Why inheritance is the dirty secret of the middle classes – harder to talk about than sex | Money

Isobel had a hard time getting pregnant. After several heartbreaking miscarriages and three gruelling rounds of IVF, she had begun to worry that, at 34, she was running out of time. But, miraculously, the fourth round worked, and when we speak she is weeks from giving birth. Her parents are “amazingly excited” about meeting their first grandchild, not least because they funded Isobel’s fertility treatment – as is the case for an estimated one in eight British couples needing IVF – meaning she and her partner could throw everything into trying to conceive, undergoing several treatment cycles in quick succession.

“I’m so grateful to have been able to rattle through it at the speed we did, when I know friends have taken big gaps between IVF rounds because they had to save up,” says Isobel, who works for a London-based charity. “I didn’t have to think about how much it cost, which really took the pressure off.” The pandemic had also made her acutely aware of her parents’ mortality, worrying they might not live to see any grandchildren. So she and her partner gratefully accepted their offer.

It’s not the first time family money has helped her out. Isobel’s parents inherited legacies from their own parents in their 50s, which helped them pass on “living gifts” to her. They helped her buy a house in London when she was 27, and paid off her student loan when she was 22, so she could start saving for a pension. “When I think of the money that’s gone into that pension, it just starts a whole cycle of privilege over again,” Isobel says. Although she couldn’t be more grateful for her parents’ life-changing generosity, like many recipients of family money, she isn’t comfortable discussing it publicly; Isobel isn’t her real name and she hasn’t been upfront with colleagues about how she came to buy a house so young. It was awkward, she admits, when they started holding Zoom meetings from home during the pandemic and everyone could see where she lived. “It doesn’t feel fair – and it makes you feel guilty.”

Britain is entering a golden age of inheritance, as the trillions accumulated by the postwar baby-boom generation begin trickling down to their children and grandchildren in what’s been dubbed the great wealth transfer. By 2025, £100bn – more than half the annual budget of the NHS – could be changing hands every year, according to a landmark analysis commissioned by estate administrators the Kings Court Trust. By 2047, they estimate that number could more than treble. Around £5.5tn in total could flow down through families over the next 30 years, both in conventional legacies and increasingly in living gifts like Isobel’s, which don’t attract inheritance tax if the donor survives for seven years after handing them over. In wealthy families, these can be part of a carefully crafted strategy to reduce death duties, often funnelled into property or school fees. “As a grandparent, have you considered investing in your grandchild’s education instead of paying 40% inheritance tax?” asks the website of fee-paying Bolton school, suggesting brightly that it’s one way to “leave a worthy bequest whilst avoiding giving away lifetime earnings to the taxman!”

But wealth transfers aren’t confined to the rich. Research into lifetime gifting by HMRC found nearly a quarter of over-70s had helped their children out financially in the last two years alone, with the instinct to help so strong that some were getting into debt to do it. Half of first-time buyers have financial help from family, according to the annual Bank of Mum and Dad report from financial services company Legal & General, while roughly a third of grandparents plan to help grandchildren with university costs. A generation who enjoyed free education, and could become homeowners even on relatively modest incomes, are watching in alarm as their children struggle to reach the same milestones, and stepping in if they can.

The sums involved in the great wealth transfer are so staggeringly high partly because the so-called boomers make up such a big chunk of the population – roughly a fifth – but partly because they got lucky. Historically, it’s perfectly normal for older people to be richer than younger ones, having had a lifetime to accumulate property, pensions and savings. What has happened to those assets over a generation, however, is unusual. House prices trebled in real terms between 1980 and 2020, and even a council house bought through Margaret Thatcher’s right to buy can be worth seven figures in some London postcodes. One in four pensioner households are now worth over £1m on paper, even if they’re not cash rich. Now this windfall is heading down to the next generation – or to some of them.

As the Kings Court Trust analysis warns, there is a “deep and growing divide” between younger people who expect to be left something and those painfully aware they won’t be, in a world where family money is becoming increasingly critical to life chances. Research for the Institute for Fiscal Studies thinktank last year showed that for children born in the 60s, a quarter of the difference in living standards between rich and poor was explained solely by inherited capital. For 80s children, a third of it is. And the harder it feels to make it on merit in tough economic times, the more inherited wealth may grate, making it an extraordinary wellspring of guilt, rivalry and sometimes gnawing resentment. Last summer, New York magazine rather melodramatically asked, “Will the Great Wealth Transfer trigger a millennial civil war?”, arguing that the supposed generational conflict between boomers and millennials might soon morph into conflict between the young haves and have-nots.

