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What Is Intergenerational Wealth Planning?
We all dream of giving our children the best possible start in life, and a strong financial foundation is key to that. But inheritance alone isn’t enough. Trusts, taxes, investments, and more can have a huge impact on your family’s financial future, so it’s important to go beyond inheritance and create a fully comprehensive plan for your family’s wealth. This is where intergenerational wealth planning comes in.
Intergenerational wealth planning is a way of managing your family’s finances with both the present and future in mind. More than just passing down an inheritance, it’s a comprehensive strategy to make sure financial security, stability, and family values are preserved across generations.
The financial advisers at Lester Brunt have guided hundreds of families through the intergenerational wealth planning process, and we understand just how important it is to secure a lasting legacy for future generations. In the guide below, we’ll explore who can benefit from this approach, what it involves, its key advantages, and how you can begin creating your own plan.
Who Needs Intergenerational Wealth Planning?
When you hear the term “wealth planning,” it’s easy to think that it’s something solely for the super-rich. But that’s not the case. Anyone who wants to make sure their assets are passed down in a way that reflects their values and goals can benefit from intergenerational wealth planning, including:
- Parents who want to secure their children’s and grandchildren’s financial future and protect their assets from potential risks like debt or divorce.
- Business owners who want to preserve their successful businesses and make sure their legacy is carried on by future generations.
- High-net-worth individuals seeking to minimise taxes, safeguard their wealth, and pass it on to their heirs.
- Individuals with blended families, trusts, or other complex financial situations.
What Does Intergenerational Wealth Planning Include?
Intergenerational wealth planning is a broad field with many different approaches. While not all strategies will apply to everyone, here’s a general overview of what’s covered:
Estate Planning
Estate planning is the process of organising your assets and liabilities so that your wishes are carried out after you die or become incapacitated. It involves creating a plan for the distribution of your property, naming guardians for minor children, and appointing an executor to manage your estate.
Inheritance Tax Planning
Inheritance tax planning aims to maximise the amount of your estate that goes to your loved ones, instead of to HMRC. It also helps you keep control over your assets and how they’re distributed.
Investment Planning
Investment planning is about building a diversified portfolio that matches your long-term financial goals and risk tolerance. It also takes into account the needs of future generations.
Trust Planning
Setting up a trust can be a good way to reduce inheritance tax and pass on wealth to future generations. You could create a trust for a child or grandchild so they’ll receive money when they reach a certain age, or you could use a trust to support a family member with a disability.
Gifts and Gifting
If your estate becomes liable for inheritance tax when you pass away, a significant portion of your wealth could be lost to taxes. This might lead to the forced sale of your home, investments, or even family heirlooms. One way to reduce this risk is by gifting assets during your lifetime. While there’s no limit on how much you can gift, you generally need to live for at least seven years after making the gift to avoid any tax implications.
Later Life and Long-Term Care Planning
People are living longer than ever, and with this increased life expectancy comes a range of financial implications, including the potential need for long-term care. Later life and long-term care planning can help you prepare for these costs without depleting your savings.
Risk Management
Risk management is about identifying and addressing potential threats to your wealth, such as market downturns, economic instability, or natural disasters. It can involve strategies like purchasing insurance, diversifying your investments, and creating contingency plans to safeguard your financial future.
Helping Loved Ones Onto the Property Ladder
It’s getting harder for young people to step onto the property ladder, with many facing the reality of long-term renting. As a result, more parents and grandparents are stepping in to help their children achieve homeownership. Planning this support carefully lets you align your financial goals and risk tolerance with your loved one, while also minimising unnecessary expenses and avoiding legal complications.
Family Discussions
Intergenerational wealth planning requires open and honest discussions with your family about your financial goals, values, and expectations. These conversations make sure everyone is on the same page and understands the importance of preparing for the future together.
Professional Advice
The process can be confusing, so it’s best to seek advice from a qualified financial adviser who specialises in intergenerational wealth planning. They can help you develop a customised plan that meets your specific needs, goals, and preferences.
What Are the Benefits of Intergenerational Wealth Planning?
Intergenerational wealth planning comes with a variety of benefits for both you and future generations. For example:
- By strategically planning wealth transfers and using tools like trusts and gifting, you can help reduce estate taxes and preserve more assets for your heirs.
- Planning helps protect your wealth from potential risks like creditors, divorce, and other threats, making sure your family’s financial legacy lasts.
- Planning can provide resources for educational expenses and support your loved ones in achieving their financial goals.
- For families with businesses, it can ensure a smooth transition of ownership across generations.
- Open discussions about finances can strengthen family bonds, encourage communication, and align everyone’s financial goals and values.
- A well-structured estate plan can streamline the probate process, reducing stress and costs for heirs, and clear instructions can help avoid disputes among beneficiaries.
In short, proactive planning helps protect your wealth, support your family’s future, and create a lasting legacy.
Protect Your Legacy with Lester Brunt’s Expert Guidance
Ready to safeguard your family’s financial future? Lester Brunt’s experts have been helping families in the South plan for over 25 years, and we’re here to do the same for you.
Our advisers will work with you to create a personalised financial plan that covers everything from protecting your assets to minimising tax spending. Whether you’re looking to help your children buy a home, invest for their future, or understand the importance of estate planning, we’re here to guide you every step of the way.
Book a no-obligation consultation online or call us on 01202 695 801 today!
The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select, and the value can therefore go down as well as up. You may get back less than you invested.
The levels and bases of taxation, and reliefs from taxation, can change at any time and are generally dependent on individual circumstances.
Advice relating to Trusts/Wills/LPAs necessitate the referral to a service that is separate and distinct to those offered by St. James’s Place. Trusts/Wills/LPAs are not regulated by the Financial Conduct Authority.
Written By Michael Lester
Financial Adviser
Lester Brunt Wealth Management
Lester Brunt Wealth Management is a trading name of Lester Brunt Wealth Management Ltd