THERE'S a joke doing the rounds about old Stan on his deathbed who tells his orphaned grandson Joe: "Boy, I want to leave you my farm."
He coughs and splutters and then explains that this inheritance includes a farmhouse, two barns, livestock, the harvest, a tractor, a chisel plough and a million and a half in cash.
Joe can't believe his luck. "Thank you, Granddad!" the teenager says, tearing up with joy. "That's so generous! I didn't even know you had a farm. Where is it?"
The grandfather pulls him close and with his last breath he whispers "Facebook..."
Of course when it comes to real inheritance, things aren't so funny.
If Stan's farm had actually existed in Britain, Joe would be looking at paying HMRC 40 percent inheritance tax on the part of his granddad's estate that was above the government's £425,000 threshold. In other words an eye-watering £630,000 on a modest £2million farmstead.
He would be best advised to speak to an estate planner as quickly as possible to discuss inheritance tax mitigation.
Estate planning is something young people should take as seriously as their parents, because the tectonic plates of inheritance are shifting.
Earlier this year, the Institute for Fiscal Studies suggested that the millennial generation would be increasingly reliant on inheritance for their future wealth. The problem is it seems that fewer families are prepared to leave their offspring anything.
A US report published this month showed that while nearly seven out of ten young Americans expect some sort of inheritance, 60 per cent of their parents aren't planning on even leaving them a dime.
If UK trends follow US ones, and they generally do, this means that the under-35s are going to have to completely re-think their assumptions about how they will fund their retirement.
The research, from the Natixis US Investor Survey, found that most Millennials plan to retire at 59 — six years earlier than the Baby Boomer generation.
The only way that is possible is if they get a hefty inheritance windfall. However the Natixis research found that:
- More than four out of ten Boomers don't have a will
- Nearly sixty per cent don't expect to have any money left to pass on
- More than a third of them plan to spend whatever dosh they have left on themselves
Furthermore, one in four Boomers expect "contributions from their children" to help fund their retirement.
In other words those US Millennials can kiss goodbye to quitting work at 59...and look forward instead to slaving away into their seventies.
Their British equivalents face an equally tough time, largely because of the spectre of inheritance tax and the difficulties the under-35s have in even getting a foot on the housing ladder.
The latest figures reveal that one in four people in their twenties and early thirties in the UK now live with their parents. The number of these 'boomerang children' last year soared to 3.3million — 900,000 more than in 2003.
These figures exclude students who return home during the college holidays.
Many are trapped in the family home because of sky-high house prices and rents.
For the wider age group — 15 to 34 — the number living with parents has gone up from 5.8million in 1996 to 6.5million, which is a tenth of the UK population.
The number of people aged between 25 and 29 who own a home dropped from 55 per cent in 1996 to 30 per cent in 2015.
These two problems, dwindling inheritance expectations and rising property prices, seem like a financial pincer squeezing the younger generation's hopes and dreams.
But they are not insurmountable. Estate planning experts can advise parents about ways they can legitimately mitigate the effects of inheritance tax on their property and savings — and also on the best ways to help their struggling adult children now.
Teressa McDonald, the Head of Legal Services at The Will Associates Limited, says:
"We do find that more and more parents are making cash gifts to help youngsters with their mortgage deposits, given that it is now more difficult to save for a house. It has always happened of course but the need for it now is as great as ever.
"Parents are feeling guilty that they got on the housing ladder with relative ease compared to today's youth. I've known some parents even take out equity release to enable them to assist with deposits — especially where there is more than one child in the family who needs assistance.
"There are also more and more children being forced to stay at home because of a shortage of rental property and the inability to get a deposit together to purchase.
"Parents looking forward to spending quality time together once the kids have flown the nest are suddenly finding that they come back from University and are reluctant to leave again due to financial pressure. Perhaps they think that paying the deposit is worthwhile for a little peace?"
Amen to that.
Garry Bushell, June 2017.