February 26, 2025
When people talk about wealth transfer, this is often associated with inheritance and the passing on of assets after death. However, helping your family now, rather than waiting until after your death, can provide immediate benefits and support for your loved ones, and has the potential to reduce your Inheritance Tax (IHT) liabilities.
With the recently announced changes to IHT, potentially bringing pensions into an estate for IHT purposes from April 2027, many people are considering how to pass on that wealth earlier.
At Talis IFA our ‘life first, money second’ approach means that we begin these conversations with an in-depth discussion about what our clients want to achieve beyond the numbers.
What’s the purpose of passing down wealth now, beyond minimising IHT liabilities? To help the next generation to buy a home? Assist with school fees or university costs? To put control of a family business into the hands of the next generation? To support a favourite cause?
Understanding the aims is our first step. While the specific aims are as individual as our clients, here are the top 8 reasons our clients usually give us for wanting to transfer their wealth now:
Transferring wealth to your family now can provide them with financial stability and support, helping with paying off debts, covering educational expenses, or managing medical bills. By providing financial assistance now, you can help alleviate financial burdens, and you get the added bonus of being around to see the positive impact.
One of the most impactful ways to support your family is by investing in their education. By funding tuition fees or contributing to educational savings accounts, you can help your children or grandchildren access quality education, enhancing their future career prospects and contributing to their personal growth and development.
Helping your family with housing and property needs can include providing a deposit for a first home, assisting with mortgage payments, or gifting a property, helping your family to build equity as well as a home for the future.
If your family members have entrepreneurial aspirations, supporting their business ventures can be a valuable way to transfer wealth. Providing capital for a startup, investing in their business, or offering financial advice can help them achieve their business goals and potentially create a lasting legacy.
You might use your wealth to cover the costs of health insurance, fund medical treatments, or contribute to wellness programs.
Incorporating charitable giving into your wealth transfer plan can have a positive impact on both your family and the community. Involving your family in your philanthropic activities can also help to instil the same values of generosity and social responsibility in the next generation. Charitable giving can also provide tax benefits, reducing your overall tax liability and allowing more of your wealth to be used for meaningful causes.
Transferring wealth can have the added benefit of building financial knowledge and skills in the next generation. By teaching your family about budgeting, investing, and financial planning, you can empower them to manage their finances responsibly and make informed financial decisions.
Many people find talking about finances, and particularly what will happen to their wealth after their death, uncomfortable. Actively involving your family in financial planning and decision-making, you can generate more open communication and encourage a healthy attitude towards discussing family finances.
Finally, transferring wealth during your lifetime can be more tax-efficient than waiting until after your death. By making gifts within the exempt allowances, you can reduce the size of your estate and potentially lower the future IHT liability. Consulting with an IFA can help you develop a tax-efficient wealth transfer strategy that aligns with your financial goals.
Transferring wealth during your lifetime offers many benefits for both you and your family. By providing immediate financial support, you can create a lasting and positive impact on your loved ones. Alternatively, following in-depth discussions with our clients, our ‘life first, money second’ ethos sometimes means that we make suggestions, to help you achieve your own life goals. Not every family needs or wants financial support – and a comprehensive financial review could reassure you that your own financial future is secure enough that you can spend a bit more on yourself.
To speak to a Talis IFA about your plans for your wealth, find an IFA here.
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