Equity Release Pre-InheritancePosted on: 26 March 2008 by Gareth Hargreaves
Inheritance makes way for new trend of 'Pre-heritance' says the pru.
According to research commissioned by Prudential, 82% of over 55s prefer to give financial support to children or grandchildren before they die instead of leaving an inheritance. 44% of over 55s would release equity in their homes to help their offspring get on the housing ladder. This would amount to a £50 billion 'hand out' from over 55s to first time buyers
This has revealed that the tradition of leaving an inheritance could soon become a thing of the past. Instead, the new convention will be for parents and grandparents to help children and grandchildren financially while they're still alive, rather than hold-off to leave them a legacy when they die. The Pru is dubbing this new trend 'pre-heritance'.
In total, almost 82 per cent of over 55s (8.6 million) with children and/or grandchildren, have stated that they would rather give a 'pre-heritance' than leave an inheritance to their offspring. This figure increases to 89 per cent of over 55s in the Midlands area. And nationally, 44 per cent of over 55s (4.6 million) said they would consider releasing equity in their homes to help children or grandchildren onto the housing ladder, or contribute towards the cost of education. In London this figure increases to 53 per cent.
Ali Crossley, Director for Prudential's Equity Release plans, comments: "We believe the trend towards 'pre-heritance' will become increasingly common. It makes a lot of sense to be able to give financial support at a time when it's needed - for things like weddings, education costs and helping to get our kids on the housing ladder. Our research shows that parents would rather help while they're still around so they can enjoy the fruits of their financial assistance.
"We estimate that the current generation of 50 to 60 year olds have £570 billion of equity in their homes and releasing part of this could provide them with the means to give their family a pre-heritance boost. Also, due to house price inflation, a number of these over 55s could find now find themselves subject to inheritance tax. Pre-heritance could offer a solution to this. "
For further information on the Prudential Home Equity Release Plan, consumers should call 0845 600 1564.
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