Lifetime gifting becoming more popular as inheritance timing lacks impact

The average age people expect to receive their most significant gift or inheritance is 52, although receiving wealth earlier than this results in the strongest reported impact, analysis from Canada Life has shown.

Its study found that impact was greatest when wealth is received earlier in life, with 59 per cent and 60 per cent of those aged 25-34 and 35-44, respectively, saying it had a great deal of impact.

This fell to just 36 per cent among people aged 45-54 and 27 per cent of those aged 65-74.

Fewer than half (48 per cent) of respondents believed they would receive wealth at the age when it would benefit them most.

Younger wealth recipients were more likely to use the money for life milestones, such as funding a house deposit or clearing debts.

Canada Life stated that while the prospect of living longer can be a reason to pass on wealth earlier, it was also a reason to hold it back.

Longer lives were resulting in a balancing act between supporting loved ones when they needed it and safeguarding later-life financial security.

Its study also highlighted differences between the types of transfer received, with 61 per cent of those how had already received a lifetime gift saying it had a great impact on their life, compared to 33 per cent who had received an inheritance on death.

Lifetime gifting was becoming more prevalent and 26 per cent of 18-34 year olds had received a significant financial gift from a living relative compared to 7 per cent of those aged 65 and older.

Advisers were also observing this shift, with eight in 10 reporting having more gifting conversations than ever.

“Our Life100+ research programme is helping us to better understand the realities and complexities of living longer, particularly around the difficult choices families face when planning for their financial future,” said Canada Life chief customer officer, Rose St Louis.

“For many families, these decisions are interconnected: how to work differently as lives and careers evolve, how to retire well, how to fund the potential costs of later life, and how to leave a meaningful legacy.

“It’s clear from the data that families want to help loved ones. The majority of Brits intend to pass wealth on in some form, and lifetime gifting is becoming more common.

“Yet the prospect of living longer is creating a difficult trade-off between supporting younger generations when it matters most and protecting your own financial security in later life.”

St Louis noted that there was no one-size-fits-all approach to intergenerational wealth transfer.

“Individual circumstances will determine whether to give during life or leave an inheritance, how much can be passed on safely, and how to balance the needs of loved ones with financial security as life expectancy increases,” she added.

“Professional advice is therefore key to help families to connect those considerations into a coherent plan.”

---