Intergenerational wealth: it’s a family business

The number of families with multiple generations in retirement at the same time could rise in the future with the average life expectancy likely to increase.

This could trigger the need for people to review financial plans for the later stages of life.

Baby boomers hold the majority of the UK’s wealth[1], accumulated through generous final salary pension schemes, the long-term rise in the stock market and the boom in house prices.

Traditionally, wealth has passed from one generation to the next. However, intergenerational wealth management challenges that tradition as there is now a new set of considerations.


One of the most straightforward ways to support family members is to give away assets while you are still alive.

This can be done in a manner to minimise inheritance tax (IHT) for loved ones.

For example, using the various exemptions such as the ‘annual exemption’ allows individuals to give financial gifts, tax-free, to the value of £3,000.

You can also give £250 to any number of people every year, though you can’t combine it with your annual £3,000 gift.

There’s more to be given away tax efficiently using the “Potentially Exempt Transfer” which allows the giving away of all types of assets, including cash, property and shares tax-free, as long as you live for seven years after making the gift.

“People are increasingly passing on their pension pot as part of their legacy, and using other assets for a retirement income.”

According to the King’s Court Trust, £5.5 trillion will move hands in the UK between 2017 and 2055, with this move set to peak in 2035.

People are increasingly passing on their pension pot as part of their legacy, and using other assets for a retirement income.

We know that the ‘Bank of Mum and Dad’ comes to the rescue frequently to help adult children buy property. Recent estimates suggest that 12.5% of the money lent to first-time buyers in 2021 will be from parents[2].

The over 60s are increasingly finding they are also needed as the ‘Bank of Grandma and Grandad’ to help fund childcare costs, school fees or university tuition fees for the younger generation – for their grandchildren.


However, wealthy baby boomers might not want to commit to passing on that wealth to younger members if they still have elderly parents who need financial support.

Much older parents could need help with long term care costs at the very least, which will have an impact on inheritance for younger family members.

It’s crucial to ensure there’s enough money in the pot to support all the family, should you choose to.


Many people might feel worried about having to provide or the prospect of providing financial help to other generations.

Yet help is at hand. Financial planning needs to be a family business. Instead of each generation making their own arrangements, families should consider how to use their combined resources in the best, most tax-efficient way.

Even better, putting in place the right plans at the earliest stage will allow greater opportunity to build wealth over time, and to provide for all loved ones.

Further, a well-structured and tax-efficient estate plan is essential for the smartest way to pass on wealth. An adviser can help formulate a plan that can benefit all the family.




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