How to transfer family wealth through your generations

January 8, 2024

What is intergenerational planning?

Family wealth is growing all the time, inheritance tax is an increasing problem and the need to design a plan for your family has become far more important to save your hard earned wealth from disappearing to not just the taxman, but to other losses such as paying for care fees or divorces within the family.

People are living much longer and healthier lives, in fact, life expectancy globally has increased by more than 6 years between 2000 and 2019 – from 66.8 years in 2000 to 73.4 years in 2019. This has led to families growing with multiple generations. It makes it even more important to plan for what will happen to our wealth when we are no longer around. It isn’t just about who will inherit your assets, it’s also getting educated about what ways family wealth can be lost forever. 40% inheritance tax may have to be paid by your loved ones who will inherit from you. Some may be considering how to pass wealth down to their children and grandchildren whilst they are still alive. Too often this is done in a way that leaves it vulnerable to loss to life events from remarriage to debt. Taking specialist advice is crucial to understand what options you have so that those you love don’t find the taxman, ex-spouses, care homes, creditors (e.g if their businesses fail) taking chunks away never to be seen again.

Intergenerational planning is the process of moving family wealth safely down through generations in a planned way to maximise the help it gives those you care about, avoiding a number of pitfalls to protect against. Everyone wants a secure and solid financial future for not only themselves, but for their children, grandchildren, and other family members. However, the ageing population also needs to make sure they have access to enough of their wealth for their lifetimes too. Few appreciate that there are options that can help to avoid loss of family wealth, especially via inheritance tax (40%), and still retain access themselves.

The difference between intergenerational planning and inheritance planning?

Often when we think of planning for our family when we are no longer here, we think of our finances and how we will pass on inheritance and wealth to other generations. However, intergenerational planning is more than financial planning (tax planning especially), it is all about how you will transfer your legacy in a way where it is protected against life events.

Have you ever wondered about what happens when either you or your parents die? A lot of people worry about that dreaded key-in-the-door moment when a family member is entering their parents' home for the first time after a parent dies. Will you be able to find all the important paperwork you need? That’s why planning and organising your affairs is key; our loved ones need us to help them sort our assets and life administration when we have gone. You really want them to feel you left nothing to chance, that you have thought of everything and not passed on lots of hassle for them to have to deal with when they are suffering the loss of you.

For most people, it’s difficult for them to think of a world where they no longer exist and as a result, many people ‘kick the can down the road’ and put off planning for what will happen when they die. It is crucial to remember we all know our date of birth, but we don’t know our date of death. Death is inevitable, and the problem isn’t going to go away. But by planning ahead and creating peace of mind for not only ourselves but also for our family that you are organised and sorted is the best gift you can give them. This way your family can focus on coping with the loss of you and not the things we never got round to.

Open up the conversation around The Family Elephant

Talking about death and money (The Family Elephant) are largely taboo subjects but crucial conversations that families should be having with children and parents. You might find yourself hesitating to broach the topic with your parents or family members because, let’s be honest, who wants to talk about death?

Virtually all families have an elephant, some are bigger and more difficult than others, but avoiding this crucial conversation can lead to misunderstanding, conflicts, unfulfilled wishes and extra stress.

Through opening up the discussion you can provide clarity to your loved ones about what you have organised, what you still need to get sorted, your plans and your wishes. We find people build in confidence at taking this planning on. They realise it isn’t rocket science, with each step they take building comfort for them, as well as alleviating stress, saving time and giving your family peace of mind.

The impact of rising property prices and inheritance tax

Intergenerational planning is vital for families as they attempt to navigate the complex inheritance tax landscape. The topic of inheritance tax has been one on the agenda for many years, but now more than ever the surge in property prices has significantly impacted the negative impact inheritance tax has on wealth we pass on. Figures from the ONS show that the average house price in the UK rose from £167,716 in January 2013 to £290,000 at the end of January 2023 – an increase of 73%. The rising value of real estate is driving more households over the tax threshold. More need to get specialist advice and not just ignore it. Intergenerational planning can help families develop a plan on how to pass on their wealth without the heartache of IHT having to be paid and no longer being there to provide much needed help and support to those we love.

Plan ahead to ensure you leave a legacy, not a nightmare

Here at The Family Elephant our approach to lifetime wealth and estate planning unites families by confronting the elephant in the room, death, and safeguards future money for future generations; all to ensure that you leave a legacy not a nightmare.

By bringing families together to confront the tricky subject of death and wealth, we ring-fence your family’s future inheritance and protect against the dangers of direct ‘giving’. We do this by applying our bespoke parallel wealth service, shielding the wealth that is available to pass through generations.

With our quick ‘what needs sorting’ quiz you can identify areas of intergenerational planning and personal organisation you need to address to help you navigate the documentation and legal processes required when getting your own affairs in order for your family.

We’re here to provide you and your family with the necessary guidance and support you need right now and in the future – contact a member of our team today.