Financial legacies to the next generation are dwindling as people struggle to pay rising bills, new research reveals.
Some 60 per cent of adults expecting to leave a legacy say the mounting cost of living will ‘unquestionably’ reduce what they can pass on to loved ones – and 10 per cent say they are now likely to leave nothing.
The average estimated value of an estate has slumped by nearly a quarter to £221,000, down from £289,000 two years ago, according to a survey by Tower Street Finance.
Inheritances dwindling away: Some 17 per cent of 18 to 24-year-olds and 15 per cent of 24 to 35-year-olds are banking on a legacy to buy a home
Recent research has shown more than half of adults have experienced anxiety and a quarter felt depression because of rising bills, as the worsening economic situation takes a toll on people’s wellbeing.
Tower Street Finance says that despite higher day-to-day food, housing and energy bills, 72 per cent of adults still expect to leave some inheritance to friends and family.
But among people expecting to inherit, 29 per cent say if they receive anything in the next 12 months they will use it to cover living costs, compared with 7 per cent who said this in the same survey two years ago.
The probate lending specialist also found that 17 per cent are relying on an inheritance to pay off debts.
And 17 per cent of 18 to 24-year-olds and 15 per cent of 24 to 35-year-olds are banking on a legacy to buy a home.
Tower also asked people whether they could afford to pay for a funeral if necessary, based on the £4,927 average cost of a burial in 2021 according to an influential annual study by SunLife.
Some 41 per cent said they would have enough money on hand, and 33 per cent would not be able to cover the cost.
Among those who couldn’t afford it, 35 per cent did not know how they would pay, 15 per cent would borrow from relatives and 14 per cent would get a loan.
SunLife found the average cost of cremation was £3,765, and the average price of direct cremation – conducted with no service and mourners, but ashes are returned to a family afterwards – was £1,647.
Overall, the average cost of a send-off was £4,056 last year.
Tower surveyed around 2,000 UK adults, weighted to be representative based on age, gender and location, who either expect to leave an inheritance or to receive one. They asked the same number of people the same questions in late 2020.
Dicky Davies, founder and business development director at Tower Street Finance, says the research indicates the value of estates people plan to leave is dropping due to rising living costs, and therefore beneficiaries should expect to receive less.
‘The current cost of living crisis isn’t just having an impact on the present day, but it’s also likely to have far-reaching impacts into the future,’ he says.
‘The current cost of living crisis isn’t just having an impact on the present day, but it’s also likely to have far-reaching impacts into the future,’
