Emma Simon

Inheritances are under threat: don’t rely on a windfall to pay your debts

Are you banking on an inheritance to help pay off the mortgage, clear your credit card bills or prop up your pension plans?

If so, you are not alone. A recent survey suggests the majority of people in the UK are optimistic about receiving a generous inheritance, with seven out of ten saying they expect to inherit their parents’ or grandparents’ home.

The survey by vouchedfor.com – a company that puts people in touch with lawyers, accountants and financial advisers – found that six out of ten respondents said they expected to receive a future inheritance, and one in ten of them expected it to be large enough to fund a comfortable retirement.

With strong rises in house prices over the past decade or so, it is perhaps not surprising those in their 30s, 40s, and 50s remain hopeful that a future windfall could prove to be a financial cure-all.

Most in this age group don’t have the generous pensions their baby-boomer parents got. Many are also saddled with larger mortgages and more job insecurity than the generation before. In addition, some may be wondering how they will ever help their own kids get on the property ladder or pay off university fees.

Unfortunately, there is often something mirage-like about these inheritances: the closer you get, the less and less substantial they seem.

What is the average inheritance?

Finding out the average inheritance isn’t a straightforward task. The Ministry of Justice, which runs the Probate Office, doesn’t publish this data. However, HMRC does collate information on the value of estates and the tax due on them. According to its most recent data — for the tax year 2013/14 — there was a total of £77.13 billion left in people’s estates, after mortgages and any other debts have been paid.

The figures from HMRC show there were around 599,000 estates included in these figures (which tallies with figures from the Office for National Statistics for deaths in that year).

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