Estate Planning

Planning for intergenerational wealth

Leaving a financial legacy for children is something many parents are keen to do. But there are a number of practical and emotional considerations to bear in mind. Steve Wright, our Estates Director, takes a look at some of the attitudes to inheritance and intergenerational wealth based on a survey carried out by Progeny last year. Following the announcement that The Fry Group will be acquired by Progeny, we are delighted to be able to share some of their findings in this important area of financial planning.

Having significant assets to pass down through the generations has become much more commonplace given rising UK property prices, a greater proportion of home ownership and strong investment market performance. But how comfortable are families with what’s being referred to as the ‘great wealth transfer’? A recent YouGov survey, designed and commissioned by Progeny, explored some of the attitudes to intergenerational wealth transfer and how people in the UK are planning to leave or pass on wealth to their families.

The survey explored five key areas – intention, communication, emotion, expectation and aspiration – and sought the opinions of three generations of UK residents including Baby Boomers, Generation X and Millennials. The results painted an interesting picture about some of the concerns currently facing these groups, and also highlighted the impact of the cost-of-living crisis which has begun to affect some people’s financial positions. To follow are some of the key conclusions reported.

Attitudes towards inheritance

Reassuringly 60% of those questioned plan to pass on an inheritance to the next generation of their family, but nearly half weren’t quite sure how they might go about it, and a quarter only had a rough idea of details, such as their intended beneficiaries and the amounts involved.

Communication challenges were also a common theme, with the majority of Millennials and Generation X (41%) saying it was ‘uncomfortable’ to discuss inheritance and wealth transfer with their parents. There were some worrying conclusions too, particularly from Baby Boomers; of those who hadn’t already discussed plans with their family, 37% said they don’t ever envisage doing so.

Expectations about inheritance

For those expecting to receive an inheritance, there were some consistent ideas about what the money might be used for. These included growing savings (35%), funding retirement (29%) or paying off a mortgage (25%). But nearly two-fifths of those expecting to receive an inheritance weren’t sure how much they’d be receiving.

Turbulent times

The survey also reported that the cost-of-living crisis is affecting people’s financial goals. The most important short-term concerns included managing regular financial commitments, having adequate cash in case of emergencies and saving enough to enjoy retirement. Longer-term, the focus was on intergenerational wealth transfer with 46% hoping to gift money while they were alive to children or grandchildren and 45% aiming to leave a gift in their Will. Inheritance Tax was also a key concern with 30% feeling apprehensive about how much their children might have to pay.

Key takeaways

Although many people appear to be focused on passing on wealth to the next generation, not enough are taking the right steps to plan ahead. This can be especially problematic given some will be the first generation of their families to leave an inheritance or face issues such as Inheritance Tax.

The survey presents some interesting considerations. At The Fry Group we always suggest that it helps to be open and honest regarding any plans for passing on wealth. Involving your family in your decisions means everyone will be informed and aware of your wishes, ensuring there are no nasty surprises when the time comes. In turn these joined-up, well managed conversations and plans can help ensure any inheritance is handled effectively, safeguarding the opportunity for younger generations to have something to pass on in future.

To discuss any aspect of your financial plans please get in touch with your nearest office.