3 important facts to remember when passing your wealth to the next generation


Grandchild enjoys a gift from their grandmother

Passing wealth to your family during your lifetime, or on death, could be a great way to help your loved ones achieve their long-term goals. It can also be immensely rewarding, knowing you’ve helped them on their journey.

Whether this means gifting a deposit toward their first home, or perhaps paying off debts, passing on your wealth could help younger family members gain financial security.

But with no promises or reassurances regarding how your money will be used, you might be apprehensive about passing on your wealth, especially to younger generations with financial values that differ from your own.

Read on to discover three useful methods for passing on wealth in a way that works for you.

As the “great wealth transfer” begins, some baby boomers remain sceptical about how their wealth will be used

The “great wealth transfer” has begun. As baby boomers begin to pass on their accumulated wealth, Barclays predicts that around £5.5 trillion will be transferred between generations over the next 30 years. 

Abrdn recently reported that 90% of Brits plan to pass money on to their family or friends, either during their lifetime or on death.

One question many baby boomers will have, though, is: “How do I know that my wealth will be used responsibly?”

According to Abrdn, one-third of those aged 55 to 73 are reluctant to pass their wealth to someone with different views from theirs. 

While 39% of Generation Z (those aged 16 to 23) prioritise short-term spending over long-term saving, the same is true of just 22% of baby boomers.

These conflicting values could easily lead to conflict. Thankfully, there are several ways in which financial advice could help to solve this problem.

3 simple ways to help avoid intra-family conflict over your wealth

1. Trusts could help you gift your wealth when and how you want to

Trusts are legal arrangements that allow you to set your assets aside for a chosen beneficiary, while appointing a trustee to look after those assets, in line with your wishes.

This makes trusts extremely useful for passing on wealth, ensuring your wishes are understood while you also retain an element of control.

Using trusts within your estate planning allows you to confirm your chosen beneficiary and the exact assets that you intend them to receive.

Crucially, though, you can also set out when they can access those funds, and in some cases, even how the assets can be used. You might want the money to become available at age 18 or ensure that the money is paid as regular income. In the latter case, the beneficiary may never have direct access to the funds, helping to secure a long-term legacy.

You can also stipulate how the trust should be managed. This is particularly useful if, say, you have firm views on how your assets should be invested.

2. Communication is key so be sure to make your wishes known to loved ones

Conversations about money aren’t always easy but being upfront about how you wish your hard-earned money to be spent is vital. 

Take the time to think carefully through your will and any gifting plans you have. Are they up to date? Do they reflect your current priorities and align with your wishes? If so, be sure to discuss them.

Making sure your wishes are known, and explaining your reasoning behind those wishes, could help to avoid stressful disputes further down the line.

The Personal Finance Society (PFS) confirmed in October that will disputes are on the rise. It expects 75% of us to experience a will, inheritance, or probate dispute in our lifetime.

Having difficult conversations now could help to ensure your wishes are known, understood, and respected. Education is important too, so be sure to pass on the financial lessons you have learned. It might just help the younger generation to see things your way.

3. Seeking help from a financial planner could lessen your emotional stress

Planning your estate can be stressful. Contemplating our own mortality is never easy, but worrying about how your family will use your money after you are gone will only add to your concerns.

Speaking with a financial planner can remove a lot of stress and anxiety. At Investment Sense, we can help you to think through your long-term retirement and inheritance plans, making sure the options you choose are right for you.

The decisions you make could have far-reaching consequences, and tax and allowance rules can be complex. We can ensure the choices you make are tax-efficient, meaning that your loved ones won’t be hit by an unexpected Inheritance Tax (IHT) bill. 

Meanwhile, you’ll have peace of mind that your family will be looked after, and in a way that aligns with your wishes. 

Get in touch

If you are looking to plan your estate, we can help you decide on the best way for you to pass on your wealth, so get in touch.

Please email us at info@investmentsense.co.uk or call 0115 933 8433 to find out more.

Please note

This article is for information only. Please do not act based on anything you might read in this article. 

The Financial Conduct Authority does not regulate estate planning, tax planning, trusts or will writing. Levels, bases of and reliefs from taxation may be subject to change and their value depends on the individual circumstances of the investor.