Beyond inheritance: The modern role of grandparents

Many moons ago, just a few months into dating my now wife, a friend made a remark that stopped me in my tracks, questioning whether I had really thought through the long-term financial implications of my choice of girlfriend.

It was not a reflection on her own finances as she was building a successful career as an accountant and doing well in her own right. The concern was much further down the line, and when I pressed him on it, he explained that with her being one of six children meant any future inheritance would simply be divided accordingly.

It is fair to say this had never crossed my mind in my pursuit of love. Unsurprisingly, that same friend remains single today, perhaps a consequence of his rather unconventional criteria for choosing a long-term partner.

Fast forward to the present day and we are approaching our 20th wedding anniversary. We have two children and, overall, life is good and that is even when factoring in the costs that come with modern family life, including a daughter at university and a son soon to begin his own university journey.

Beyond our immediate household, my wife’s family has grown considerably. Each of her siblings now has a family of their own, resulting in 13 grandchildren in total, ranging from six months to 21 years old.

Photo: The Morris family’s annual holiday 

This kind of growth brings joy but also perspective, particularly when considering the financial realities many families face today. The cost of raising children has risen significantly in the last two decades. Housing is expensive, childcare costs remain high, and early career earnings do not always stretch far enough. As a result, grandparents are increasingly playing a more prominent role, not only emotionally but financially as well.

With the estimated parental cost of raising a child to the age of 18 now around £194,246, supporting the 13 grandchildren would equate to more than £2.5 million in today’s terms.

For my mother-in-law and father-in-law, their support has taken many different forms over the years. Until she retired, my mother-in-law was a registered childminder, which, given she had already raised six children of her own, demonstrated remarkable commitment. Naturally, the early grandchildren became part of her childminding group.

This arrangement provided both reassurance and practical benefits, as knowing our children were cared for by family gave us real peace of mind. At the same time, her registered status meant we were able to make use of the government’s childcare voucher scheme, something that would not have been possible otherwise.

Beyond childcare, their support extended to weekends and overnight stays, giving us the opportunity to maintain some semblance of a social life during the early years of parenthood. Having lost my own parents relatively young, this support has carried even greater significance and it is something I will always be grateful for. In many ways, it highlights that the true value of family support goes far beyond the financial considerations my friend alluded to all those years ago.

Although my story is fairly unique being less focused on the financial side, the role of grandparents within family finances has changed significantly in recent years. What was once occasional support has, for many, become a consistent and sometimes essential financial contribution. Rising property prices, higher childcare costs and increased living expenses have placed greater pressure on younger generations, leading to a growing reliance on parental and grandparental support.

Research shows UK grandparents provide £14.6 billion (1) each year to support family costs like childcare, housing and everyday expenses. For many households, this support is not simply helpful but necessary in maintaining financial stability.

While this trend reflects strong family bonds, it also presents an important opportunity from a financial planning perspective. Providing support during one’s lifetime can deliver meaningful benefits, both emotionally and in terms of tax efficiency.

From a practical standpoint, lifetime gifting allows wealth to be directed to where it is most needed. Younger generations (as I can truly appreciate) often face their greatest financial pressures earlier in life, whether that is saving for a deposit, managing childcare costs or coping with fluctuating incomes.

There is also an emotional dimension to consider as many grandparents value the ability to see the positive effects of their support during their lifetime, whether that is helping a child purchase a home or contributing to a grandchild’s education. This approach can strengthen family relationships and offers a sense of purpose that differs from passing on wealth later.

Providing support at this stage can have a meaningful impact, not only improving a family’s financial position when it matters most but also creating space for a better quality of life and more time together. At Equilibrium, we believe there is real value in making gifts during your lifetime, allowing you to see the difference your support makes and understand how it is used. By contrast, passing on wealth later through inheritance, at an unknown point in the future, can often mean support arrives after the most financially demanding years have passed, limiting its value. This can even create tension as beneficiaries reflect on how much more impactful it could have been earlier.

Alongside these benefits, the tax treatment of gifting is a key consideration. Under current UK rules, certain gifts made during an individual’s lifetime fall outside of their estate for inheritance tax purposes, provided specific conditions are met. Most notably, gifts made more than seven years before death are generally exempt from inheritance tax. This makes early planning particularly valuable, as it allows more of an estate to be transferred efficiently over time.

There are also a number of established allowances that can be used each year. Individuals can gift up to £3,000 annually without this forming part of their estate. In addition, smaller gifts and regular payments made from surplus income may also be exempt, provided they are structured correctly and do not affect the donor’s standard of living. These rules can be particularly useful for those looking to fund regular costs such as school fees or ongoing savings for children and grandchildren.

Beyond straightforward gifting, there are a range of structures that can support longer term planning. Junior ISAs, for example, allow funds to grow in a tax efficient environment for the benefit of a child, while pension contributions for grandchildren can create significant long-term value due to the impact of compounding. Trust arrangements may also be appropriate in some cases, offering greater control over how and when funds are accessed, alongside potential tax advantages.

Recent tax changes have also influenced the way individuals approach intergenerational planning. Developments affecting pensions, capital gains tax and other areas have prompted many to reconsider how and when wealth should be passed on. In particular, the potential for pensions to form part of an individual’s taxable estate in the future has led to increased interest in gifting strategies.

Despite these opportunities, any gifting strategy should sit within a wider financial plan, ensuring you retain enough to support your own lifestyle given longer life expectancy and uncertain care costs. A considered, phased approach, backed by regular reviews, helps maintain flexibility and keeps plans aligned with changing circumstances.

Ultimately, the increasing role of grandparents in supporting younger generations reflects both economic realities and evolving attitudes towards wealth. There is a clear shift away from retaining assets until later in life towards a more proactive approach, where wealth is shared earlier to maximise its impact.

The key is balance and at Equilibrium, we help you be generous in a way that is planned, tax efficient and secure, so you can give with confidence without compromising your own future.

(1) Financial Times – May 2026