The Great Wealth Transfer

Thanks mainly to the high price of property, many more of us either have wealth to pass on – or can expect to receive an inheritance at some point in our lives.

Over the next 30 years, an estimated £5.5 trillion is due to be passed between generations in the UK. Most of the beneficiaries will have little experience of dealing with a sudden influx of potentially life-changing wealth.

As a country, we may be on the verge of the biggest generational wealth transfer in history. According to a recent survey conducted by wealth management company Sanlam, nearly two thirds of 25 to 45-year olds now expect to receive some kind of inheritance in the future. Almost a third may be looking forward to a windfall of £50,000 or more in either fixed assets or money.

For many people, the possibility of receiving this kind of inheritance has become central to their long-term financial plans. In some cases, they are neglecting practical measures, and counting on being left enough to pay off mortgages and retire in comfort.

A cloud in the silver lining

A substantial inheritance could come as a financial lifeline for a generation facing unprecedented financial challenges.  However, although an inheritance may be substantial, it may not be the answer to all the problems they face. In fact, it might create a false sense of security.

We have found that many younger clients have unrealistic expectations of how much they will inherit. In the excitement of receiving a substantial legacy it is all too easy to forget the inheritance tax at 40% for cash sums over £325,000 and the cost of long-term care. Both can eat away at the wealth they will inherit.

Even if young people believe they will inherit money, it may not be enough to let them realise their financial goals.

What’s more, without the right financial grounding, these inheritances can easily be mismanaged. Poor investment choices, fees and the attentions of the taxman can all whittle away a windfall. At Continuum, we know that being prepared for an inheritance is vital – and yet industry figures suggest that most people who expect to inherit don’t have a financial adviser – or any clear idea about the best way to manage the money.

Getting help

Those who receive inheritance or gifts may be in the greatest need of expert advice, and naturally, the Continuum team is ready provide the support and guidance you need. But we believe that things can be better handled with careful estate planning – preparing for the transfer of wealth by inheritance years before it takes place.

Getting a financial adviser involved when you are writing your will can help pinpoint the safest and most tax efficient ways to pass on your wealth to your loved ones.

So, whether you are ready to start thinking about how you will pass on your wealth, or want to plan how you will make the most of a bequest, and use it to help you meet your financial goals, it is best to get expert help.

The Continuum team can provide the expertise you need, and it really is never too early to start thinking about the future. If you – or your children – have financial questions about inheritance and wealth transfer, we can help you to start to get the answers today.

The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to suitable investment strategy, you should seek independent financial advice before embarking on any course of action.

The value of investments can fall as well as rise and you may get back less than you invested.

The Financial Conduct Authority does not regulate estate planning, wills, tax and trust advice.

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