Generational wealth planning

Jaco70

I was talking to an IFA (about something unrelated) and he said that the largest portion of their work now is generational wealth planning, as so many people are now caught by IHT.

I wondered what this usually involves, especially for 1m to 3m wealth, rather than the super wealthy.

HappyHarry

Spending and gifting mostly.

Triumph13

Trust is the key word.  As in 'Do I trust my kids, or do I need a trust?'

Jaco70

Triumph13 said:

Trust is the key word.  As in 'Do I trust my kids, or do I need a trust?'

Probably not a straightforward question, but what is an example of a trust ?

kempiejon

Ah the getting the horses hitched up to the next bandwagon and of course laying off the trust mis-selling scandal for a decade.

poseidon1

Jaco70 said:

Triumph13 said:

Trust is the key word.  As in 'Do I trust my kids, or do I need a trust?'

Probably not a straightforward question, but what is an example of a trust ?

You  are correct, not a straightforward question.

However in the context of the IFA's comment it could mean anything from simple whole of life policies in 'bare trusts' for children to help pay IHT when due,  all the way up to all singing all dancing discretionary trusts holding  assets for future generations, with a view to taking the assets outside the parents taxable estate entirely (IHT avoidance). 

With future taxation of pension pots on the horizon, IFAs will be dusting off investment bond related trust products as part of  'generational wealth planning' strategies.

Marcon

Jaco70 said:

Triumph13 said:

Trust is the key word.  As in 'Do I trust my kids, or do I need a trust?'

Probably not a straightforward question, but what is an example of a trust ?

Google on 'example of a trust' and you'll get masses of info.

Jaco70

poseidon1 said:

Jaco70 said:

Triumph13 said:

Trust is the key word.  As in 'Do I trust my kids, or do I need a trust?'

Probably not a straightforward question, but what is an example of a trust ?

You  are correct, not a straightforward question.

However in the context of the IFA's comment it could mean anything from simple whole of life policies in 'bare trusts' for children to help pay IHT when due,  all the way up to all singing all dancing discretionary trusts holding  assets for future generations, with a view to taking the assets outside the parents taxable estate entirely (IHT avoidance). 

With future taxation of pension pots on the horizon, IFAs will be dusting off investment bond related trust products as part of  'generational wealth planning' strategies.

Thanks for that, I will do some online research on that.
If there’s a way of holding assets outside estates, it is going to be of interest to loads of families.

dunstonh

I was talking to an IFA (about something unrelated) and he said that the largest portion of their work now is generational wealth planning, as so many people are now caught by IHT.

Tax allowance use and succession/generational wealth planning is probably the main areas for most.

I wondered what this usually involves, especially for 1m to 3m wealth, rather than the super wealthy.

as HH says higher up, you cannot beat gifting and spending.   Use of trusts is complicated and frequently over-used by people who don't need them.

Bostonerimus1

There are significant costs and taxes to set up discretionary trusts and then it will have to pay tax. Gifting to heirs is a good option and if you start well before you expect to die you'll probably avoid a lot of IHT.

Personally I think having DC pension accumulations outside of IHT is bizarre and is probably a hang over from when they didn't exist; when everyone had DB pensions inheritance just wasn't an issue. I'd include DC pensions in the taxable estate, but increase the tax free threshold by maybe 500k so that most estates still avoid IHT. Also some tapering of the tax rate might be good as the 40% cliff edge is a bit brutal.

Jaco70

dunstonh said:

I was talking to an IFA (about something unrelated) and he said that the largest portion of their work now is generational wealth planning, as so many people are now caught by IHT.

Tax allowance use and succession/generational wealth planning is probably the main areas for most.

I wondered what this usually involves, especially for 1m to 3m wealth, rather than the super wealthy.

as HH says higher up, you cannot beat gifting and spending.   Use of trusts is complicated and frequently over-used by people who don't need them.

When you refer to ‘spending’, just to be clear, you are referring to holidays, cars etc? Not appreciating assets like property?