An estimated £8.5 billion of inheritance wealth is now skipping a generation each year, as older relatives look to help younger family members, according to research from OneFamily.

As a result, despite ONS data showing the age people inherit family wealth is between 55 to 64 years, many younger relatives are benefitting from a financial legacy earlier, helping to rebalance wealth between the older and younger generations.

Overall, £42 billion has skipped a generation over the last five years. £19 billion has been left directly to younger generations while the remaining £23 billion has been passed on by the original beneficiaries, usually their parents.

The research shows that 57% of those aged over 55 who received family wealth since turning 50 are choosing to pass it on to children and grandchildren. This is largely via cash or helping to fund big one-off expenses such as university or getting on the property ladder. 22% passed on inherited wealth to younger relatives specifically in a bid to help them buy their first home.

70% of over 55s feel that the current economic climate means it is much harder for younger generations financially compared to when they were younger and, as a result, 31% say they want their wealth, and that of their parents, to be shared and enjoyed across the family. 47% of over 55s feel responsible for supporting their family financially, while 36% say they are currently conserving their wealth in order to pass it down.

The difference in wealth amongst younger and older people is also causing an increase in ‘living’ inheritances, whereby the wealth is given to loved ones as a gift. 18% over 55s have already given relatives a living inheritance, and a further 15% plan to do the same. The average living inheritance is a substantial £27,000, suggesting it is most likely wealthier families behind this trend. Though the most popular reason for this is the fact that their younger relatives need the money now (55%), other significant factors include wanting to see their contributions in action (53%) and minimising inheritance tax charges (29%).

While some over 55s are using savings or drawing down from pensions, many are keen to use the money tied up in their home. 12% are downsizing, while 6% are unlocking funds through equity release. Gifting family members money is now one of the most popular uses for equity release, with 24% of homeowners aged over 55 saying they would use the equity in their home to help their family.

Nici Audhlam-Gardiner, managing director of lifetime mortgages at OneFamily, said: “Finding ways to spread wealth fairly and evenly across generations is something that’s increasingly important for many families today. We’re also seeing that gifting a living inheritance is a popular way to support younger relatives who need the money now.

“When it comes to thinking about providing a living inheritance, a lifetime mortgage is one of the options available to older homeowners. It allows them to release money from their home and turn it into a cash lump sum to spend on whatever they please. And as it is not a single use product, it can be used in many ways, from helping out families financially to enjoying life’s little luxuries.”