Family fortunes: the truth about the UK’s great wealth transfer

Over the next 30 years, vast amounts of wealth is set to change hands in Britain.

Billed as the biggest financial shift in modern history, nearly £7 trillion will pass from the baby boomer generation – those born between 1946 and 1964 – to Gen X and millennials, in the form of inheritances.

It's being called the great wealth transfer, and you might've already heard about it. It's essentially one big, real-life episode of Succession, just with fewer private jets and more semi-detached houses.

Sounds dramatic. And slightly cinematic. 

But what will this unprecedented economic shift really mean for most of us? How much will the average person inherit? And what happens to an economy when trillions of pounds start moving from one generation to the next?

We've broken it all down – along with a few reasons why that windfall might be smaller, slower, and far less predictable than you might expect.

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The generation that won the economic lottery

If you think this is all just a bit of hyperbole, think again.

Boomers are the wealthiest generation in UK history, holding more than half the nation's total housing wealth, totalling an estimated £2.89 trillion.

On a more individual level, households headed by someone aged 65 to 74 have median wealth of £502,500 – which means half have more, and half have less. That's over 30 times the wealth of households headed by someone aged 16 to 24.

Around a third of that wealth typically sits in property, with the rest split between pensions, savings and investments. And those averages mask an even more striking reality: around 20% of households in this age group are millionaires, compared with 7% in the mid-2000s. 

Of course, the picture isn't so universally rosy. Around one in five pensioners live in poverty, and roughly 14% rely solely on the State Pension.

But why is this generation, on average, so wealthy?

Well we won't overlook that many people spent decades steadily saving, budgeting and planning. But for most, it was also luck and timing: generous defined-benefit pensions, decades of economic growth, housing markets that rose far faster than incomes, and long bull markets that helped push up the value of investments.

And, if you ask your dad, it was probably a bit of good old-fashioned hard work, too.

How much will the average person inherit?

It's pretty grim to be anticipating an inheritance, when you really think about it – and yet a lot of us do seem to be thinking about it. 

54% of Brits expect to inherit some money, and a third are even financially depending on it. Many are even already mentally spending it, with a quarter saying they'll use it to pay off the mortgage and 31% rather vaguely saying they'll use it to "live a better quality of life".

One in seven young adults thinks they'll receive money before they're 35, and expect to get a whopping £130,000.

And the numbers suggest we're increasingly likely to expect an inheritance compared with previous generations.

According to the IFS, every cohort since the 1960s has been more likely than the last to expect one, whether they actually receive it or not:

The big question is:

How much will people actually get?

Accurate figures are tough to pin down. That's mainly because, thankfully, most of the boomer generation are still very much alive and kicking.

A huge study conducted by the IFS and funded by the Nuffield foundation estimated that:

• The median inheritance for those born in the 1980s will be around £136,000
• For those born in the 1970s, it will be £107,000
• For those born in the 1960s, it will be £66,000.

So for some, expectations might actually be bang on the money.

For others, though, they may prove wildly off the mark: one-fifth of people born in the 80s are projected to actually inherit less than £10,000, while a quarter will get close to £300,000. 

Where people really misjudge things is when they'll actually get it. 

By the time most people receive anything, they'll already be well into their own retirement.

That's because as life expectancy rises, so does the age at which people inherit. The average age when someone loses their last surviving parent is 58 for those born in the 1960s, is likely to be 62 for those born in the 1970s, and 64 for those born in the 1980s.

And for about a third of people born in the 1980s, it won't happen until they're in their 70s, as more of us than ever live to a ripe old age.

All of this, of course, is very good news – it means people are living longer and spending more years with their families. 

But it does also mean that if you're one of the 26% of people planning to use an inheritance to clear the mortgage, you might be waiting a long while.

While people hoping for an inheritance before age 35 may be disappointed, there are plenty of underutilised ways families can pass wealth down earlier – and bask in the glory of being living legends.

Cash gifts can be given during a person's lifetime for any amount, provided they don't die within seven years – a rule that sounds less like tax law and more like a fairy-tale curse.

Alternatively, people can give away £3,000 each year, which is exempt from inheritance tax regardless. Smaller gifts of up to £250 per person are also allowed, and regular gifts made out of surplus income can be exempt too – provided they come from income rather than savings and don't affect the giver's standard of living.

But lifetime gifting in the UK is far rarer than you might expect (or hope). Around 90% of transferred wealth comes through inheritances rather than gifts. 

