A recent survey by wealth manager Charles Stanley has revealed than some millennials might have unrealistic expectations about how they will pay for their first home. The survey showed that one in seven young adults expect to inherit money before they turn 35, and that they expect to receive nearly £130,000. According to the research, 22% of millennials expected to be able to use an inheritance as a deposit for their first home.
However, the reality is that the average age for receiving an inheritance is actually between age 55 and 64, according to the Office for National Statistics (ONS). In addition, the median average inheritance amount is £11,000, not even 10% of the amount that young adults expect to receive. According to official statistics, only 7% of millennials have received an inheritance that they could use as a deposit for a first home.
John Porteous, from Charles Stanley, said:
“People are living longer than ever, so relying on an inheritance to get on the housing ladder is a risky strategy as you may get less, and much later than planned. In reality, most people save and invest to get on the housing ladder. Starting early and planning ahead is essential to achieving the deposit you need.”
The average expectation for when an inheritance would be received, according to the research, is age 50, but even this is five years below the average age when an inheritance is received. While some people might expect to have an inheritance that helps them to get on the housing ladder, it’s more likely that they will already be homeowners, and in fact almost retirees, by the time that they receive one.
Another issue is the general consideration of estate planning and financial planning. Although many people might be expecting an inheritance from their parents or other family members, many neglect to consider their own financial planning and what will happen to their assets after their death.
According to Dan Garrett, founder of will writing service Farewill, 30 million people in the UK had not written a will. On of the reasons given is that people simply drop it from their list of things to do and don’t make writing a will a priority. Garrett has also asked the government to clarify its plans for probates fees. The government is planning to raise its fees for settling estates by a significant amount. With the changes originally planned to take place in April, they have been delayed until further notice.
The current probate fees for estates worth £5,000 or more are £155 if the application is made through a solicitor and £215 when made by an individual. The changes will see no charge for estates worth under £50,000. However, estates worth more than £50,000 will see an increase in fees of between £35 and £5,785. For example, estates worth between £50,000 and £300,000 will pay £250 for an individual application, while estates worth more than £2 million will require a probate fee of £6,000.