Prudential, the Lifetime Mortgage Provider, reveals that ‘Pre-heritance’ is the new trend and leaving an inheritance to ‘the kids’ is something that most parents no longer plan to do.

Instead most parents (65%) would help their children financially now or when help is needed and would prefer to give multiple amounts over time instead of one big lump sum. Less than one in five (19%) plan to leave an inheritance after they have died.

Funding gap

‘Kids’, with some as old as 55, say that they need a whopping average of £14,444 over and above what they currently have to help them financially. This varies by age group, as the 25-34s in particular seem to be even more out of pocket: they specified the need for an extra £17,406 on top of what they can afford. However, parents are only prepared to give an average of £5,513 to help their children financially, almost £10,000 less than their kids’ state they would need.

There is a further gap in what ‘children’ (including adults up to 55 years old) say they need money from their parents for, and what parents would be willing to help them out with.

Children ask for help paying off debts (33%) and going on holiday (30%). But parents have different ideas – they are thinking much longer term and are more likely to help out with life events such as weddings or financing grandchildren’s education rather holidays.

However, parents and children’s wishes do come together as they both agree that help to purchase a house tops the list. In particular almost half (46%) of children aged 25-34 name buying a house as their most pressing financial concern over the next few years.

Interestingly, almost two thirds (63%) of parents say that they would prefer to assist their children with multiple payments over a period of time rather than one big lump sum. Financing their childrens’ needs would come from three main sources; savings (67%), investments (24%) and equity built up in their homes where 13% said they would be happy to release this.

Ali Crossley, Pru UK’s director of lifetime mortgages, said: "It is clear that parents are providing more financial help to their children than ever before regardless of the age of the child and I expect this ‘pre-heritance’ to be a trend that continues. For many first-time buyers, a financial boost from parents is the only way to get a foot on the housing ladder and the same is true of many other financial purchases."

"It is interesting to see that parents are looking to a variety of pots from which to draw this financial support – from traditional savings to investments and, significantly 13% would use the equity built up in their homes in order to help their children."

"With two thirds of parents stating that they would prefer to provide multiple amounts of money over time rather than one big lump sum, the equity release drawdown product could be the perfect solution."

Prudential’s lifetime mortgage plan gives people flexibility and control in allowing them to take their money as and when needed rather than in a single lump sum."