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Are we leaving inheritances too late?

ended 06. October 2026

Scott Gallacher, Chartered Financial Planner at Rowley Turton, believes families may need to rethink not just how much wealth they pass on, but when they pass it on.

It is a theme Gallacher also explores in his book, 50 Today.100 Tomorrow, which considers how longer lives should change the way people think about money, retirement and what they ultimately leave behind.

Gallacher argues that inheritance tax planning should not simply be about saving tax. The real objective should be to use wealth in the way that creates the greatest benefit for children, wider family or charities.

The Bank of Mum and Dad is already playing an increasingly important role in helping younger generations cope with high housing costs and wider cost-of-living pressures.

But are families still thinking about inheritance the wrong way?

As people live longer, many children may not receive their inheritance until they are in their 50s or even 60s, by which point they may have repaid much of their mortgage, raised their family and accumulated significant wealth of their own.

Would some of that money have achieved more if it had been passed on 20 or 30 years earlier?

A £50,000 inheritance at 60 is undoubtedly welcome. But £50,000 at 30 or 35 could potentially help someone buy their first home, extend a property to accommodate a growing family, take maternity or paternity leave, establish a business or simply reduce financial pressure at a particularly expensive stage of life.

The same principle can apply to charitable giving. For some people, there may be greater satisfaction in seeing their wealth make a difference during their lifetime rather than only after their death.

There is now another reason for families to consider the timing of wealth transfers. From 6 April 2027, most unused pension funds and pension death benefits will be brought within a deceased person’s estate for inheritance tax purposes.

HMRC estimates that, of around 213,000 estates with inheritable pension wealth in 2027/28, around 10,500 estates will face an inheritance tax liability where they previously would not, while approximately 38,500 are expected to pay more inheritance tax.

Gallacher says this does not mean people should simply start giving their money away.

Any lifetime gifting should begin with ensuring that the donor retains sufficient resources for their own retirement, longevity and potential care costs.

But perhaps financial planning needs to focus less on simply minimising an eventual tax bill and more on making sure wealth is transferred at the point when it can do the most good.

There may also be a wider economic question.

If financially secure older generations transferred more wealth during their lifetime, at the stage when younger generations most needed capital, could that money be put to more productive use through house purchases, home improvements, business investment, childcare and other spending?

With younger generations under financial pressure, increasing longevity potentially delaying inheritances and the inheritance tax treatment of pensions changing from April 2027, perhaps the stars are aligning for families to rethink when wealth should pass between generations.

Questions for experts

  • Are inheritances increasingly arriving too late in people's lives to make the greatest difference, and should more families consider passing wealth on earlier?
  • With younger generations facing high housing costs and wider cost-of-living pressures, could advancing part of an inheritance help families more than leaving a larger sum on death?
  • Does the inclusion of most unused pension funds within estates for inheritance tax from April 2027 strengthen the case for families to review lifetime gifting?
  • Could earlier transfers of wealth have wider economic benefits if that money is used for house purchases, home improvements, starting businesses, childcare or other spending earlier in life?
  • Should inheritance tax planning focus less on simply minimising tax and more on when and how wealth can create the greatest benefit for children, wider family and charities?
  • What are the main risks families need to consider before making substantial lifetime gifts, particularly around longevity, future care costs and retaining sufficient financial independence?

5 responses from the Newspage community

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Scott GallacherVerified
Director at Rowley Turton
Inheritance tax planning often starts with the question, ‘How can we reduce the tax bill?’ I think the better starting point is, ‘How can this money do the most good?’

As we live longer, there is a real risk that substantial inheritances arrive too late. Receiving £50,000 at 60 is obviously welcome, but for many people the same £50,000 at 30 or 35 could be transformational. It might provide a deposit for a first home, allow a family to extend rather than move, provide financial breathing space during maternity or paternity leave, or help someone start a business.

That doesn't mean parents should give away money they may later need themselves. Their own financial security, including the possibility of living to 100 and needing care, has to come first.

But once genuine affordability has been established, I think we should be asking whether leaving the largest possible inheritance on death is really the best outcome for you and your loved ones.
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Martin RaynerVerified
Financial Adviser at Compton Financial Services
The problem with traditional inheritance planning is that the money often arrives when it is least needed. We typically see people passing on wealth in their 70s or 80s, meaning their children are already in their 50s and may be financially established.

That is why planning should be genuinely intergenerational, including grandchildren. A grandparent can fund a bare trust for a grandchild and, if they have little or no other income, the child could potentially receive up to £18,570 of savings income tax-free each year, using their £12,570 Personal Allowance, £5,000 starting savings rate and £1,000 Personal Savings Allowance, plus their £3,000 CGT exemption.

We often see this used for education or university costs rather than building a large house deposit. The important catch is that the money belongs to the child and they can take control at 18, which understandably may make grandparents wary of building up too large a sum.
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Nouran MoustafaVerified
Practice Principal & IFA at Roxton Wealth
Inheritance is often most powerful before someone becomes financially comfortable.

£50,000 at 35 could be the difference between renting and buying, starting a business or not, or taking proper parental leave. The same £50,000 arriving at 60 may still be welcome, but it may not change someone’s life in the same way.

The pension IHT changes from April 2027 make the timing conversation even more important, but tax should never be the only reason to gift.

The first question is always: can the donor genuinely afford to give the money away? Longevity, future care costs and financial independence come first.

After that, I think inheritance planning should focus less on dying with the smallest possible tax bill and more on using wealth at the point it can create the greatest impact.

Good estate planning is not just about what you leave. It is about when you let it go.
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Harvey DhillonVerified
Founder & CEO at Zmartly
Yes, the pension change is a good reason to review lifetime gifts, but it shouldn't hurry anyone into giving. For deaths from 6 April 2027, most unused pension money counts in the estate for inheritance tax, so some estates that owed nothing before could face a bill. The biggest risk in giving sits outside inheritance tax. In England, if avoiding care charges was a significant reason for a gift, the council can charge as if the money were still yours, and there's no fixed time limit, so living for years after the gift doesn't make it safe. A key test is whether a need for care could reasonably have been foreseen when the gift was made, so a parent who gives while fit and healthy is on far firmer ground. Nobody knows how long they'll live or what care will cost, so a gift should only come from money you could never need to call on. On the tax side, if you stay on without paying a full rent in a home you've handed to a child, it stays in your estate however long you live.
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Rakhee WoodVerified
Founder & Independent Financial Adviser at Butterfly Financial Planning
There is a lot to be said for giving with warm hands rather than cold hands.

The problem is many people do not know their numbers. They do not know how much they need for their own future, so they hold on to everything just in case.

Good financial planning can give people clarity around what they genuinely need. Once you know that, you can make much more confident decisions about what you can afford to give away.

That might mean helping children or grandchildren with a first home, childcare or starting a business, at a time when the money can make a real difference.

And you get to see the benefit of it. This is one of the highlights of my job. I get great pleasure from seeing the happiness my clients get from gifting during their lifetime.

For me, this is about much more than tax. It is about having enough for yourself first, then using your money in a way that has the greatest impact.

Tax matters, but it should not drive the decision.