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What is a living inheritance and how does it work?

Your Money
Friday 12 February 2021
The practice of leaving your estate to your loved ones dates back to ancient Greek times. Time has moved on, though, and while a traditional inheritance is still the norm, older generations are also looking toward giving a living inheritance.

We’re all living longer and so a living inheritance allows you to see your loved ones enjoy your contributions now, when they may need it. Generally, we all become more financially self-sufficient as time goes on, so often by the time people receive a traditional-style inheritance, they need it less than they would have when they were younger.

What is a living inheritance?

While an inheritance is a gift of money or property from a person after their death, a living inheritance is the act of giving it to loved ones now, while you’re still around.

It recognises that children or grandchildren more often need the money earlier on - to pay for education or a house deposit - rather than later in life when they tend to be more self-sufficient.

It also allows you to help your loved ones build up their own wealth now.

When and how to give a living inheritance

Everyone’s situation is different and it’s likely your loved ones will need help at different times. The first step is to make sure you have provision for your retirement before thinking of others.

Of course, not many people will have a lump sum of money to give out, which is why some homeowners turn to equity release in order to help loved ones with a financial gift.

With equity release, homeowners over 55 could unlock some of the tax-free cash that’s tied up in their property to use in a variety of ways, including passing it on as a living inheritance if you wish.

Making a difference

Instead of missing out on your loved ones enjoying your generosity, with a living inheritance you get to share these precious moments with them.

It might be seeing your children thrive in their dream homes, freeing family members of financial burdens or treating loved ones to the holiday of a lifetime.
In short, you could change their lives.

And you wouldn’t be alone either. More than a quarter of our customers choose to gift some or all of their release to family and friends*.

They’re making a difference, and it’s all through the power of the tax-free cash tied up in their homes.

Where does Key come in?

We know that the decision to release equity is an important one. That’s why, before you go ahead, you need to take advice. It’s a regulatory requirement.

This is where we come in. During your first, free, no-obligation appointment, your fully qualified Key Equity Release adviser will talk you through the process as well as look at your other options. If equity release isn’t right for you, we’ll tell you.

Over the past 20 years, Key has seen thousands of people all with different needs and wants for their future and all with their own unique set of circumstances. Our equity release advice is unique to you, delivered by qualified experts, who will take the time to understand your needs. They’ll search our product range to ensure they recommend the right plan for you.

There’s no pressure to go ahead. Your adviser will give you all the information you need about equity release for you to make an informed decision in your own time.

What should you think about before taking equity release?

Key Equity Release offer lifetime mortgages only, the most popular form of equity release, which is a loan secured against your home. You should always think carefully before securing a loan against your home. Our specialist equity release advisers will discuss your options and explain that equity release will reduce the value of your estate and may affect your entitlement to means-tested benefits.

With a lifetime mortgage you’ll still own your home. It’s a loan secured against your home and is repaid when you, or the last surviving applicant, pass away or move into long-term care.

 The lifetime mortgages we recommend have a no negative equity guarantee. That means you’ll never owe more than the value of your home.

All of our equity release advice relates to our range of Key-branded products and our fixed advice fee of £1,299 is only payable on completion, so you can find out if it’s right for you without it costing you a penny.

*Full year Market Monitor 2020
Page last updated: Tuesday 16 April 2024