Early Inheritance Equity Release: The Ultimate Guide in 2025
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Key Takeaways...
- Equity release can be a viable option for early inheritance, providing immediate access to funds while allowing homeowners to remain in their homes.
- It works by converting a portion of your home's value into cash, which can be passed on to beneficiaries before your death.
- The benefits include immediate cash access and potential tax advantages, while the risks include a potential reduction in your estate's value and possible impacts on benefits eligibility.
- Lifetime mortgages or home reversion plans can serve as alternatives, providing a tax-efficient method to release cash from your property.
- Using it could potentially reduce inheritance tax liabilities, but it is essential to consult with a financial adviser as it may affect other taxes or benefits.
Are you thinking of providing your family with an early inheritance with equity release?
The good news is, you can!
The potential to release home equity has made retirement planning a lot more exciting, providing you with options that may not have existing before.
In This Article, You Will Discover:
Our expert team has done extensive research into the equity release market to keep you in the know.
Therefore...
Modern Inheritance
Revising the concept of inheritance is long overdue, especially now that people, on average, live longer, better, healthier, and more active lives.
Today, you can leave an early inheritance for your kids if you have taken out an equity release plan.
Many people plan to rely on that inheritance to fund their retirement instead of a pension.
Now:
Skipton Building Society did some recent research and found that approximately one in four people do not plan to provide their children with an inheritance.*
*This is for indicative purposes only.
Something new has happened: spending the kid's inheritance (or SKI-ing for short).
More and more retired folks are celebrating the end of their lives and enjoying the various reasons to use equity release.
Passing on a Legacy
This can sound surprising, but if you look a little deeper, SKIers may have passed on a legacy already, in some way or another.
As life gets more expensive, many people choose to gift their loved ones an 'early inheritance'.
This is often in the form of training courses, covering university costs, property deposits, or even weddings.
Simply put…
For those helping their family in different ways than the norm, leaving a legacy is not enough.
People want to see their inheritance being enjoyed while they are still alive.
That is why SKIers use their most significant asset, their property, to help their family with a boost in life.
In addition, you can help your children to start a business or invest in their future. Releasing equity could change their lives.
How does equity release work, and how does it relate to an inheritance in action?
Inheritance in Action with Equity Release
You may have given an early inheritance if:
- You have released equity, either a lifetime mortgage or a home reversion plan.
- You are older than 55.
- In one way or another, you have gifted the money you received to your family.
Note: You can release what you need and then leave the balance in a cash facility, so that you can withdraw it as and when you need.
7 Things to Think About BEFORE Releasing Equity for Early Inheritance
- You have spoken to a financial advisor who thinks it is a good idea for you.
- Your family agrees to obtain an early inheritance.
- You have no other means to help your family.
- You would rather give them money now, than at a later stage.
- Your property value could increase with time, leaving them even more when you pass away. The opposite could also be true.
- Interest will be paid on the money you have given them.
- With some equity release plans, you can guarantee an inheritance. Therefore, you could use the money yourself and still have some income for your family.
Hidden Costs of Early Inheritance: What Equity Release Really Costs
Equity release can seem like a straightforward solution for early inheritance, but it comes with hidden costs that are often overlooked.
Beyond the obvious arrangement fees, interest rates and valuation fees can significantly impact the total amount received.
The compounding interest on lifetime mortgages can erode the value of the estate over time, reducing the inheritance left for future beneficiaries.
Additionally, there may be ongoing costs associated with maintaining the equity release plan. These can include administrative charges or early repayment penalties if the plan is settled early.
Understanding these hidden costs is crucial for anyone considering equity release for early inheritance, as they can affect both the financial outcome and the overall value of the inheritance provided.
Common Questions
How Quickly Can I Obtain Equity Release to Give an Early Inheritance to My Children?
How Does Equity Release Work for Early Inheritance?
How Can I Get Inheritance Early?
Can I Give Inheritance Early in the UK?
Is Equity Release a Good Option for Early Inheritance?
What are the Benefits and Risks of Using Equity Release for Early Inheritance?
Can Equity Release be used as an Alternative to Early Inheritance?
What are the Tax Implications of Using Equity Release for Early Inheritance?
In Conclusion
If you have the means to give your family an early inheritance and see them flourish because of it, now you can.
You can change their lives now, rather than waiting until you pass away.
However, you must be aware of the equity release pitfalls before making your final decision to give anyone an early inheritance with equity release.