That's much lower than in countries like France, Germany and Italy, where passing wealth down during life is far more common.

In other words, in the UK, we like to hold onto our money until the bitter end. 

There could be a very good reason for that, though, which we'll get to shortly.

Inheritocracy: the new wealth order

There's a much more interesting story behind those headline figures – and one that reveals a lot about how wealth is really being created and passed down in modern Britain.

Inheritances have been rising as a share of national income in the UK since the 1970s, making them a far more important determinant of total lifetime wealth.

Economists point to three reasons for this.

The first is that each subsequent generation is – on average – having fewer children, meaning estates are split between fewer people. 

The second is that inheritances themselves are getting larger. Those born in the 1980s are projected to receive inheritances roughly twice the size of those received by people born in the 1960s.

The third is that wealth accumulation for younger generations has stalled.

For most of the post-war period, each generation reached their 30s and 40s in a stronger financial position than the generation before them. Higher wages, rising home ownership and steadily increasing house prices meant people built wealth earlier and faster.

That pattern has now broken down.

Millennials have, on average, accumulated 8% less wealth at 30 than their Gen X counterparts did at the same age.

Housing is a major factor here. As prices have surged relative to incomes, home ownership has been pushed further out of reach, meaning people buy later – if they buy at all – and miss out on the early years of housing-driven wealth accumulation.

It didn't work this way for much of the 20th century, where most people accumulated the majority of their wealth during their working lives – through wages, savings and buying a home. 

In fact, some economists argue that the importance of inherited wealth is approaching levels last seen in the late 19th century – the sort of economy where, much like in a Jane Austen novel, who your parents were mattered more than what you earned.

And inheritances don't just add wealth, they can often reinforce the advantages people already have.

People already on high incomes are roughly twice as likely to receive an inheritance as lower-income individuals, and when they do inherit, the amounts are much larger.

It's an obvious point, but wealth tends to run in families. Children of wealthier parents are more likely to grow up in higher-income households, attend better schools, receive financial help earlier in life and accumulate assets sooner, long before any inheritance arrives.

We can also see this reflected in the data on lifetime transfers. Over half of the richest 20% of people receive money from a parent or family member while they're alive, compared to around one in 10 of the poorest 20%. They also receive substantially more. 

As Bertrand Russell once put it: "Choose your parents wisely."

But even those at the higher end of the wealth spectrum might have something to fear.

The Japanese have a saying: "the third generation ruins the house". We even have a similar maxim here in the UK: "shirtsleeves to shirtsleeves". Both of these adages refer to the largely proven notion that wealth rarely survives long enough to reach the grandchildren.

If younger generations can't build their own wealth, the fortunes amassed by the boomer generation may not take long to dwindle and disappear.

The great wealth transfer... to the care sector

Even if you're congratulating yourself on having the foresight to be born into wealth, of if you've built up a small fortune that you're excited to pass onto your children, there could be a big threat lurking just around the corner: care fees.

It goes without saying that everyone deserves to be looked after properly, with dignity, and to enjoy their life as much as possible until the end.

The problem is that this kind of support is eye-wateringly expensive – and prices show no signs of slowing down any time soon.

In the UK, care funding is means-tested. In England and Northern Ireland, if your savings and assets exceed just £23,250, you'll usually have to pay for your care yourself. Scotland and Wales have more generous thresholds, but the principle is the same.

And the costs add up quickly:

• On average, a place in a care home costs £949 per week, rising to £1,267 per week for a nursing home. That's roughly the price of renting a two-bed flat in Westminster
• Over two years – the average time someone spends receiving dedicated care – that comes to almost £100,000 for a residential care home and more than £130,000 for a nursing care home
• Some financial advisors even reckon people should be putting aside up to five years' worth of care home fees – around £400,000.

Actual costs vary widely by location. London residents will pay on average £1,548 weekly for residential care, while those in the North East will get a relative bargain at £1,112.

And when you're paying privately, you'll pay more. Self-funding residents are typically charged around 40% more than local authorities for exactly the same room.

Fees have been marching steadily upwards, increasing by more than 20% in the last five years alone.

Even at current prices, one year of residential care would eat up around 50% of the IFS's projected median inheritance for people born in the 1980s. One year of nursing care would swallow about 60%.

Bear in mind, that's just for one parent – many people, if lucky, have two.

