Young bank on a ‘living inheritance’

OLDER relatives are offering the younger generation a “living inheritance” of cash gifts, says a survey.

Generous parents and grandparents are handing over money now instead of waiting until their death.

Two in five of those aged over 59 had helped their children or grandchildren financially in the past six months, the survey of 1,005 people found. But experts have warned them to be aware of financial rules, to avoid falling into a tax trap.

As much as £3,000 a year can be given without falling foul of tax laws. Cash wedding gifts of up to £5,000 can be given to a child, £2,500 to a grandchild and £1,000 to others.

But if the donor dies within seven years of the gift, the recipient is potentially liable for inheritance tax.

Andrew Tully of Retirement Advantage said: “Living inheritances are clearly helping out cash-strapped children and grandchildren who may be struggling with the cost of living.

“However, there are some simple rules to remember when gifting which should ensure that you don’t fall foul of the tax man.”