The now widespread practice of leaving your estate to loved ones actually dates back to ancient Greek times, and this tradition has remained popular throughout the centuries.
However, there’s no doubt that time has now moved on, and while traditional inheritance remains the norm throughout the western world, older generations are also starting to embrace the concept of a “living inheritance”.
But what is a living inheritance, and what are the benefits of this from the perspective of both benefactors and beneficiaries alike?
What is Living Inheritance and Can You Afford it?
In simple terms, a living inheritance refers to the practice of giving away assets or money to family members while you’re still alive, rather than waiting for the estate to be distributed following your death.
This means that you can see the benefits that this provides to your loved ones, while it also makes practical sense at a time when we’re living for longer than ever before.
However, the first question is whether you can afford a living inheritance? The truth is that such an option is only really viable for those with the requisite wealth and assets, who can afford to give cash and property without compromising their own standard of living.
Certainly, wealthier property owners can use an equity release calculator to estimate precisely how much money they are able to gift to a family member, while this option is likely to be largely unavailable to those who don’t own homes or have already mortgaged their property.
This is a key consideration, as embracing the concept of a living inheritance may not work and could actually be counterproductive in some instances.
What are the Benefits of a Living Inheritance?
As we’ve already touched on, a living inheritance enables you to proactively give cash and property to your loved ones long before your death, so that you can see the benefits of this and achieve genuine peace of mind in your later years.
What’s more, a living inheritance is particularly beneficial to recipients in the current financial and economic climate, with inflation rising in the western world and continuing to outstrip real wage and earnings growth.
This is creating an entire generation of citizens who are struggling to cope with the daily cost of living, so a cash boost or injection from your estate may prove to be worth its weight in gold.
Similarly, gifting large cash sums or a house can help younger loved ones to take their first steps on the property market, which is proving increasingly inaccessible without financial assistance. For example, while the average house price in the UK is now 65-times higher than in 1970, wages have only increased by 36-times during the same period.
Certainly, this leads us onto the practical things that a living inheritance can be used to achieve, from helping your family to buy their first home to paying for higher education.
Ultimately, this will depend on the precise amount of wealth that you’ve built over time, but the key is that you have the necessary capital to create a living inheritance in the first place.
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