<img height="1" width="1" style="display:none" src="https://www.facebook.com/tr?id=6179656805443055&amp;ev=PageView&amp;noscript=1">
BFW Master logo no strap
Contact Us

6 Considerations when Planning for Generational Wealth

Amy Peters
06 December 2021 23 min read

Over the next 30 years, it is predicted that a generational wealth of an estimated £5.5 trillion will be transferred between generations. There is now the expectation that current generations will receive an inheritance of some type in the future, with almost a third looking to receive £50,000 or more in either fixed asset such as property or money.

The need for intergenerational financial planning has never been greater. Baby boomers (those in their 50s and 60s) and the ‘silent generation’ (those aged 70 and over) are particularly important, as they hold the majority of the UK’s wealth.

Unlike previous generations whereby there was very little to pass through in inheritance to families, it is now becoming an expectation amongst those aged 25-45 that there will be property and possibly financial wealth coming their way in the future, and they are using this prospect as part of their future for retirement and mortgage payments.

Whilst an expected inheritance could be on the way at some point, people can also have unrealistic expectations as to what they will actually receive. If parents do not have a Will then nothing is guaranteed, but also there are a number of possible inheritance tax implications to consider that can change over the course of years to come, plus if there is not the correct Estate Planning in place then further implications can impact on how assets and finance are distributed.

Thinking of the future now can ensure that there is an inheritance passed down and that it is done so correctly and family wealth can be transferred as you wish.

The expectation of a future inheritance is there, but is the planning for this in place?

1. Do you have a Will?

So the simplest aspect of all – is there a Will? No Will means an inheritance is not guaranteed – it’s that simple. Without a Will, it will be for the courts to decide what happens to any assets, property and finances.

By making a Will then the basics of an inheritance are covered and wishes met.

2. Property

Passing wealth down through the generations is a sensible move, but can be fraught with difficulty – not least because much of the nation’s wealth is tied up in property. Over-50s own 75% of Britain’s housing wealth, while under-35s account for less than 6%, according to Telegraph, pointing to a huge divide. The younger generation is struggling to get on the housing ladder and start their savings. But valuable wealth of the older population can also lead to huge liabilities in inheritance tax which can vary from circumstance to circumstance.

New call-to-action

3. Gifts

It’s important to have clarity on assets and financial circumstances. Do you wish to gift anything now or in the future? This needs to be considered carefully within the remit of Inheritance Tax. The timing of a gift can be the difference between paying IHT or not in some circumstances.

A gift can be:

• anything that has a value, such as money, property, possessions;
• a loss in value when something’s transferred, for example, if the family home is sold to the child for less than it’s worth, the difference in value counts as a gift. Plus the client could find this causes serious issues if, unfortunately, the child found themselves insolvent or they needed help with care later.

Inheritance tax will be charged if gifts are made in the 7 years before death. The tax is charged on a sliding scale known as ‘tapered relief’ and is a key consideration when making any lifetime gifts.

4. Family involvement

Involve your family in discussions when planning the distribution of your wealth. This will ensure everyone knows what is going on, helps avoid future debates and will encourage other family members to consider their financial future and planning.

5 Too reliant on inheritance?

But with this heavy reliance on generational wealth, there is a growing concern over what the under 45s and the millennials will do with their newfound wealth. Will they know how to handle it, to look after it for their own future generations

6. Effective Estate Planning for successful wealth transfer

If you are looking to make your future more secure for yourselves and the next generation we can help ensure you can do so in the most efficient and effective way for you. From your Will to Property Protection Trusts, to Life Interest trusts and more.

Effective Estate Planning for future wealth transfer is vital to not only ensuring wishes are met but helps ensure wealth is passed on tax efficiently and is distributed in a way that helps add future security to family wealth.

If you wish to make a Will or amend your Will, or you just want to better understand the buy to let inheritance tax implications then just get in touch and we will help. You can email us on hello@beneficialfamilywills.co.uk

Get In Touch

New call-to-action