James Coney  

What did the rich ever do for us?

James Coney

James Coney

The rich are different from you and me, as novelist F Scott Fitzgerald once said. He wasn’t talking about the way they deal with their wealth, but he may have well have been. 

Rich families have learned over the years how to pass down their assets through the generations (perhaps it is taught when they learn which knife to use to butter their bread, or how to tie a cravat). The rest of us, in the middle classes, are very poor at it indeed.

A recent report by asset managers Sanlam found there are 5.1 million people aged between 25 and 45 who are likely to inherit about £233,000 each over the next three decades. That’s £1.2trn. So much for moaning millennials. More like the lucky generation.

What a perfect example of income redistribution. Though I am sure any Corbynistas reading this would disagree.

Only, of course, they will not actually get all this money. It will be mostly eaten up by taxes.

Because what Sanlam does not get into is how and when millennials are going to get this money. And inheritance is changing – it is now not coming until much later in life.

Many will get an inheritance only when they hit their 60s – that is too late to buy a first home and too late to help put the next generation of children through school and university.

Part of the problem is that though we’re living longer, we’re not necessarily living better. Families are worried that they will have decades of care fees to pay for.

Ironically, while much of the intergenerational angst about wealth comes from resentment of those with a final salary pension, children of the baby boomers may well be thankful for their parents' luck. In many cases it should be enough to cover a substantial part of care fees for their father and their mother – that is like someone else covering the bill for you.

It is perfectly understandable to take precautions for your later years. But with the huge increase in asset prices this generation have enjoyed over the past three decades – particularly on property – it is also time for the middle classes to start behaving a bit more like the rich.

They need to get into the habit of passing down wealth earlier. It is not just sensible: it is tax efficient. It needs to become part of the national debate about personal finance. 

Why has it become so politically toxic to want to, say, give away money to your children to help them do better, when giving away money to put your parents in a good care home is not? It is the same intergenerational redistribution of income.