UK Women Are 45% More Likely to Inherit: Your Guide to Managing the Great Wealth Transfer
The Great Wealth Transfer is Here, and It's Changing Women's Finances Forever
We are at the beginning of the largest transfer of wealth in modern history. As the Baby Boomer generation passes on its assets, trillions of pounds are set to change hands in the UK. But a fascinating and under-reported aspect of this "Great Wealth Transfer" is who is set to benefit most: women.
Recent studies and demographic trends show that women are increasingly becoming the primary inheritors of this wealth, due to a combination of longer life expectancies and societal changes. This presents both a monumental opportunity and a profound responsibility. At Plouta, our mission is to empower you with the knowledge to navigate these pivotal financial moments with confidence. This guide will explore why this trend is happening and provide a clear, step-by-step plan for women who have received, or expect to receive, an inheritance.
What You’ll Learn in This Guide:
The Trend: Why women are at the forefront of the Great Wealth Transfer.
The Opportunity: How an inheritance can help close long-standing financial gaps.
Your 5-Step Plan: The immediate actions to take after receiving an inheritance.
Common Pitfalls: Mistakes to avoid when managing a sudden windfall.
Building a Secure Future: How to make your inheritance last.
The Great Wealth Transfer: Why It's a Women's Story
Several key factors are driving this shift:
Longer Life Expectancy: In the UK, women continue to live longer than men on average. This often means they inherit from a male partner, taking sole control of the couple's combined assets.
Inheriting from Parents: As the main inheritors from their partners, women are also frequently the last surviving beneficiaries of their own parents' estates.
Changing Family Structures: More women are remaining single or are financially independent within their relationships, making them direct inheritors and managers of family wealth.
This trend is placing more wealth into the hands of women than ever before, giving them unprecedented power to shape their own financial futures.
An Opportunity to Close the Gap, A Responsibility to Plan
For many women, an inheritance is not just a windfall; it's a chance to overcome systemic financial disadvantages.
The Gender Pension Gap: Women still retire with significantly smaller pension pots than men, often due to career breaks for caregiving and the gender pay gap. An inheritance can be a crucial tool to supercharge retirement savings.
The Investment Gap: Historically, women have invested less than men. A lump sum provides the capital to start or significantly boost an investment portfolio, allowing women to build long-term wealth.
However, managing a sudden influx of wealth can be overwhelming. Without a clear plan, it's easy to make emotional decisions or fall into common traps. This is where a structured approach becomes vital.
Your 5-Step Plan: What to Do After Receiving an Inheritance
Receiving an inheritance, especially after the loss of a loved one, is an emotional time. The most important first step is to not rush into any decisions.
Step 1: Pause and Give Yourself Time
Your first instinct might be to immediately pay off the mortgage, quit your job, or give large sums to your children. Resist this urge. Give yourself at least six months to a year to grieve, process the change and adjust to your new financial reality before making any significant, irreversible decisions. Park the money in a safe, accessible savings account while you plan.
Step 2: Understand the Tax Situation
Inheritance Tax (IHT): In most cases, the Inheritance Tax (40% on assets above the available thresholds) will have been paid by the executor of the estate before you receive your inheritance. The money you receive is therefore yours.
Future Tax Implications: However, this new capital is now part of your estate and could be subject to IHT upon your own death. It will also generate taxable income (e.g., interest on cash savings) or capital gains (if you invest it).
Step 3: Create a Holistic Financial Plan
An inheritance should not be viewed in isolation. It needs to be integrated into your complete financial picture.
List Your Assets & Liabilities: What do you own, and what do you owe?
Define Your Goals: What do you want to achieve in life? Retire early? Fund your children's education? Start a business? Be specific.
Assess Your Shortfall: How does this inheritance help you bridge the gap between where you are and where you want to be?
Step 4: Build Your Financial "A-Team"
Managing a significant sum of money is not something you have to do alone. This is the time to seek professional, regulated advice.
Financial Adviser: A good adviser will help you create the holistic plan mentioned above, recommend tax-efficient investment strategies (like using your ISA and pension allowances), and act as a crucial sounding board for your ideas.
Solicitor: For estate planning, updating your will, and potentially setting up trusts to manage your new wealth and pass it on tax-efficiently.
Accountant: To help you manage any income tax or capital gains tax liabilities.
Step 5: Allocate the Capital with Purpose
Once you have a clear plan, you can start putting the money to work. A common strategy follows a hierarchy of financial priorities:
Clear High-Interest Debts: Pay off any expensive credit cards or personal loans. The guaranteed "return" you get from saving on interest is unbeatable.
Solidify Your Emergency Fund: Ensure you have 6-12 months of living expenses in an easy-access cash account.
Pay Down Your Mortgage: Consider paying off a chunk of your mortgage to reduce monthly outgoings and provide immense peace of mind.
Maximise Your Pension & ISA Allowances: These are the most powerful tax-efficient vehicles for long-term growth. Use the inheritance to make sure you are using your full £20,000 ISA allowance and £60,000 pension annual allowance each year.
Invest for the Future: Invest the remainder in a diversified portfolio that matches your goals and risk tolerance.
Consider Gifting: If you wish to help children or grandchildren, understand the rules around tax-free gifting and the 7-year rule for larger sums to manage your own IHT liability.
Common Pitfalls to Avoid
Sudden Lifestyle Inflation: Making drastic, unsustainable changes to your spending habits.
Making Emotional Decisions: Gifting large sums or making irreversible investments without a plan.
Becoming a "Family Bank": Being put under pressure to hand out money without considering your own long-term security.
Ignoring Professional Advice: Trying to manage a life-changing sum of money on your own can lead to costly mistakes.
Conclusion: An Opportunity to Shape Your Future
The Great Wealth Transfer is placing unprecedented financial power in the hands of UK women. An inheritance is more than just money; it's an opportunity to close financial gaps, secure your retirement, and build a lasting legacy.
By taking a measured approach, seeking professional guidance, and creating a plan that aligns with your personal values and goals, you can transform this inheritance into a powerful tool for achieving true and lasting financial independence.
Take control of your retirement, starting today.
Use Plouta to track your savings, forecast your retirement and get clear, practical advice tailored to your goals.
Disclaimer: This guide provides general information about inheritance and is for informational and educational purposes only. It does not constitute financial or tax advice. The rules around Inheritance Tax, gifting, and investments are complex and subject to change. Your personal circumstances will significantly affect your financial plan. Always seek professional, regulated financial and legal advice tailored to your specific situation before making any significant financial decisions.