It’s something Isobel worries about. “Of my friends who have bought houses, most have got money from their parents,” she says. “When people talk about our generation having a terrible time, I think the divide is between people who do and don’t have inherited wealth.” No wonder inheritance has become the middle class’s dirty secret, harder to talk about than sex.

A child of Nigerian immigrant parents, the writer Otegha Uwagba did not grow up with money. But getting a full scholarship to a private school, then moving on to Oxford, brought her into contact with a very different social circle. In her bestselling memoir We Need To Talk About Money, she describes her new friends’ strange coyness about how they became homeowners in their 20s: “Few people are forthcoming in noting the often massive inheritances underwriting these purchases. Instead, we see Instagram photos of beaming twentysomethings standing proudly on the steps of their new home, or engage in polite dinner party chitchat about paint swatches and mid-century Ercol furniture, even as we silently wonder, ‘How?’” Puzzled, Uwagba once asked a friend how she’d secured a mortgage aged only 24. It turned out the woman’s parents had bought the flat outright, and she was just pretending to need a loan.

“I think people are coy about sharing the reality of any form of privilege, whether it’s racial or gender or financial. They think it diminishes them,” Uwagba says. After all, they haven’t made it on merit.

“Intergenerational gifting is sensitive,” write sociologists Liz Moor and Sam Friedman, in a research paper examining how people whose parents have helped them to buy justify their good fortune. “It can elicit feelings of guilt, embarrassment, even shame, and therefore often goes unspoken in everyday life.” Some of the heirs they interviewed felt judged by friends for not having made it on their own, while those with leftwing views struggled to reconcile personal gratitude with political conscience. Participants tended to say inheritance tax was a good thing, but mainly if it fell on people richer than them.

Moor, who set out to examine why there isn’t more social pressure to tax inherited wealth, says interviewees tended to defend themselves by citing the working-class roots of relatives who made money generations ago. “People could find a way to reconcile a belief in meritocracy with receiving unearned income by making that connection to upward social mobility over time,” she says. “It’s a bit self-serving, but it lends itself to the status quo when you can say, ‘Yes, but it was my working-class grandparents selling their bungalow that helped me buy my flat.’” What they found harder to explain away was the disparity between them and friends in similar jobs who couldn’t afford to buy. One interviewee, Alicia, simply hid the fact that she had bought her flat outright.

As Uwagba points out, this embarrassed silence just leaves those without family money to self-flagellate over why they can’t seem to get their lives together when the truth is their friends haven’t really done so either; they just have parents who did. For most of her 20s she assumed financial success was “a question of working hard, getting further up the career ladder”, but not any more: “If I can’t figure it out, I just assume it’s family money, and that’s a good rule of thumb, especially with people working in the media and publishing.”

Wealth acquired young, she points out, has a powerful multiplier effect. Get your student loan paid off and you can save for a deposit earlier. The sooner you buy property, the sooner money that would have gone on rent is building assets your own children might inherit. Wealth breeds wealth, so much so that one study tracing the descendants of wealthy Victorians found their great-great-grandchildren were still disproportionately likely to be well off five generations later. Some of Uwagba’s contemporaries had their education funded by grandparents: “So now your life trajectory is determined not even by your parents’ money but by your grandparents’ – how do you compete with that?”

Inherited money, or the expectation of it, also has less tangible advantages. It can free people to take professional risks, entering potentially lucrative fields that don’t pay well initially – from insecure gigs such as acting to professions with surprisingly low earnings for juniors, like criminal law. Uwagba herself went into advertising after graduating, worrying that writing for a living seemed too precarious. But friends from wealthier families were more confident about taking unpaid internships in creative industries: “It’s the knowledge that there’s money coming down the line eventually. You can take more risks, think more long term.”

