The answer depends on whether you’re likely to need the money yourself.

Before passing inherited wealth to children or grandchildren, it’s important to consider your own circumstances. Do you have enough to support a comfortable lifestyle and pay for everything you’ve planned? How much of a financial cushion do you want to retain?

If you have more money than you’re likely to need, you might decide to pass some on. But that doesn’t necessarily mean giving everything away.

Before considering gifting, start by looking at your own financial position.

You might feel financially secure today but still have several decades of life ahead of you. Inflation, investment performance, changing spending patterns and later-life costs can all affect how much you ultimately need to maintain the lifestyle you want.

Questions to consider include:

• Do you have enough income to afford the life you want to live?
• Do you still have a mortgage or other debts?
• How much do you hold in pensions, investments and cash?
• How much should you put by for unexpected events?
• What about the potential for long-term care later in life?
• How long might your money need to last?

Cashflow modelling can help you find the answers to these questions.

An independent financial planner can plot your desired life and model different ‘what if’ scenarios, such as what might happen if you live into your 90s, spend more during the early years of retirement or face significant later-life costs.

This can help you assess whether you can afford to give this money away today, and how much you could pass on while still feeling confident about your own future.

You might decide to pass some inherited wealth on if your own financial position is secure and the money could make a greater difference to younger family members now.

For example, children or grandchildren might be trying to:

• Buy their first home
• Reduce a mortgage
• Pay education costs
• Start or grow a business
• Meet childcare or other family costs
• Build longer-term financial security

You can also derive real joy from seeing your family enjoy the money during your lifetime rather than leaving everything through your Will.

However, giving money away is generally irreversible. Your circumstances could change, as could those of the person receiving it. So the decision should not be based simply on whether you need the money today.

Yes, potentially. Once you receive an inheritance, those assets generally become part of your own estate. If you already have substantial wealth, keeping a significant inheritance could further increase the value eventually passed on when you die.

For the 2026/27 tax year, the standard Inheritance Tax nil-rate band is £325,000 and the residence nil-rate band is £175,000 where the relevant conditions are met. The government has fixed the current thresholds up to and including the 2030/31 tax year.

That doesn’t mean receiving an inheritance automatically creates an Inheritance Tax liability. Your eventual position will depend on your individual circumstances, including your assets, family situation, available allowances and any gifts you make.

But if you already have more wealth than you’re likely to need, receiving another substantial sum could be a useful prompt to review your estate planning.

Yes. Once you’ve received an inheritance, you can give some or all of it to your children or grandchildren.

If you make the gift after receiving the inheritance, it’s generally treated like any other lifetime gift from you.

There are various IHT exemptions for gifts. For example, the current annual gifting exemption is £3,000, with unused exemption able to be carried forward for one tax year.

Larger outright gifts to individuals can fall under the seven-year rule. If you survive for seven years after making the gift, no Inheritance Tax is normally due on it. Different rules can apply if you die within that period.

But giving money away purely to reduce a possible future tax bill could leave you financially exposed if you later need those assets yourself.

In some circumstances, you might be able to redirect an inheritance rather than receive it first and then give it away.

This is commonly known as a Deed of Variation, although GOV.UK refers more broadly to changing or varying an inheritance after someone has died.

To meet the relevant rules, any changes generally need to be completed within two years of the death. Beneficiaries who will potentially be left worse off by the change must agree.

For example, you might inherit £200,000 from a parent but feel you don’t need the money. Rather than receiving the full amount and later making a gift yourself, you could explore whether some of the inheritance could be redirected to your children.

The tax and legal treatment can differ depending on how the arrangement is structured, so professional advice can be valuable.

Most importantly, a Deed of Variation should not be the starting point. The first question is still whether passing the money on fits with your own long-term financial plan.

Inherited wealth should not be considered in isolation. An independent financial planner will want to understand you and your lifestyle first. What are your goals? What do you have in place that already supports those goals? Only then can they look at it alongside your pensions, investments, property, retirement income, tax position and wider family objectives.

This can help you explore questions such as:

• What does the life I want to live look like?
• How much am I likely to need during my lifetime?
• What happens if I live longer than expected?
• How much financial flexibility should I retain?
• Could I afford to help my children or grandchildren now?
• What effect might keeping or gifting the inheritance have on my estate?
• Would keeping some and passing some on provide a better balance?

Amber River’s Life Landscaping® approach looks beyond the value of the inheritance itself and considers how an inherited lump sum could help you and your family.

Receiving an inheritance gives you choices. You could use it to strengthen your own financial security. You could pass some to children or grandchildren when it might make a significant difference to their lives. Or you could do both.

The important thing is not to make an irreversible decision based purely on tax or on the fact that you don’t need the money immediately. Understanding how much you’re likely to need throughout your own lifetime can give you greater confidence when deciding what you could afford to pass on, and when.

An independent financial planner can help you look at inherited wealth alongside your lifestyle and wider family goals. This can help you understand whether you’re likely to need the money yourself, how much you might be able to pass on, and what the different options could mean for you and your family.

Should I keep my inheritance or give it to my children?

That depends on your own financial position. Before giving money away, consider your retirement income, spending, assets, possible care costs and how much financial flexibility you want to retain. If you have more than you’re likely to need, or your kids have a specific need you want to help them with, you might decide to pass some on.

Can I give inherited money straight to my children?

Yes. Larger gifts can potentially fall within the seven-year rule for Inheritance Tax, so it’s worth considering both the tax implications and your own future financial needs.

Can I give my inheritance to my grandchildren?

Yes. In some circumstances you might be able to redirect inherited assets to them using a Deed of Variation. The most suitable approach will depend on your circumstances.

What is a Deed of Variation?

A Deed of Variation is a way of changing how an inheritance is distributed after someone dies. It can allow a beneficiary to redirect some or all of their inheritance to another person. Changes generally need to be completed within two years of the death.

Does giving away an inheritance avoid Inheritance Tax?

Not automatically. If you receive an inheritance and later give money away, normal gifting rules can apply. The tax outcome will depend on factors including the type and timing of the gift and your individual circumstances.