Which generation is the UK’s luckiest financially?

It could be Baby Boomers, who have collectively amassed £5.5bn in assets according to Abrdn.com. Or maybe it’s set to be Millennials as they stand to collect more than £1bn of that wealth in this decade alone.

Intergenerational wealth is a regular hot topic of debate. That won’t change as we approach a General Election, and issues such as getting on the housing ladder and the cost of living continue to make headlines.

But whatever the source of your wealth, you’re entitled to protect it and make it work as hard as possible. Often, that doesn’t mean thinking only of how your loved ones will benefit when you die. It might bring into to play other aspects such as your business interests that you’ve built up over time.

Leaving a legacy can be a legal nightmare. In this article we’ll give you an expert view on how to plan for final financial matters, and ensure that your wealth – and the benefits it brings – lives on.

Under one roof: legacy planning for family

Consider the challenges that you’ve faced, and those which confronted your parents, your extended family and your grandparents. Perhaps you’ve seen your relatives struggling to invest in education, career, business; maybe you’ve even witnessed creditor claims that may have arisen due to the loss of a key family member, because of their premature death.

Now imagine life throwing the same obstacles in the path of your children – but this time the wealth you’ve left behind has been ring-fenced.

Strategic intergenerational wealth planning takes into account your financial assets, including land and property, businesses, stocks and shares, and any beneficial interest you may have in inherited wealth or lifetime settlements made by family members.

Effective planning helps to protect and secure the transfer of economic resources and their benefits from one generation to the next, giving them firm financial ground to make the most of their lives.

Unless wealth is managed carefully and strategically, it can be eroded remarkably quickly – not least by the burden of inheritance tax – meaning financial struggle for future generations.

Property, of course, is a huge factor. It plays a crucial role in intergenerational wealth due to its potential for long-term value appreciation and income generation. According to data, over-50s in the UK hold 78% of privately held housing wealth – and it must eventually find a home somewhere else.

That’s why effective wealth management involves assessing each property’s value, potential for growth and income-generating capabilities. Regular property evaluations and understanding market trends are essential to make informed decisions around property, as part of your overall wealth strategy.

Wealth managers can collaborate with families to ensure smooth property transfers to the next generation. We address legal aspects, minimise taxes and resolve potential disputes. It’s worth establishing structures like family trusts to facilitate the management and control of property assets.

Going concern: leaving behind business assets

Surveys suggest that only around a third (34%) of UK-based business directors already have a succession plan in place.

Business owners have a different layer of challenges – subject to the stage of their business – which must ensure business succession issues are carefully taken into account.

The earlier you begin business succession planning, the better. Leave everything to chance and there could be devastating consequences not just for your loved ones and beneficiaries in general, but for your fellow directors too.

Your options include:

Trust in the process – One of the most regular oversights by company directors is not writing a business trust into their will. To qualify for 100% business property relief, shares of a business intended to be a going concern after a director’s death must pass via the ‘legacy’ clause in the will to a specific beneficiary, as per S39A Inheritance Tax Act 1984. That specific beneficiary should be a trust.

Gift that keeps giving – Consider gifting strategies to share wealth while reducing tax burdens. If you are starting out as a property developer/investor, this would be complemented with a smart company structure involving different share classes where necessary.

Don’t get cross, get cross-option – How will the deceased shareholder’s family and the company’s other shareholders be fairly compensated for their relative stake in the business? This is a complex area, but has a relatively simple, satisfactory and water-tight solution – a cross-option agreement – if you get the right advice.

For sure, business succession planning is a minefield. The main thing to take away is that it’s never too early to plan. Whatever the stage of your business, it’s crucial to take a step back and consider the requirements of the company going forward, should the worst happen.

No matter your situation, successful legacy planning – from intergenerational wealth management to successful business succession planning – requires a blend of disciplines. There’s much to gain from talking to a trusted adviser who can join all the dots, managing diverse elements of your wealth and resources to sustainably maximise your wealth.

You can read more on estate planning and how to leave a legacy, rather than a headache, in this article. And to book a free e-consultation with our expert team, so that we can discuss your specific requirements, contact us.

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