UK millennials are inheriting more than ever – most aren’t ready

A generation that grew up through the 2008 crash, stagnant wages and a brutal housing market is now starting to receive large sums of money from their parents. Trillions of pounds are already changing hands. But for many millennials, inheriting money has created more confusion than comfort.

The numbers behind the transfer

The scale of what’s happening is hard to overstate. Estimates suggest that between £5.5 trillion and £7 trillion will pass between generations in the UK over the next 30 years. Baby boomers control around £5.1 trillion in assets, roughly 52.5% of the UK’s total wealth, much of it tied up in property, pensions and investment portfolios.

Yet despite the size of this wealth shift, preparation on both sides has been poor. The reality of today is that only a fraction of baby boomers have a formal inheritance plan in place. And a good chunk of younger generations are uncomfortable even discussing wealth transfer with their parents.

That disconnect is a problem. When money arrives without a plan or a conversation behind it, it often gets mismanaged.

Where first-time inheritors go wrong

The most common mistake is acting too quickly. A sudden lump sum can trigger impulsive decisions, whether that’s buying a bigger house, splashing out on a new car or making risky investments without proper research. Financial planners often recommend sitting on an inheritance for at least six to twelve months before making any major moves.

Another frequent issue is ignoring tax. Inheritance tax in the UK is charged at 40% on anything above the £325,000 nil-rate band, though a further £175,000 residence nil-rate band can apply when a main home passes to direct descendants, taking the threshold to £500,000 (or up to £1 million for a surviving spouse). 

Both bands are frozen until April 2031, and from April 2027 most inherited pensions will fall inside the taxable estate too. Many people don’t realise how much of their inheritance could be reduced if the estate wasn’t structured efficiently. Capital gains tax can also come into play later if inherited assets like property or shares are sold at a profit.

Then there’s the confidence gap. A 2025 study by the Investment Association found that almost a third of Gen Z and Millennials aren’t confident managing their current financial situation. Add a complex inheritance into the mix, and it’s easy to see how things can unravel. Many inheritors have never dealt with investment portfolios, trusts or pension drawdowns before, and they don’t know where to start.

Why professional advice matters early on

For someone who’s never managed a six-figure sum before, professional guidance can make a real difference. For a first-time inheritor weighing up what to do, investment management services in the UK are probably the best route to a proper long-term strategy, instead of a quick, impulsive reaction to a windfall. That might mean building a diversified portfolio, managing tax liabilities or simply having someone to talk through options with before committing to anything.

It’s long been known that a majority of wealthy families lose their wealth by the second generation and almost all lose it by the third. Much of that comes down to poor planning and a lack of financial education. Getting advice early won’t guarantee you’ll avoid every pitfall, but it will give you a much better chance of holding onto what you’ve been given.

What millennials actually want from their money

One thing that separates millennial inheritors from previous generations is how they want to invest. EY’s 2025 Global Wealth Research Report found that 49% of UK millennials plan to include digital assets like cryptocurrencies in their portfolios. A third are looking to diversify into alternative investments. And many want their money aligned with their values, favouring ESG-focused funds and sustainable investments.

This shift in priorities means inheritors aren’t just looking for growth. They want portfolios that reflect who they are. That’s a reasonable goal, but it still requires careful planning. Sustainable investing and crypto both carry risks that need to be weighed against long-term financial security.

Don’t let a windfall become a missed opportunity

Inheriting money can be life-changing, but only if it’s handled well. The biggest risk for most millennials isn’t losing the money overnight. It’s making a string of small, uninformed decisions that quietly erode what could have been a solid financial foundation.

If you’ve recently inherited or expect to in the coming years, the single best thing you can do is pause before you act. Get clear on what you owe, what you own and what you want your money to do for you over the next decade and beyond. And if the sums involved are beyond what you’ve managed before, don’t treat that as a reason to wing it. Treat it as a reason to get proper help.

The editorial unit

The value of your investments and the income from them may go down as well as up, and you could get back less than you invested. Past performance should not be seen as an indication of future performance.