People whose baby boomer parents warned they’d be hit with a ‘big bill’

A warning has been issued to people whose parents are ‘boomers’ about an unwanted bill amid the cost of living crisis. Baby boomers inheriting have been warned to expect big bills as a result of Inheritance Tax (IHT).

Chris Rudden, from investment platform Moneyfarm, said: “The average 35-44 year old has less than £7,000 in savings and is the first generation to be poorer than the one before it. Property prices are generally very high now, particularly in the south, where there are 600,000 properties over £1 million.”

“If you suddenly have £100,000 of IHT to pay and only £20,000 in the bank, it’s not going to get you very far,” he continued. “Many, many properties will have one of these properties, possibly even two, and they would be well over the threshold with other assets.

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“Many of the next generation don’t have the money to pay the tax, so they may have to sell the assets they inherit.” He told the Telegraph: “This will have a negative impact on house prices, both for those selling and those not.

“We saw in 2008 and 2009 what falling house prices can do, especially in the US. Either the Government will change the policy on IHT or people could end up footing the bill for something they can’t afford. We could be looking at an estate fire sale and the next generation is sleepwalking right into it.”

Harry Bell, of wealth managers Charles Stanley, said: “Being an executor is not an easy job and it is very stressful. Often they are the children of the deceased, so they are already in a fragile and difficult position and are constantly reminded that they have lost a loved one.

“To add insult to injury, the IHT bill must be paid within six months and probate usually takes longer than that. This often means the money has to be borrowed at punitive rates to cover the bill. If there is not enough cash in the property, investments and properties will have to be sold to cover the bill. This can be a long process, all while the borrowed funds accrue more punitive interest.”