Generous grandparents keep their gifting plans secret – especially over Christmas
For many of us, Christmas is a time when different generations of the family come together and celebrate. This might involve generous gift giving from grandparents to their grandchildren, but many are still avoiding important conversations about bigger gifts in the form of an inheritance.
New research from Octopus Investments reveals that only one in three (33%) grandparents had ‘gifted’1 anything to their grandchildren free of inheritance tax.
However, a much greater proportion intend to leave an inheritance. Two in three (64%) grandparents plan to leave something to their children, while (37%) plan to skip a generation and leave money to their grandchildren.
Of those who expected to be hit by inheritance tax, the vast majority (80%) also said they had already or intend to put plans in place to reduce their inheritance tax bill.
Grandchildren in the dark over their grandparents’ plans
Despite these generous intentions, four in ten grandparents (38%) are yet to discuss their plans with their children, leaving family members in the dark. Remarkably, only 2% of grandparents have shared their plans with their grandchildren.
With family often spending time together, Christmas might be seen as an opportunity to discuss those plans. Yet just 1 in 10 (9%) of grandparents agreed, with the majority suggesting Christmas would be a bad time to talk about plans to gift or leave an inheritance.
The ‘middle generation’, those with children and parents still alive, were more receptive to the idea, with two in ten saying it was a good time to discuss such plans. A further 15% of this group agreed, but worried it would be too awkward to actually have the conversation.
The research also found that as people become older, they become less inclined to talk about plans around inheritance. Four in ten (39%) of the middle generation aged 18-34 said Christmas was a bad time to discuss the matter, rising to over half (53%) among those aged 35-54, and two thirds of those aged 55 or above.
Paul Latham, Managing Director at Octopus Investments, said:
“For those celebrating, Christmas is often a special time for families to spend together and the idea of using it to discuss inheritance and finances might not seem very appealing. Yet, as our research reveals, talking about these issues is something we tend to keep putting off as we get older, sometimes until it’s too late. Starting that conversation is never easy, but the potential benefits for all involved are huge.
“With people living longer, many grandparents will have grandchildren who are already well into their twenties and thirties. At that stage of life they might be desperately trying to get on the housing ladder or pay for a wedding, while at the same time being completely unaware that their grandparents intend to help out. Having these conversations could be vital in helping with financial planning and providing peace of mind over the festive period.”
Polling carried out by Opinium – 2005 UK Adults weighted to be nationally representative of the UK population
1) What is gifting? – Gifting is a common way of passing on wealth to family members without incurring inheritance tax (IHT) upon death. Those you give gifts to will be charged IHT if you give away more than £325,000 in the 7 years before your death. However, you can also give away £3,000 worth of gifts each tax year (6 April to 5 April) without them being added to the value of your estate. This is known as your ‘annual exemption’. (HMRC – Inheritance Tax, Gifts).
For journalists in their professional capacity only. The value of an investment, and any income from it, can fall as well as rise. Investors may not get back the full amount they invest. Personal opinions may change and should not be seen as advice or a recommendation. We do not offer investment or tax advice. We recommend investors seek professional advice before deciding to invest. Issued by Octopus Investments Limited, which is authorised and regulated by the Financial Conduct Authority. Registered office: 33 Holborn, London, EC1N 2HT. Registered in England and Wales No. 03942880. Issued: December 2019.