Most of us will have heard of the great wealth transfer but its magnitude is quite staggering. Estimates suggest that £5.5 trillion is set to pass through generations over the next 30 years but the financial landscape for millennials is very different than it was for their parents. Demand for early retirement is rising, and mortgages are higher and longer thanks to Generation Rent. As a result, the younger generations are needing more financial support from the bank of mum and dad and it’s a vicious cycle.

Over the next few decades, longer life expectancies mean we will see our ageing population grow larger while we are also seeing more and more blended families and high divorce rates. This in turn makes wealth transfer more complex and means advisers are seeing increasing demand for guidance regarding cross-generational client needs and financial planning.

Record-Breaking IHT Receipts

It is estimated that the Baby Boomer generation controls around 80 per cent of UK private wealth and property is expected to account for 70 per cent of transferred wealth to the next generation. Inheritance tax receipts in 2019-20 totalled £5.2bn – this is the highest figure ever recorded and more than double of those figures recorded just a decade ago (in 2009-2010)

We are also seeing a growing awareness of the importance of financial planning and setting things up for dependents. More people have set up a Will, life cover or other plans to pass down wealth but today’s younger generations also have less financial resilience and security than previous generations.

There are three main goals at play when it comes to navigating the great wealth transfer. The first is to help the older generations maintain the desired level of control over their wealth and how it is transferred. The second is to mitigate inheritance tax as far as possible and focus on capital preservation. The third – and perhaps most important – is to bring the generations together in making decisions.

Choosing your Wealth Transfer Solutions


Many parents or grandparents have traditionally chosen to gift money directly to their children and grandchildren as gifts of any size are IHT free if the donor survives seven years. But this may not always be the most effective route for family wealth preservation. As explained in an article by FT Adviser: “The 7-year rule applies at the point a direct gift is made to remove it from their IHT-assessable estate, but the money now forms part of the recipient’s estate immediately.”

Regular gifts can be a useful way to transfer wealth but this process comes with its own questions. First of all, clients must be absolutely sure that the gift qualifies under the surplus income banner to avoid tax charges. In addition, where clients have more than one dependent, they will likely need to consider their decisions in a wider sense, If, for example, they plan to transfer the title of their home into the name of one of their children, they may wish to make future provisions for their other child/ren in their Will to maintain fairness and minimise the risk of ill feeling.


Trusts are another common route chosen for their tax-efficiency, where families could potentially save hundreds of thousands of pounds. They are also popular for their flexibility – donors can choose when funds are receivable and adopt the desired level of discretion depending on which parameters they choose and why. A popular reason to do so is to risk money being eroded by a younger family member with less understanding or respect for financial matters. As this could be a sensitive topic among families, it’s common for an adviser to step in and keep intergenerational relations peaceful.

Business Protection

For older generations who act as business owners, partners or shareholders, it’s important to consider a succession plan and the different types of business protection insurance available. Factors such as whether your company is a Limited company or an LLP, how much stake you hold and the importance of your role will all influence the type of protection that will prove most valuable.

Wills and Cashflow Planning

A clear and up to date Will is also essential in order to avoid a prolonged probate process. This is especially important for those families where divorce, remarriage and/or stepchildren are involved. Healthy cashflow planning should be another cornerstone of your wealth transfer strategy, as this will help family members to understand key issues, such as how the death of a spouse will impact their cross-generational financial planning journey.

The role of the adviser

There is inevitably a level of disconnect between Baby Boomers and millennials when it comes to the wealth transfer process. Advisers play an essential role in encouraging open, healthy and proactive conversations to help different generations get on the same page. They will prove key in helping families to create an effective intergenerational wealth transfer strategy and facilitating mutual understanding.

Advisers can help the older generations to understand and respect just how important it is for their dependents to be aware of and involved in the planning process. They will also take steps to encourage interest and drive from the younger parties. Financial education, also known as financial wellbeing, is a good way to help individuals to understand the complexities of financial management and the different milestones and hurdles they are likely to face. Understanding both the short- and long-term picture will help them to prepare effectively for the responsibility of handling large sums of cash, savings or investments.

COVID-19 has helped to motivate the conversation as we have all become more aware of our own mortality – and the vulnerability of those closest to us. While it’s not an easy topic to broach, there also needs to be a clear dialogue centred on the fact that planning ahead is essential in order to maximise the success of the wealth transfer. Otherwise, families risk delaying decision-making until the health and/or mental capacity of the older parties starts to decline. Advisers play a crucial role in highlighting this very real risk and helping families make plans before such a time when panic might set in and influence decisions in a direction they may not otherwise have gone.

Minimising Conflict

Many families will inevitably bring their own issues to the table when it comes to money. This often means questions around “fairness” regarding – for example – how much wealth each child should receive if one has their own children and one doesn’t, or one has much more of their own wealth accumulated. Advisers act in a type of mediator role, navigating the process to address important questions and minimise the risk of conflict and misunderstanding.

Our team at TR Wealth offers a unique blend of traditional advisers and modern ideas that is essential for creating a successful, cross-generational financial planning dialogue. Younger generations will typically respond more effectively to advice from those of their own age and we offer a diverse team of advisers to cater across the generations.

Risk Disclaimer:

The information contained within this communication does not constitute financial advice and is provided for general information purposes only. No warranty, whether express or implied is given in relation to such information. Vintage Wealth Management or its associated representative shall not be liable for any technical, editorial, typographical or other errors or omissions within the content of this communication.