Are You Prepared for the Great Wealth Transfer?

The Great Wealth transfer will see more wealth passed on to future generations than ever before, and we are already seeing this start to take place with our clients. But how prepared is the future generation – facing the cost-of-living crisis as well as record debt levels – to take on this amount of wealth?

It is estimated that over 80% of UK household wealth is held by the over-45s which, in the next twenty to thirty years, it is estimated that a record £5.5 trillion (globally) is set to be transferred between generations as either inheritance or gifts*. This includes the transfer of £327 billion to 300,000 younger people in the UK in the next decade alone. This has been dubbed as ‘The Great Wealth Transfer’.

The UK’s ‘baby boomer’ generation has more wealth than any other before – the majority of which is held up in property and pensions. The perfect storm of interest rates, property values, and pension reforms has meant that the next generation of beneficiaries are set to inherit more overall wealth than any generation before them.

However, a study by the CFA Institute** found that nearly 4 in 10 millennials cite lack of knowledge as a major hurdle to investing, as well as a lack of savings or income, with a focus on paying off debt instead. As a result, many young beneficiaries may feel like they do not know how or where to start investing.

Family relationships are rarely straightforward; simply handing money to children before they are ready is fraught with potential dangers, and getting beneficiaries to appreciate family wealth and their inheritance has its own difficulties. Furthermore, Inheritance Tax planning is a complex area that requires support and advice, and there are ways to take positive action to share wealth between the generations in a more smooth and easy process.

Including the whole family in financial planning discussions can help demystify investing, and enable long-term, consistent plans for inheritance to be put in place from an early stage. Our advisers at Integrity365 welcome any of our clients to start that conversation and are here to support the journey however we can.

For advise on Inheritance Tax planning and involving your family in your financial plans, please do not hesitate to get in touch with one of our Independent Financial Advisers on 0117 450 1300.

Sources:

* The Great Wealth Transfer Research Paper – Kings Court Trust, 2019
** 7 Myths about Millennials and Investing – CFA Institute, 2018

Read more about IHT and Estate Planning in our downloadable PDF guides:

• Estate Planning Guide 2022
• The Rules of Gifting Guide – Integrity365 2023