According to recent research commissioned by Sanlam UK, almost two-thirds of 25 to 45 year olds expect to receive an inheritance from parents or grandparents. Of these, almost a third believe they are on course to receive £50,000, with the average anticipated inheritance being  £233,000. Around a third of those expecting a substantial inheritance admit to putting off saving and “living in the now”, and a similar number say they will be reliant on their inheritance for their future financial security. Which ties in with another element of the research which showed that nearly half of those planning to leave an inheritance to the younger generation are concerned about how they will use the money. Another problem for this expectant generation is that people are living longer, and therefore the average age at which people get assistance from their older loved ones is getting later and later, with the most likely age to receive  their inheritance being their mid-sixties. And then there is the small matter of inheritance tax that could take up to 40% off the amount being passed down. This could of course be reduced or avoided by planning in advance, or better still by making gifts in your lifetime, subject of course to affordability.

Inter-generational wealth transfers have always played a part in the long-term financial planning we provide for our clients, and our experience in advising in this area concurs with this research. We are seeing a significant rise in enquiries from our clients about making lifetime gifts. In particular with regards to helping grandchildren now with school or university fees and house deposits, rather than just leaving a legacy on death. However there is often the concern about the affordability of a lifetime  gift. How do you calculate what you will need for the future? Obviously, this can be hard to predict as you don’t know how long you will live and whether you will need to fund care expenses. Another common concern is deciding who you want to receive your wealth. Sometimes the complexity of trying to be fair leads to no action being taken. For example, if your daughter has four grandchildren but your son only one, is it fair to gift each grandchild the same, or should you give each of your children the same, for them to pass down to the grandchildren? Do you want to have a say on how the gift or inheritance is spent or used, or are you happy to provide an outright gift with no conditions attached?

At Wingate we can work out your inheritance tax  position, and  explain the tax implications of lifetime gifts ,on both you and your beneficiaries.  We can help ensure that you use all the different allowances available to minimise inheritance tax, including the use of trusts and inheritance tax efficient investments. In addition through the use of sophisticated cashflow planning tools we can assist you assessing and understanding the affordability of lifetime gifts to help you minimise the risk of adversely impacting your own financial security.

If you are concerned about inheritance tax, considering making a lifetime gift, or  If you would like to discuss any other Financial Planning issues, please do not hesitate to contact me.

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