Jasmine Birtles
Your money-making expert. Financial journalist, TV and radio personality.
Home Sweet Inheritance – How Equity Release Can Help You Pass on Wealth to the Next Generation
Moneymagpie Team
14th May 2025
For many older homeowners, the desire to leave something meaningful behind for loved ones is deeply personal.
A home isn’t just a roof over one’s head—it’s often a symbol of life’s hard work, a cherished family space, and a key financial asset.
But what if that same home could help you give a helping hand to your children or grandchildren while you’re still around to see the difference it makes?
In this insightful piece, Bert Hofhuis, founder of BankingTimes, explores how equity release can support a new kind of inheritance—one that begins now, not just after death.
By unlocking wealth stored in property, older homeowners are increasingly choosing to pass on financial gifts, offer support with life milestones, or help future generations get a strong start.
- Rethinking Inheritance: Why Wait?
- Understanding Equity Release as a Tool for Gifting
- Why Equity Release is Increasingly Used for Inheritance Planning
- Common Reasons for Living Inheritance via Equity Release
- Planning for Gifting: Things to Think About
- Potential Impacts on Tax and Benefits
- Flexible Gifting: Equity Release Isn’t All or Nothing
- Wealth Transfer Without Sacrificing Lifestyle
- Conclusion: Giving with Confidence
Rethinking Inheritance: Why Wait?
Traditionally, inheritance happens after death.
But many parents and grandparents are now asking a simple question: Why wait until it’s too late to help?
Today’s financial pressures—such as rising house prices, student loan debt, and the cost of raising children—mean younger generations are often in need of financial support much earlier in life.
For older homeowners who are asset-rich but cash-poor, equity release offers a practical way to share wealth sooner.
This early gifting approach not only provides emotional satisfaction but also allows families to enjoy shared experiences, reduce financial inequality, and watch loved ones thrive.
Understanding Equity Release as a Tool for Gifting
Equity release allows homeowners aged 55+ to access tax-free cash tied up in their home, without needing to sell or move.
The two main types of equity release are:
- Lifetime Mortgages: The most popular option, allowing you to borrow money against your home’s value while retaining ownership. The loan, plus interest, is repaid from your estate later.
- Home Reversion: You sell a portion of your property to a provider in exchange for a lump sum or income while continuing to live in the home rent-free.
These funds can then be passed on to family members as living gifts—helping with a house deposit, education costs, debt relief, or even family holidays.
Why Equity Release is Increasingly Used for Inheritance Planning
Using equity release to give early inheritance has several distinct advantages:
- Immediate support for children or grandchildren when they need it most
- Reduces the size of your taxable estate, potentially lowering inheritance tax liabilities
- Creates opportunities for shared family experiences in your lifetime
- Empowers retirees to manage their wealth on their own terms
Bert Hofhuis observes that “many of today’s retirees are less focused on hoarding wealth and more interested in impacting lives now.
Equity release helps them do just that—securely and confidently.”
Common Reasons for Living Inheritance via Equity Release
Families use equity release funds in various meaningful ways:
- Helping adult children get on the property ladder
- Paying off student debt or funding education
- Supporting a business venture or career change
- Contributing to weddings, home renovations, or major life events
- Medical expenses or private care for family members
- Enjoying time together—such as multigenerational holidays
Whatever the motivation, gifting now often means the help has more immediate value and creates deeper connections.
Planning for Gifting: Things to Think About
While equity release provides flexibility, it’s essential to approach early gifting with a clear plan:
- Be realistic: Only release what you’re comfortable parting with
- Discuss openly with your family: Ensure transparency to avoid future misunderstandings
- Consider future care needs: Make sure you keep enough back for your own wellbeing
- Take financial advice: Professional guidance ensures your decision supports both generosity and stability
Some equity release products allow you to “ring-fence” a portion of your property’s value to ensure there’s something left for other beneficiaries later.
Potential Impacts on Tax and Benefits
While the money released from your home is tax-free, giving it away can have implications:
- Inheritance Tax (IHT): Gifts made seven years before your death are usually free of IHT. Beyond this, taper relief may apply.
- Means-tested benefits: Releasing cash might reduce eligibility for state support
- Deliberate deprivation rules: Intentionally giving away money to claim benefits can be flagged
It’s important to have these conversations with a financial adviser to avoid unexpected surprises.
Flexible Gifting: Equity Release Isn’t All or Nothing
One of the benefits of modern equity release is the ability to release funds in stages.
This way, homeowners can:
- Provide support as needed, instead of one lump sum
- Retain better control over how much is gifted and when
- Reduce the amount of interest built up over time
- Ensure they’re meeting their own financial needs first
This staged approach can form part of a wider family wealth strategy—combining generosity with smart financial management.
Wealth Transfer Without Sacrificing Lifestyle
Older homeowners are understandably cautious about giving too much away too soon.
With equity release, there’s no need to sacrifice your lifestyle in the process.
You can continue living in your home, retain ownership, and still enjoy retirement on your terms.
Many providers now also offer flexible repayment options, allowing borrowers to reduce interest over time or even repay the loan entirely if their circumstances change.
As Bert Hofhuis explains, “The beauty of equity release today lies in its balance—between sharing and safeguarding, between giving and preserving.”
Conclusion: Giving with Confidence
Passing on wealth shouldn’t be about waiting in silence—it can be about joyful, intentional generosity.
Through equity release, homeowners have a unique opportunity to watch their legacy in motion: a child’s first home, a grandchild’s graduation, or the quiet joy of knowing you’ve made life a little easier for the people you love.
With the right guidance and planning, equity release can be a powerful and personal way to turn your home into something more than shelter—it can become a living gift.
Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence.
Subscribe
Login
0 Comments
