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Financial Wellbeing –
Making difficult conversations more simple
Three quarters of people do not think the next generation will be better off, but only 14% regularly discuss money and inheritance with descendants.
It has been 235 years since the famous Ben Franklin quote: “nothing is certain except death and taxes.”
Much time has passed, but I find it fascinating that two of life’s biggest certainties remain taboo subjects.
This is particularly pertinent now…
For the first time in a long time, we are seeing a decline in living standards between generations.
A concerning 74% of respondents in our recent wellbeing survey think the next generation will be the same or worse off financially.
Despite this, only 14% regularly discuss money and inheritance with descendants.
Inflation, interest rates, and the macroeconomic picture create their own inherent problems with the standard of living, but as wealth planners, we know there is lot we can do to help ensure a structured and purposeful passing of wealth from one generation to the next.
How do I pass wealth to my family?
The first step is to decide what sort of legacy you want to leave, and to who.
The best way to ensure this is implemented when you die is to make a will.
You would think that these are simple steps that everyone knows about, but 77% of those aged over 65 we surveyed had no plan in place for passing on their estate after they die.
77% of over 65s
had no plans on passing their estate
Many will know that they can simply pass their estate to their spouse tax-free, but that leaves open the possibility that a widower will then have to, at some point, shoulder the burden of creating a legacy plan by themselves.
The importance of having conversations about inheritance
As Brits, we are naturally averse to talking about money and our survey found a gender divide: 68% of women said they talk to their children or grandchildren about inheritance, but this number was just 54% for men. In a similar vein, 25% of men said they never spoke to children or grandchildren about money or inheritance.
only 68% of women
talk about inheritance
against 54% of men
talk about inheritance
These can feel like difficult or morbid conversations, but in my experience the thought of the conversation is often much worse than the actual experience.
Just as you would explain to a doctor the symptoms of illness, or to an architect your specific plans for a new home, it is important to be clear about your intentions for your estate.
This helps manage expectations among your loved ones and allows for honest two-way conversations that can help your loved ones prepare for the future.
Should I be taking measures to protect against inheritance tax liability?
Inheritance tax (IHT) receipts made the government £6.8 billion between April 2023 to February 2024 – this number is increasing year-by-year.
Most estates in the UK do not pass the threshold to become liable for IHT, but this is a particular concern for those inheriting estates in excess of £325,000 (or in excess of £500,000 if you are also inheriting the home from a parent or grandparent).
Despite this, of the high net-worth-individuals we surveyed, only a quarter (26%) have taken measures to mitigate IHT.
only 26% of people
take measures about IHT
It is very important to seek the right advice about inheritance tax to fully understand your liability.
Four tips for securing your financial legacy
- Seek advice from an expert
- Take the time to understand your finances and inheritance tax liabilities
- Consider your legacy plan; both your will and the steps you want to take to mitigate against inheritance tax
- Discuss your plans with your beneficiaries.
Helping you go further
The good news is that where there are concerns or problems, there are also solutions. We work with our clients to create a long-term financial plan, designed around their specific needs. Our aim is to support and empower them to take ownership of their financial wellbeing.
Take control of your financial wellbeing
Our research has shown that wealth alone does not equal financial wellbeing. Knowing you have an expert to support your journey can give you peace of mind and ensure you are on track to meet your financial goals.
Speak to us to today by completing our enquiry form or calling us on the number below.
Author -
Rachel Wyatt
Wealth Planner
Rachel Wyatt is a Chartered Financial Planner with over 20 years’ experience in the financial services sector. She helps clients prioritise their wants, needs, and goals and then provides wealth planning solutions to make effective use of the assets and resources available to achieve these objectives.
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