4 important reasons your client should create an intergenerational wealth plan today

A survey by Bank of America makes for interesting reading. Its research, which was featured in a report by Morningstar, revealed that nearly half (49%) of US parents with £2.4 million or more in investable assets do not feel their children are prepared to inherit their wealth.

While your clients may be keen to pass wealth on to loved ones, they may also be worried that their beneficiaries will not know what to do with the inheritance left to them. Furthermore, they may be worried that younger family members will not use the money or assets passed to them in a responsible way. 

If this is the case, creating an intergenerational wealth plan might help. It could provide your client with greater control over how wealth is passed to beneficiaries and help ensure the latter understand how to make the most of it when they receive it. 

With this in mind, read on to discover four important reasons your clients might want to create an intergenerational wealth plan if they haven’t done so already.

1. Your client can discuss their plans with loved ones

According to Aviva, more than half of over-55s want to pass wealth on while they are still alive, as opposed to via an inheritance when they die. An intergenerational wealth plan provides a roadmap on how best to do this. 

This means that your client can discuss their strategy with beneficiaries, which in turn, allows them to explain how much they intend to give and why. Additionally, your client can explain how they would like their wealth to be used once the loved one receives it. 

This might be particularly important if your client is concerned that the beneficiary will not use the money they receive responsibly. For example, they may be worried the money could be used to buy a luxury car or to fund expensive holidays, instead of being used for a deposit to buy a home. 

Being able to agree how the wealth should be used with the beneficiary could provide your client with peace of mind that their hard-earned wealth will be spent appropriately. 

2. Your clients can prepare their beneficiaries for the inheritance

A key advantage of creating an intergenerational wealth plan is that your clients can take steps to prepare beneficiaries for the wealth they are about to receive. This may be particularly important if your client intends to leave investments to family or friends.

According to an article in the Independent, research suggests that 48% of people would not feel confident about what they need to do if they inherited investments. This means they are more likely to fall foul of common mistakes that beneficiaries make, which could significantly reduce the value of the inheritance over time.

If you or your clients would like to learn more about these common mistakes, please read our informative blog.

One way your client could prepare beneficiaries is to include a financial planner in conversations with them. A planner could make sure beneficiaries understand what is being passed on to them, the options available to them and how to maximise the financial benefits of the gift. 

3. Your client could pass wealth on when beneficiaries need it most

Another advantage of passing wealth to loved ones while your client is still alive is that the beneficiary could receive it at a time when it is more valuable to them. For example, gifting earlier in life means the recipient could still have a young family to support and mortgage to pay.

With this in mind, any wealth passed on to them is likely to be more valuable to the beneficiary, as opposed to receiving it later on when your client dies. Receiving it later on in life means the recipient could have paid their mortgage and no longer has to support their children, which in turn means they may not feel the benefits of the inheritance as much.

4. Your client can ensure their long-term financial security

As an intergenerational wealth plan provides a long-term strategy for passing wealth to beneficiaries while your client is still alive, it can help ensure that any gift made does not put your client’s financial security at risk.

According to Just Group, 60% of parents who give lump sums to adult children do not factor in later-life care. This might mean that parents may not be able to afford care at a care home of their choice, such as one that’s nearer to their family. 

Get in touch 

If you would like to discuss these and other benefits to your client of creating an intergenerational wealth plan, such as potentially reducing their exposure to Inheritance Tax, please contact us. We can be contacted on hello@ardentuk.com or by calling 01904 655 330, and would be happy to discuss it further with you or your client directly.

As an award-winning financial advice company that was a 2022 VouchedFor Top Rated firm, you can be sure that your clients will receive excellent advice and a high quality service.

Please note

This blog is for general information only and does not constitute advice. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change. 

The information is aimed at retail clients only.

The Financial Conduct Authority does not regulate estate planning, tax planning or will writing.

Get in touch

By talking about your current situation and listening to your aims, we create a personalised plan that will put you on a path to achieving your aspirations.

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