Gifting to Grandchildren via Equity Release
At Rockhopper Later Life Finance we help customers aged 55 and over who want to use some of their home’s value to gift to grandchildren during their lifetime. This has become one of the more common reasons our customers consider equity release. Seeing grandchildren benefit from the gift in real time appeals to many grandparents, and for some it is also part of broader estate planning. The decision deserves proper thought about your own retirement security, fairness between family members, and the tax implications.
We work with grandparents who are:
- Helping a first grandchild with a house deposit
- Funding university fees or other education costs for a grandchild
- Helping with a wedding, a car, or another significant life event
- Providing emergency support to a grandchild facing difficulty
- Making equal gifts to multiple grandchildren over time
- Considering gifts as part of broader inheritance tax planning
- Balancing gifts between adult children and grandchildren
Many of our customers tell us that making a gift to grandchildren while they are alive to see it is more meaningful than leaving it in the estate. The financial side sits alongside genuinely human considerations about what kind of legacy you want to leave and when. We take the financial part seriously without losing sight of the family context.
The inheritance tax seven-year rule means that gifts made more than seven years before death fall outside the estate for IHT purposes. Gifts made within three years of death are added back to the estate at their full value. Gifts made between three and seven years before death are added back at tapering rates. The rules are more complex than this summary suggests, including specific exemptions for annual gifts, small gifts, and gifts from surplus income. Before making significant gifts, specialist tax advice is worth taking.
Deprivation of assets in the long-term care context is a separate consideration. Local authorities can look at gifts made in the period before care is needed and treat them as deprivation if they judge the gift was made to reduce care contributions. The rules here are different from the IHT seven-year rule and can extend back further where deprivation is clearly indicated. For customers at or near the age where care funding may be needed, this consideration deserves weight.
Fairness between family members is often as important as the tax analysis. If you are helping one grandchild significantly, other grandchildren may need to know about the plan even if the gifts to them are more modest or at a different time. We encourage family conversations rather than secret gifts, and we are happy to have meetings with family members present if that helps.
Your own retirement security comes first. Before any significant gift, we work through your long-term position to confirm that the retained funds and income will support you through retirement, including potential care costs in later years. If the proposed gift would reduce your position below a comfortable level, we will say so.
The Process
Your first conversation is a relaxed discussion about what you want to do and why. There is no cost or obligation, and we are happy to have family members present if you would find that helpful.
We recommend specialist tax advice alongside our mortgage advice for any significant gift. We complete a full fact-find, research the lifetime mortgage market, and come back to you with a written recommendation.
Every family situation is different. Helping a first grandchild with a house deposit is a different conversation from making equal gifts to multiple grandchildren over several years, and our advice reflects those differences.
Speak to a Later Life Adviser
Call 0203 621 5696
Lines open 9am to 5pm Monday to Friday. Alternatively, complete the enquiry form and we will call you back at a time that suits you.