Parents in United Kingdom are shifting their wealth and transferring hundreds of billions of pounds to their children's accounts, and United Kingdom has entered a "golden age" of inheritance. Inheritance has a direct impact on the well-being and upward mobility opportunities of young people in the United Kingdom, creating conflict between generations and exacerbating social divisions.
A living legacy
Celebrities in the United Kingdom cannot be considered real celebrities if they have not been in the tabloids. In this way, TV presenter Anne ·Robinson is a literal celebrity, as her household affairs have recently been in various tabloids. She gave her £50 million personal assets as an inheritance, ahead of schedule to her 43-year-old daughter and two teenage grandchildren.
Robinson is still alive and will turn 80 in September. Robinson, who is in a relationship with Queen Camilla's ex-husband, Parker · Bowles, is a legend in the media industry. In 1982, when she attended a banquet at Buckingham Palace in the Mirror, she keenly noticed that Princess Diana was late, so she led editors and reporters to dig up the news that Diana was suffering from an eating disorder, and planned a series of reports that caused a sensation, but Buckingham Palace's criticism of this also made her lose her job. She turned to the field of television, hosting and producing a series of popular programs, the most influential of which is the knowledge contest program "The Weakest Link". Robinson, with his sharp words and sharp eyes, is among the highest-paid people in the United Kingdom television industry.
Stills from "The War of Succession".
It is human nature to leave the family property that you have worked hard to earn all your life to your children and grandchildren. David · Willetts, a politician and president of the Resolution Foundation, a think tank, called inheritance a "noble instinct" that people want to provide for their children. The current inheritance tax laws in the United Kingdom are complex, but most people are clear about two things: first, if the total value of an individual's estate does not exceed £325,000, it is exempt, and the estate tax rate in excess of the exemption amount is 40%. (2) Giving property to children while alive, and if the parents die after 7 years, the gift is not taxed; If the gift dies within 7 years, according to the "7-year decreasing rule", different tax rates will be applied according to the length of time the gift occurs, for example, the gift occurred in 3 years before the death will be taxed at 40%, and the gift occurred within 6~7 years will be taxed at 8%. The gift in the second case is called a "living legacy".
In this way, if Robinson left the family property in the will, her daughter and grandson would be taken by the tax collector for nearly 20 million pounds. Everyone has a love for calves, not to mention that Robinson himself is a beneficiary of the "living legacy". In 1967, she interned at the Daily Mail, becoming the first female intern in the paper's history, and her mother, a successful businessman, rewarded her with an MG sports car. One day, a lawyer friend was in a hurry to catch a train but couldn't get a taxi, so she asked the lawyer to take her own sports car. On the way, the lawyer told her that Brian ·Epstein, the manager of the Beatles, had died suddenly and that he was rushing to deal with the legal matters. Robinson seized the scoop and secured a permanent position at the newspaper.
So, Robinson said, rather than the money going to the tax collector after her death, it would be better to give the property to her daughter and grandson during her lifetime "so that they can enjoy it now." United Kingdom former Chancellor ·of the Exchequer, historian and writer Roy Jenkins (1920~2003), who described the estate tax as a "voluntary tax", meaning that only those who distrust heirs more than they dislike the tax office will pay it. Robinson apparently firmly believes in the goodness of his daughter's humanity and believes that he will live to be at least 87 years old.
Stills from "The War of Succession".
Parents like Robinson are not a minority in United Kingdom, and they are in the midst of a wealth shift. The so-called "great wealth transfer" refers to the fact that the baby boomers (those born in 1946~1964) began to pass on the trillions of wealth they had accumulated to their children and grandchildren. United Kingdom ushered in the first peak of the baby boom in 1947, when 1 million babies were born, and into the 21st century, they began to age, the first born baby is 77 this year, and even the youngest baby boomer is 60 this year. The aging and passing of this generation has ushered United Kingdom into a "golden age" of inheritance.
According to an analysis by Kings Court Trust, a United Kingdom estate management service provider, by 2025, a total of £100 billion of wealth will be transferred to children in the form of trusts, home purchases, traditional forms of inheritance and "living inheritance". That's more than half of the United Kingdom's NHS annual budget.
