Financial planning transcends generational gaps and can have a huge impact on all members of a family unit. By looking at the bigger picture of your family’s finances, you can achieve far longer- lasting outcomes than by focusing solely on one generation.

In this article we will explore the concept of intergenerational planning and give a few ideas on how this might be applicable to your circumstances.

What is intergenerational planning?

Perhaps the most common form of intergenerational planning is inheritance tax planning.

This is an attempt to minimise the impact of inheritance tax on your estate when it passes to your heirs, and is certainly important, but there are wider considerations than just minimising inheritance tax on death.

Why intergenerational planning?

There has never been a greater divide between the wealth of the older and younger generations in the UK. This is partly due to the costs of rental property, high university tuition fees, the difficulty in saving for house deposits and adding into that, the need to save for retirement.

In contrast, due to generous final salary pensions and big increases in the stock and housing markets over the last 20 years, older people now sit on more than 50% of the UK’s private wealth. As a result, grandparents understandably want to help the younger generations by passing down their wealth.

Additionally, they may wish to do this while they are alive in order to enjoy the effect that their money will have for their grandchildren and family members. Research suggests that there could be as much as £293billion earmarked in the UK for younger generations.

A more complete approach to intergenerational planning would include a much wider range of issues than just inheritance tax planning, including some or all of the following:

For parents:

• Assisting aging parents with their financial decision making
• Discussions on the subject of death and who stands to inherit the parental estate
• Concerns over who looks after the parents if they lose mental capacity
• Funding any required care, whether at home or at a residential facility
• Reviewing existing investments, pensions and other plans to check continuing suitability, especially if a trusted adviser has retired or otherwise been replaced

For children or grandchildren:

• Making sure children are saving enough for their future
• School / university fee planning for children or grandchildren
• Helping the younger generations to buy their first property
• Educating the younger generations on the savings options available to them and making them aware of how much they can expect to generate from a certain level of input
• Providing financial support for younger children in the event of parental death

Common Pitfalls

Modern families are much more complex than they used to be. Blended families due to divorce and remarriage, step-brothers, half-sisters, the list goes on. As a result, there are many pitfalls and traps that are easy to fall into so you need careful planning to ensure that your wealth reaches those that you intended.

If you assume that your wealth will simply pass to those you intended and then it turns out that it won’t because of a divorce or remarriage then the last thing you want to leave as a legacy is a family disagreement and lots of upset!

Where Grosvenor Wealth Management can help

Here at GWM, we have an offer that is almost unique. Not only can your financial adviser sit down with you to create an inheritance plan, but our network of legal contacts will work alongside them to include the use of wills and trusts where necessary.

We can also support you with your tax liabilities if you choose to distribute any of your wealth whilst you are still alive. Additionally, we can help you understand how the process works, clear up any jargon and ensure that you are able to leave the legacy that you want, to those that you intended.

Speak to our team of financial planners to get independent advice on what strategies will work best for you and your family.

PLEASE ALWAYS REMEMBER: Grosvenor Wealth Management Ltd is authorised and regulated by the Financial Conduct Authority. The value of investment can go down as well as up and you may not get back the original amount you invested. Tax treatment is dependent on individual circumstances and may be subject to change. The Financial Conduct Authority do not regulate tax planning, estate planning, wills or trusts.