That’s true for Beth, who works in PR, and discovered in her mid-40s she was to inherit a “life-changing” amount after her parents died in quick succession. The windfall was a surprise, as her parents are from ordinary backgrounds and she hadn’t considered them rich. But her father started a successful engineering business in her native Australia; her parents bought property, managed their money carefully, and left enough for Beth to pay off her mortgage. But she has also worked out that, if she wants to, she could now move to a hot country where overheads are cheap, and not work for a decade. She isn’t sure if that life is for her, but knowing that, for the first time in her life, she could quit has transformed her attitude to a stressful job. “If you have a bad day at work, you can think, ‘Screw this, I don’t need it.’ No wonder the confidence of rich folk!”

Yet for some, family money comes with more complex feelings attached. Philippa, a 39-year-old NHS worker, says her parents are not wealthy but stretched themselves to help her buy a small flat on the outskirts of London she couldn’t otherwise have afforded on a public sector salary. She worries whether they have left themselves enough for a comfortable retirement, and whether she invested wisely (she recently discovered some issues with the flat that may make it harder to resell). “They trusted me to make the right decisions, and I worry about letting them down,” she says. Like Isobel, Philippa views her good fortune with both gratitude and guilt that she isn’t more financially independent. “You want to be self-sufficient, but to be in a position to have help – that’s a really difficult thing to turn down.” The hopes and fears bound up with inheritance can make it an emotionally loaded issue not just in broader society, but also within families.

It was back in the early noughties, just as the baby boomers were entering their 50s, that marketing analysts first identified what became known as the “ski set”; empty nesters who had paid off their mortgages and were unashamedly out to Spend the Kids’ Inheritance on bucket-list holidays, sports cars and pleasures they had denied themselves while raising families. The ski-ers had worked hard and meant “to make the most of it while they can” instead of leaving legacies, a report by the analysts Datamonitor concluded. Hidden in the small print was the fact that many had already given their children money to buy property first. But still, the idea of hedonistic pensioners caught on. When the Joseph Rowntree Foundation conducted research into attitudes to legacies back in 2005, it found two-thirds of those potentially wealthy enough to leave something weren’t worried about organising their finances to do so, and more than half of adults didn’t expect to get anything. Older people wanted to enjoy the fruits of their labours, and some might even have worried about inheritance doing more harm than good: this was, after all, the era of celebrities from software billionaire Bill Gates to cookery writer Nigella Lawson declaring they wouldn’t leave fortunes to their children because (in Lawson’s words) “it ruins people not having to earn money”.

But in 2005, Britain was in the middle of a seemingly endless economic boom. Three recessions later, parents are far less confident about their children’s prospects and also potentially their own, with rocketing inflation disrupting retirement plans. The original ski-ers are now in their 70s and 80s, and worrying about this winter’s central heating bills, even as they may be fretting about their adult children growing older in rented flats.

Rachael Griffin is head of tax and trusts at the wealth management company Quilter, and specialises in inheritance advice. Some clients still worry about spoiling their children by passing money on, she says, but she senses attitudes shifting: most want to see their hard-earned wealth passed down the family, not collected by the taxman. “There’s always this sort of underlying concern that people want their children or grandchildren to achieve on their own, and understand the value of money and work. But that way of thinking is changing, just because trying to get on the housing ladder now is completely different from how it would have been for baby boomers.”

Even for those wealthy enough to need advice from a firm like hers, the cost of living crisis is making itself felt. Some clients worry about keeping back enough to pay for nursing care in their old age, given uncertainty about what the government will fund (a promise to cap care costs has just been delayed for another two years). Others are seeking advice on conserving capital, not giving it away. “We’re in a crisis, so people feel like they need their own money today,” Griffin says. “It’s that fear of running out of money during their lifetimes.”

A society that has become overly reliant on inherited money may have potentially painful consequences not just for those who don’t inherit, but also for people’s quality of life at an age when they should be free to please themselves. According to a recent report on inheritance from low-income thinktank the Resolution Foundation, some older people are now making significant sacrifices in order to leave something to their children, with 9% downsizing, 16% saving more and 4% working longer into retirement. “It’s not just about younger people missing opportunities if they don’t happen to have rich parents – it penalises older people, too,” says Jack Leslie, senior economist at the foundation and co-author of the report. This often unspoken intergenerational clash of expectations makes inheritance a sensitive subject in many families.

Fiona is a 33-year-old single parent, working in local government. Her parents chipped in for her older sister’s house deposit and promised to do the same for her, she says. But when she was ready to buy, her parents told her they had ploughed everything into a house abroad, hoping for a retirement in the sun, leaving Fiona torn between accepting that it was their hard-earned cash to do with as they wanted, and feeling privately bitter.

