Brits using their inheritance to pay for living costs

14 April 2014

More than a third of Brits expect to see their heirs use their inheritance on day-to-day living costs and paying-off their debt.

A new report by Close Brothers Asset Management found 38% expect the wealth they pass-on to their loved ones will be used to cover the cost of living, while more than a fifth (21%) think the money will go towards helping their beneficiaries clear any outstanding debt they have.

And in a sign of the current boom in the housing market and how tough people are finding it to get on the property ladder, its survey revealed that 29% expect their beneficiaries to put their inheritance towards buying a home.

When asked if they had experienced a similar situation, only 23% admitted they needed to use their inherited wealth to cover their living costs, while 18% said they used their inheritance to pay-off their debt.

Overall, 67% of those questioned said they used their own inheritance for investments or savings, but only 57% expect their heirs to do the same.

Financial difficulty

Patrick Haines, regional head of advice at Close Brothers Asset Management said: "The way people expect their legacy to be used has changed, and reflects the rising cost of living.

"It's crucial that those receiving inheritance understand the trade-off between short-term expenditure, and long-term financial security.

"Those spending wealth that traditionally could have supplemented income in retirement may encounter financial difficulty further down the line."

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