There are many ways advisers can ensure that older generations can help their younger family members. This can begin with ensuring wills and powers of attorney documents are in place.
Gallacher adds that advisers can recommend investment bonds and pensions to enable their wealthy clients to pass on their fortune in a tax-efficient way. By placing an investment bond in trust, clients can ensure that the assets are protected from inheritance tax and pass to their beneficiaries outside of their estate.
This method also allows parents to shelter investment income and growth from higher and additional rates of tax.
Preserving wealth across generations
Gallacher says that as long as the children or grandchildren are not higher-rate taxpayers, then there should be an opportunity for them to make withdrawals with little to no tax payable.
Similarly, he adds that pensions can also be used to help clients provide for their families. He says advisers can recommend schemes such as a self-Invested personal pension, which allows clients to nominate their children or grandchildren as beneficiaries and as a result permits them to receive a tax-free lump sum on the client’s death.
“Overall, investment bonds and pensions can be valuable tools for advisers in helping clients transfer wealth to their families in a tax-efficient manner,” Gallacher says.
“By recommending these products and advising clients on the most effective strategies for their specific needs, advisers can help their clients achieve their financial goals and preserve their wealth across generations.”
Even if an advisory company is proactive in trying to win the business of multiple generations of the same family, then one of the biggest challenges they will face is overcoming the stigma of families openly discussing inheritance.
Interestingly, Progeny’s recent research found that 41 per cent of millennials and Generation Xers found it “uncomfortable” to discuss inheritance and wealth transfer with their parents.
Commenting on the poll, which quizzed 1,004 Britons in August 2022, Ross says: “Advisers are key to breaking the taboo around discussing inheritance and passing on wealth, and by promoting intergenerational wealth planning as a responsibility for both generations to share — those who are giving and those who are receiving — they can help deliver clarity and peace of mind for both parties.”
Gemma Siddle, chartered financial planner for Newton Aycliffe-based Eldon Financial Planning, says it is especially important to have these difficult conversations to ensure that a client’s loved ones are fully aware of their intentions.