Even worse, the government hasn't upped the means-tested threshold in 16 years – in that time, property prices have risen, on average, by 50%. A cap on care fees of £86,000 was due to come into effect in October 2025, but this was scrapped back in 2024.

Give your house to your child, live in it for free?

It's not surprising that people sometimes go looking for ways around the whole "means tested" thing. One piece of advice often touted online is to "just put the house in trust."

But if Dave from Facebook has thought of that, you can rest assured HMRC has, too.

Trusts are far from a magic loophole. If the person giving away the property continues living in it, it will still usually be treated as part of their estate under the "reservation of benefit" rules. 

Transfers into trust can also trigger an immediate 20% inheritance tax charge, along with potential capital gains tax if the property later rises in value – and trusts themselves are taxed more heavily than individuals.

Simply giving the property away doesn't solve the problem either. If it's done to avoid care costs, it's likely to be treated as "deliberate deprivation of assets", meaning the person can still be assessed as if they owned it anyway.

In reality, this leaves people with only a few options: using savings first, and if necessary selling the family home. If their assets eventually fall below the means-testing threshold, the state steps in to cover the rest. 

People who can't sell their home, usually because a surviving spouse is living in it, will sometimes rely on deferred payment agreements, meaning the council will cover care home fees but recoup the costs once a property is sold.

This can some as an unpleasant surprise to relatives who may have been in the dark about the arrangement and assumed the house would simply pass down to them. 

So much for keeping it in the family.

The endgame: inheritance tax

Let's say you climb the ladders, avoid most of the snakes, and make it to the end of the board with some fortune still owing to you.

You might still have one last square to land: inheritance tax.

It's a tax that's widely despised in the UK – despite most people not understanding it. On one level, it just seems unfair to have tax taken again on assets someone has already paid tax on.

On another, we can at least all broadly agree on its purpose: to redistribute accumulated wealth and increase social mobility. 

One problem is that IHT is hitting middle classes increasingly harder than the wealthiest in society.

Even though the total allowance for a married couple or civil partnership is £1 million, as property values rise, thresholds lag behind inflation and pensions are set to be included in taxable assets from 2027, it's thought that one in 10 deaths will trigger an IHT charge by the end of the decade. 

Many of those impacted might well be ordinary families whose wealth sits almost entirely in a family home that has simply appreciated over decades and whose occupants have had the good fortune not to move into residential care, rather than the dynastic fortunes the tax was originally designed to target.

Another problem is inheritance tax is barely touching the wealth gap it was designed to address.

By their early 50s, the children of the wealthiest fifth of parents have already accumulated an average of £830,000, compared with £180,000 for those whose parents are in the poorest fifth.

Inheritances themselves are just as uneven. Those with parents in the top fifth receive an average inheritance of around £372,000. Those at the bottom receive about £2,000.

And even after inheritance tax is paid, the children of the wealthiest fifth of parents still receive an average of £334,000.

That's before you even get to the raft of sophisticated ways to reduce the value of an estate – strategies most ordinary households don't use, qualify for, or have ever even heard of.

As a result, estates worth more than £10 million often face a lower effective tax rate than those worth between £1.5 million and £2 million.

In other words, as trillions of pounds pass from one generation to the next in the coming decades, inheritance tax is set to trim middle-class estates more frequently while doing little to shuffle the deck.

Bottom line

If there's one thing we can take away from all this, it's that the great wealth transfer will have surprises in store for many.

Some families will pass down life-changing sums. Others will see decades of accumulated wealth quietly disappear into care fees. Some will discover that the taxman gets there before they do, or realise their parents have taken "you can’t take it with you" less as a saying and more as a financial strategy.

And as inheritances become more important than ever before, the most useful thing families can do is simply talk about it. That sounds obvious, but it rarely happens. Most people have never discussed inheritance at all, and one in five say it's the most awkward topic imaginable.

This is reflected in the alarming rise of inheritance disputes, from which many families never recover.

Having a conversation gives everyone the chance to plan ahead, understand what might realistically happen, and avoid making financial plans based on money that may never materialise – or materialise much later than we think. 

And as a nation, we probably also need to be more honest about the growing role inherited wealth plays in determining who gets ahead. Not to shame those who get help, of course, but not to ignore those who don't.

Because if the difference between getting on in life and standing still increasingly comes down to whether help is waiting in the wings, inheritance becomes less of a personal issue, and more of a force shaping the society we live in.

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