According to financial services provider OneFamily, £42bn has skipped a generation over the last five years, with £19bn left directly to younger generations while the remaining £23bn has been passed on by the original beneficiaries, usually their parents.
Data from the Office of National Statistics suggests that people usually inherit family wealth when they are aged between 55 and 64, however younger relatives are benefitting from a financial legacy earlier.
OneFamily found that 57 per cent of those aged over 55 who received family wealth since turning 50 chose to pass it on to children and grandchildren. This was largely via cash or helping to fund big one-off expenses such as university or getting on the property ladder.
According to the analysis, 22 per cent passed on inherited wealth to younger relatives specifically in a bid to help them buy their first home.
A further 70 per cent of over 55s feel the current economic climate means it is harder for younger generations financially compared to when they were younger and, as a result nearly a third say they want their wealth, and that of their parents, to be shared and enjoyed across the family.
Nearly half of over 55s feel responsible for supporting their family financially, while 36 per cent say they are currently conserving their wealth in order to pass it down.
The difference in wealth among younger and older people is also causing an increase in ‘living’ inheritances, where the wealth is given to loved ones as a gift.
Nearly one in five over 55s have already given relatives a living inheritance, and a further 15 per cent plan to do the same. The average living inheritance is £27,000, suggesting it is most likely wealthier families behind this trend.
Though the most popular reason for this is that younger relatives need the money now, according to 55 per cent of the 2,000 people quizzed. Other factors included 53 per cent wanting to see their contributions in action and 29 per cent minimising inheritance tax charges.
While some over 55s are using savings or drawing down from pensions, many want to use the money tied up in their home. Some 12 per cent were downsizing, while six per cent unlocked funds through equity release.
Gifting family members money was one of the most popular uses for equity release with 24 per cent of homeowners aged over 55 saying they would use the equity in their home to help their family.