Parents gifting assets to help children battle cost of living

PARENTS are drawing down their pensions and taking money out of properties to help their children manage the cost-of-living crisis.

One in seven over-50s has overhauled their inheritance plans and intends to give cash to adult children early, according to research by Saga Equity Release, a mortgage provider.

Parents are planning to give away nearly a 10th of their assets before they die – equivalent to around £30,000, based on the average estate. One in four parents aged over 50 said they expected to support adult children during the cost-of-living crisis, the survey showed.

This was a higher share than during the pandemic. In October 2020, just one in five parents said they would do similar. However, since then, families have had to grapple with soaring energy bills, food prices, rent, house prices, interest rates and mortgage costs. Inflation is expected to peak at 10.2pc this year, bringing the biggest drop in real disposable incomes on record.

Alex Edmans, of Saga Personal Finance, said the crisis could change the way the British people leave assets to their children.

“We could see permanent changes to attitudes towards inheritance,” he said.

“Our research points to a growing dependence on family support as inflation continues. More parents are now considering different approaches to inheritance – be that fast-forwarding plans, gifting sums of money or releasing equity from their homes.”

Jason Davies, 67, and his wife have given £184,000 to their two children, aged 31 and 36, to help them get on the housing ladder. To help their daughter buy a home in Cardiff, Mr Davies drew down a quarter of his pension.

He said: “My daughter was renting so that her children could be in the catchment area for a good school. She was trying to save for a deposit, but house prices have gone up so much in Cardiff you can’t get anything for less than £220,000. To get a 20pc deposit on that, even if you were saving £1,000 per month, would take too long.”

Other parents have taken money out of properties. One in 20 parents aged over 50 is considering equity release, according to Saga.