Baby boomers want to make up for their guilt with their legacy
It's a historical rule that older people are more well-resourced than younger people, but the wealth of baby boomers is also unprecedented in history. They caught up with one of the best eras in history. In the 30 years after the war, United Kingdom had more working people than pensioners, and full employment gave everyone money in their pockets and society amassed a lot of wealth. The biggest luck of the baby boomers is that between 1980 ~ 2020, after they entered middle age, United Kingdom house prices increased by 3 times, even if it is a welfare public housing (council house), in some areas of London may now be worth 7 figures. Last year, data released by property service provider Savills showed that United Kingdom over the age of 65 owned £2.58 trillion of property, while mortgage debt was just £147bn. Many seniors don't have a lot of cash on hand, but a quarter of superannuation households have more than £1 million on paper. Property is their greatest asset.
In the 21st century, "baby boomers" have gradually become synonymous with greed and selfishness, taking on negative connotations. At this time, the baby boomers have entered the age group of 50s, have paid off their mortgages and car loans, and their children have grown up and left home. As empty nesters, they are hedonistic, changing sports cars, buying overseas vacation homes, and traveling around the world, vowing to regain the happiness they missed when raising children. At the beginning of the 21st century, a report by Datamonitor, an information services company, titled the elderly "ski set," concluding that skiers unabashedly intended to spend their legacy to their children and "enjoy the moment as much as possible."
Stills from "The White Lotus Resort".
United Kingdom a 2005 survey of attitudes toward inheritance conducted by the Joseph ·Rowntree Foundation found that two-thirds of potentially wealthy individuals did not make an estate arrangement, and correspondingly, more than half of adults did not expect to receive any money. It was a time when Bill ·Gates declared that he would not leave his wealth to his children, United Kingdom cooking best-selling author Nijra ·Lawson said, "Getting money without working ruins a person," and one cannot understand the value of money and labor without achieving success through personal effort. This view is still embraced today. In June last year, King's College London conducted a survey, and more than half of the baby boomers surveyed believed that young people could not afford to buy a house because they spent too much money on Netflix and vacations, and that millennials were living too easily and that they should quit extravagant spending instead of relying on their parents.
The actions of the older generation have provoked criticism: the baby boomers rightfully enjoy the dividends of the times, but refuse to give the benefits to the next generation, which has suffered from the economic crisis. The highest tone of criticism was none other than David ·, the former Conservative government's minister for universities and science. In 2010, while still in office, Willitz published The Pinch: How the Baby Boomers Stole Their Children's Future–and Why They Should Give It Back, which sparked a heated debate that continues to this day.
In February 2024, the United Kingdom Pensions and Life Savings Association held a meeting in Edinburgh, and members of climate change activists staged a protest outside the venue, criticising the association for using pensions to invest in fossil fuels
Born in 1956, Willitz is part of the Baby Boomer generation, but he believes that the Baby Boomers enjoyed the benefits of postwar economic affluence and youth culture cults, and that they received far more from the state welfare system than they paid for it. Rather, they are "selfish giants" who hoard power and wealth, occupy cultural hegemony and "steal the future of their children" through cultural, demographic and political superiority. Although the state pension is modest (£203 a week), they are driving up house prices to profit – a generation that owns three-quarters of United Kingdom's real estate wealth and enjoys a prosperous old age. In short, "baby boomers have made a huge mistake in protecting the interests of future generations". Willitz wrote.
The economic and social development after the 50s of the 20th century has given people the illusion that one generation will live better and have more material abundance than the next. After the 2008 global financial crisis, the United Kingdom economy fell into recession, inflation disrupted parents' retirement plans, and they were less confident about their children and their own futures, worried about winter heating bills and middle-aged children living in rented apartments. They see that the real estate market today is completely different from when they started a family. Housing expenses accounted for 8% of income in the 60s, millennials (born in 1980~1994) spent 1/4 of their net income, and the down payment on buying a house, baby boomers only needed 3 years to save in the 80s, and millennials needed an average of 19 years; One third of millennials will live for life, with only one-third owning a home, compared to nearly two-thirds of baby boomers in their age group, and those under the age of 35, made up of millennials and Gen Z, own £306 billion of property and £317 billion in loan debt. For this reason, millennials have also been called "the poorest generation in history".
Perhaps in order to correct their mistakes, the Baby Boomers wanted to make up for their mistakes with their legacy, and the "Great Wealth Transfer" was the product of their decisions. Former Prime Minister David David promised · Cameron campaign: "The house you earn from your work, your savings, belong to you and your family." We'll help you pass it on. "He won. Theresa · May nearly lost the 2017 election when she called on pensioners to sell their homes to subsidize nursing costs.
A still from "The Tokyo Family".