“Even with my parents, it’s very difficult to talk about. There’s a lot of emotion attached, and a lot of shame,” she says. “They are quite prickly about it. But this is what I struggle to reconcile – I do sound entitled; my parents came from very working-class backgrounds, worked hard and ended up well off, and if they want to buy houses overseas, they can.” But she struggles not to feel short-changed, compared with her sister. What makes the passage of money down through families so emotionally loaded is that money is rarely just that. All too often, it can stir painful memories of who was the favourite child, or who felt overlooked growing up. No wonder some families end up squabbling over seemingly trivial trinkets following a bereavement, or blowing their inheritances on fighting each other in court.

“I’ve had people come to me for a legal consultation and describe incidents in their highchairs,” sighs Barbara Rich, a family law barrister specialising in high-value inheritance cases and a mediator trained to resolve family disputes over wills. Her first question to clients, she tells me over Zoom from her elegant study, is now invariably about their place in the birth order and relationships with siblings; she has never forgotten overhearing, as a young barrister, a conversation that sounded like “something out of a Larkin poem” unfolding outside court. “A middle-aged woman turned and said to [the sibling] next to her: ‘Mum never loved you, you know, and those candlesticks aren’t real pewter.’ That really sums it up.”

Perhaps surprisingly, such legal wrangling over legacies is no longer confined to families who would regard themselves as rich. Especially in London and the south-east, the property boom has created a new class of unexpected heirs. “People whose parents or grandparents were working-class Windrush arrivals and council house right-to-buy owners – their descendants are in this net now,” Rich says. “Someone who came over on the Windrush could have a secure blue-collar job and afford a mortgage on what would then have been a run-down house in Brixton or Tottenham.” She has represented clients who grew up in “really unimaginable poverty – broken windows, not enough shoes for all the children to go to school every day”, and yet found themselves in line for seven-figure inheritances.

What commonly brings them into dispute, she says, is that older people who don’t consider themselves rich may not bother making a will. In the absence of one, estates usually pass by default to surviving children or spouses – an arrangement that may suit traditional nuclear families, but not always those broken and remade by migration. “A grandfather who came on the Windrush might well have left siblings and parents in Jamaica; they might even have left children to come and work, then perhaps formed a new relationship. There are perhaps children they barely know who are entitled to inherit in the absence of a will, and someone they’ve lived with, children they’ve had from a long relationship, living in the house, who aren’t.”

Sometimes it’s only in death that the tensions and secrets beneath the surface of family life emerge. Rich has handled several disputes where the existence of a mistress or even a second family with a claim to money emerged posthumously. Another common source of tension, she says, is wealthy men divorcing, then marrying younger women, who outlive them and clash with the children of the first marriage over the inheritance. But perhaps the most painful disputes are between siblings not treated equally in a will – in some cases because parents are trying to compensate for perceived hardship in one child’s life. “Sometimes parents get an idea about their children, even when the children are quite small – who’s the pretty one, who’s the clever one – and then perhaps subconsciously mould their children’s lives to fit that pattern,” Rich says.

Sheila, a 60-year-old retired City dealer and mother of two grown-up children, inherited nothing from her father when he died. There wasn’t much to leave, she says, as she comes from a “very ordinary” family. But her father told her in advance her younger sister would get the family house, because Sheila had a successful career and didn’t need it. When I ask if being cut out was hurtful, she insists it made her proud of being self-reliant. “I feel almost aggressively righteous about not having received a penny from anybody,” she says. “As a child, my sister was always the one who was asking for stuff, she always feels hard done by, and you think: how many of these things should come easily? She had conversations with my dad saying, ‘I have nothing, she’s got everything,’ and he just thought, ‘Well, OK then.’”

Some of her friends think millennial children have it too easy and should give up luxuries rather than rely on their parents. (More than half of boomers still think overspending on things like Netflix and holidays is a key reason young people can’t buy property, according to research published in June by King’s College London.) But Sheila fervently disagrees. “My husband bought his first house in 1975 for about tuppence ha’penny. He and his first wife had very ordinary jobs – she was a manager in a shop – but they bought a three-bedroom semi in London. That would be impossible now,” she says, pointing out that her children’s generation is also burdened with student debt.

