Inheriting wealth in later life
It’s an unfortunate reality that as we enter our 50s and 60s, elderly parents and relatives start to pass away, leaving behind estates that will be distributed amongst their beneficiaries.
In fact, in the next 20 years 54% of Brits are projected to inherit money from a family member or loved one, but receiving inheritance in later life can be difficult to navigate. [1]
Many individuals in their 50s and 60s have already established financial security, paid off their mortgage and have a comfortable financial plan. So, what do you do if you receive an inheritance in later life?
What to do with your inheritance in your 50s and 60s
For many beneficiaries, inheritance serves practical financial goals. According to this source[2], 1 in 5 plan to pay off their mortgage, 16% will use it to support retirement income and nearly 1 in 5 aim to reduce credit card or personal debt.
But for those in fortunate positions with little to no debt, complete mortgage payments, ample emergency funds and healthy pensions already designed to maintain an ideal retirement, what other options are available for their inherited wealth?
Despite the government’s Capital and Income Tax rises, there are still legitimate ways to mitigate them both for oneself and potentially your beneficiaries.
Protect and invest
First and foremost, it’s worth thinking about how to protect your money. Reducing the increased Inheritance Tax (IHT) liability on your estate is advised and using tax-efficient methods of investing like a Stocks and Shares ISA could be a great starting point. They are a simple way to make your money work harder for you.
You might also want to diversify your investments. Depending on your experience and how comfortable you are with risk, there are plenty of options to explore, from Enterprise Investment Schemes (EIS) to General Investment Accounts (GIA). A financial planner can walk you through the choices and help you find what fits best. Just remember, higher potential returns often come with higher risks, so it’s important to strike the right balance for you.
Spend and enjoy
Brits aged 65 and over are most likely to use their inheritance on a dream holiday[3] – which can be a great way to enjoy the rewards of a lifetime’s hard work. Life is for living, and if you haven’t had the chance to retire early but are starting to slow the pace, a well-earned break from the routine could be the ideal way to spend some of your inheritance.
From April 2027, pensions will become a taxable part of your estate. So if you already have a comfortable pot, you might want to consider spending rather than saving. As always, it’s prudent to speak with your financial planner to ensure your choices align with your long-term goals.
Passing your inheritance on to your children or grandchildren
Succession planning may be a big part of your financial plan, with the option to pass on some of your own inheritance onto your children or grandchildren, whilst also reducing the IHT liability on your own estate.
It’s possible to use a ‘Deed of Variation’ to amend a Will within two years of somebody’s passing to enable you to share your inheritance with your family without incurring a larger tax bill.
Depending on the size of the inheritance you receive, you could make a big difference to the lives of your children or grandchildren to pay for certain milestones in their lives like weddings, property or education.
Gifting
Generally, there’s no issue with IHT if the total value of your gifts to one child doesn’t exceed £250 in a single tax year. The same applies if your total annual gifts stay within the £3,000 allowance. However, it is possible to gift far more than these statutory amounts if the gifts that you make in any one year come from your normal income and do not impact on your standard of life. If this is the case, then the limit for gifting can be substantially more without any IHT liability.
As they say – ‘gifting with a warm hand rather than later with a cold heart’ is more rewarding. Making appropriate gifts now outright or to a Trust may enable you to see the benefit and enjoyment that others receive.
You don’t need to be restricted to family for gifting either, there are many needy causes that could benefit from a philanthropic donation. Ask yourself – would you rather share your money with your nearest and dearest and worthy causes, or it potentially become taxable as part of your estate? A modest donation to a charity close to your heart may make a significant positive impact and can even reduce your income tax bill.
Finally, any larger financial gifts such as a generous Christmas present, will usually be free from IHT if you live for seven years after making the gift. The amount of any gift needs careful consideration and should be affordable, factoring in the different variables that your planner can talk you through.
Inheriting in your 50s and 60s
Every individual’s financial plan is unique, and when it’s well-managed, it can adapt to life’s changes. Receiving an inheritance in your 50s or 60s can be a lifechanging thing, particularly if you’ve already retired early or have a solid retirement strategy in place.
As life expectancy increases, many of us are facing longer retirements and an inheritance can offer valuable flexibility, helping to extend your financial security, support future care needs, or simply enhance your quality of life.
Whether it’s used to boost your retirement savings, invest for the future, or achieve your dreams, what matters most is aligning this new wealth with your broader goals and values. Speaking with a financial planner can help you make informed decisions that balance today’s enjoyment with tomorrow’s peace of mind.
[1] UK inheritance expectations report 2025 – The Level Group – 2025
[2] 90% of people will rely on inheritance to fund later life – LawSure Insurance – 2024
[3] UK inheritance expectations report 2025 – The Level Group – 2025
Important Note
The information contained within this document is subject to the UK regulatory regime and is therefore primarily targeted at consumers based in the UK.
This article is distributed for educational purposes only. This communication does not constitute financial advice. Individuals must not rely on this information to make a financial or investment decision. Before making any decision, we recommend you consult your financial planner to take into account your particular investment objectives, financial situation and individual needs.
The opinions stated in this document are those of the author and do not necessarily represent the view of Progeny and should not be relied upon to make a financial decision.
Information contained herein has been obtained from sources believed to be reliable but is not guaranteed.
Please note
Tax treatment depends upon individual circumstances and is based on current UK tax legislation, that is subject to change at any time.
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