There is a vast disconnect between those who have received an inheritance from parents in the past and those who expect to receive one in the future.”
She continued: “While expectations are high, these may well not come into fruition and those who are banking on a future windfall should not overstretch themselves or acquire unmanageable levels of debt in the hope that an inheritance will pay this off.”
Inheritance Tax
The findings may persuade many people of the need to make or update their will to ensure that assets reach the intended beneficiary. The UK’s intestacy laws are complex and not always logical, which can mean assets are not passed on as someone may like, a valid will ensures this does not happen.
Furthermore with the size of estates rising more and more may become subject to Inheritance Tax. Many experts believe that whilst Inheritance Tax is not quite the ‘voluntary’ tax it used to be, careful planning can help mitigate the amount paid, meaning that more wealth can be passed on to beneficiaries.