When her husband inherited from his father, the couple passed the money directly to their children – but have given their 30-year-old son more help than his older sister. “She’s very ambitious, works hard. We have given money to both of them, but he has received far more. He’s not married – he’d be living with us still if we hadn’t topped up the inheritance money he already had.” She pauses. Though she plans to even things up in her will, her daughter isn’t happy about it: “We have a strained relationship – she says, ‘Oh, he’s always the golden child.’”

Will and his wife are on the other side of a similar family divide. His mother-in-law, a wealthy widow, is generous with presents to each of her three children. Two are high earners, but Will’s wife is not. When their now teenage children were small, Will and his wife were struggling to trade up to a bigger family house and his mother-in-law offered to give them £100,000. His wife’s richer siblings objected, arguing that it was unfair not to do the same for them. “It was really clear that it was important neither my wife nor I ever referred to our relative income – that would have been a red rag to a bull,” Will recalls. “My brother-in-law is earning more in a month than my wife and I are earning in a year, which to us means they don’t need this money – and his response was, ‘You don’t need it either, you don’t have to live in a house that’s worth another £100,000.’”

To avoid ill-feeling, his wife declined the money. But years later, when they were house-hunting again, his mother-in-law quietly repeated the offer – adding that this time she wouldn’t ask the rest of the family. The money will come off his wife’s share of her inheritance, but Will still isn’t sure if the other siblings know about it.

Squabbling over money looks, he admits, a “nice problem to have” – at least there’s something to fight over. But having seen the distress it caused his in-laws, Will has encouraged his own parents to be open about their wishes. “It’s not OK to think about it at some point in the future, because it causes so much grief and misunderstanding.”

If inherited money can be a double-edged sword within families, there is arguably an easy way to relieve people of the burden, and that’s via the taxman. The Treasury is quietly anticipating a hidden windfall from the great wealth transfer, with inheritance tax receipts due to hit £7.8bn by 2027-2028 (up from £2.4bn in 2009). More and more families are being drawn into the net, thanks to the freezing of the tax-free threshold for the last 13 years, at a time of rising property prices. But still, only around 4% of British estates are liable for inheritance tax, and a married couple passing on the main family home can leave up to £1m between them tax-free. Successive governments have embraced the idea that, as David Cameron once promised, “The home that you’ve worked and saved for belongs to you and your family. We’ll help you pass it on.” (The exception was the one led by Theresa May, who nearly lost the 2017 election after suggesting more pensioners should sell their family homes to fund nursing care.) But is there scope for the left to be bolder, using the great wealth transfer to raise cash for progressive ends?

If inheritance is a deeply conservative idea, arguably its most conservative function is to underpin the status quo. Historically it’s always helped the rich make their children rich in turn, consolidating wealth and power within the same tight circle. But family money has also insulated many Britons from what would otherwise have been a more painful middle-class squeeze over the last decade. That ability to live off past glories, creating the illusion of good times still rolling even as real wages flatlined, has arguably kept an artificial lid on pressure for change. “There’s a lot of talk about Generation Rent and how millennials aren’t well off. But there are enough people who are inheriting money, so it doesn’t affect as many people as you think,” Otegha Uwagba says. “When you think about the system of power, who are the gatekeepers, who goes into media and politics – I wonder how many MPs have had to do London renting on a very average salary?”

Yet for all that, the idea of the taxman coming between parent and child remains startlingly unpopular, even among those who might stand to benefit. The Resolution Foundation’s Jack Leslie didn’t ask his focus groups about inheritance tax, reasoning that they weren’t rich enough to be liable for it, but found they were strongly resistant to the idea: “It feels deeply unfair to people – basically, people feel it’s right that they should be able to help their children or their grandchildren.” In October, amid rumours that the chancellor, Jeremy Hunt, might be eyeing up inheritance tax as one way of bailing out the public finances, a YouGov poll found two-thirds of Britons opposed a higher rate, and almost half wanted the entire tax abolished. The parental instinct to protect your own can be fiercer sometimes than reason.

When I ask Isobel if she has a solution to the uncomfortable social divide she describes, she says instantly: “Tax us more!” But it may be a brave politician who takes her up on that in a country where inheritance is increasingly central to middle-class ambitions, or seen as a shield against the slings and arrows to come. Too many lives are shaped by family money, perhaps, to give it up without a fight.

Names have been changed.