What's more, while giving money to others, money also gives you the right to choose, which is the last pleasure in the life of an old person.
A society ruled by heritage
The legacy of the baby boomers has led to a massive redistribution of wealth in human society, transforming millennials from the poorest generation in history to the richest generation in history. Bank of Switzerland, one of the world's largest wealth management companies, released a report: Globally, the number of people who became billionaires through inheritance in 2023 exceeded the number of people who became billionaires through entrepreneurship for the first time, and "inheritance is clearly becoming an increasingly important factor in the process of creating new billionaires."
Of course, the middle class does not have the illusion of inheriting an inheritance and becoming the richest person, they just pragmatically calculate that whether it is a testamentary inheritance or a "living inheritance", it becomes an important financial support for their children. Baby boomer parents have earned the nickname "Bank of Mum and Dad" (BOMAD).
The "Mom and Dad Bank" helps children buy a house or make a down payment in full, pay for their living expenses, provide key internship opportunities, pay off student loans, and even sponsor IVF for their daughter who suffers from infertility. There are also grandparents who pay to send their grandchildren to private schools. The 500-year-old Bolton School advises on its website: "As a grandparent, have you considered investing in your grandchildren's education instead of paying 40% inheritance tax?" This leaves a valuable legacy without having to hand over your life income to the tax collector. ”
Stills from "Downton Garden".
A famous survey by Sutton Trust, a United Kingdom education charity, concluded that a person's background has a greater impact on life success than hard work and excellent grades. According to the survey, there are about 615,000 students enrolled in private schools in the United Kingdom, accounting for 7% of the school-age population; Elite trades, typically journalists, editors, parliamentarians, lawyers and bankers, also make up 7% of the United Kingdom's population. Every key occupation in these elite professions is dominated by private school graduates, with 65 per cent of senior judges, 57 per cent of members of the House of Lords, 61 per cent of doctors, 52 per cent of diplomats with a private school education, and as many as 43 per cent of the 100 most influential journalists are from private schools, nearly half, or much more than 7 per cent.
Tuition fees for private schools, such as the Bolton School's Secondary School, cost £15,000 a year, in addition to laundry, tipping, commuting to and from home and school, attending sports competitions and performances, buying sports equipment and musical instruments, study trips, donating to charities and more. The grandparents give this money for their grandchildren, which is also a transfer of wealth in the family. As a result, best-selling author Otegha ·Uwagba, a descendant of Nigerian immigrants, wrote in her autobiography "We Need to Talk About Money" that she had the opportunity to attend a private secondary school and Oxford University on a full scholarship, entered another social circle, and found that some of her peers' education was funded by their grandparents, and sighed: "The trajectory of your life is determined not only by your parents' money, but also by your grandparents' money – how can I compete with these people?" ”
The "Great Wealth Shift" exacerbated the inequalities felt by Uwagba, creating class divisions and rifts within a generation. The iron law of "inheritance" overwhelms many efforts for social mobility, and perhaps the world will become a society ruled by heritage.
Stills from "Thief Family".
As the King's Court Trust's analysis puts it, there is a "deep and deepening divide" between those who know they have an inheritance to inherit and those who are painfully aware that they are not receiving an intergenerational gift. In 2021, New York magazine argued that the so-called generational conflict between baby boomers and millennials triggered a wealth shift, but it may soon turn into a conflict between rich and not-money young people, and asked a dramatic question: "Will the wealth transfer trigger a millennial civil war?" ”
"Inheritance" is a deep-seated conservative notion whose most basic function is to preserve the status quo and consolidate wealth and power in the same tight circle. Two economists, Gregory Clark, ·a professor at the University of California, Davis, and Dr. Neil Cummins of the London School of Economics · did a study: They tracked 634 rare surnames and looked at the wealth inheritance of these families from the Victorian era to 2012, and found that the children and grandchildren of the wealthy were still much richer than the average person today after five generations, and that the wealth transmission in the wealthy families was both durable and stable.
The correlation between parents' income and children's income in the United Kingdom is highest in developed countries. With the support of your parents' inheritance, the sooner you pay off your student loans, the sooner you can start saving for a down payment on a home; The sooner you buy a house, the sooner the money you would have used to rent a house will start accumulating into assets that you can pass on to your children. And the wealth that a person acquires at a young age has a powerful multiplier effect, which breeds more wealth and even makes them live longer than average. The professions that children are engaged in today were done by their great-great-great-great-grandfathers, and their futures were bought by their parents.