Wealth transfer considerations


In this introductory episode on transferring wealth, we touch on main issues families are facing and questions you should start thinking about to help you plan.

When we refer to ‘wealth transfer’, we are referring to wealth cascading from the older generation to the younger generation – weather this is during the lifetime of the older generation or at death.

To give context on wealth being transferred between families
In 2020, £69 billion of wealth changed hands which is expected to go up to stat 1.2trillion in the next 5-10 years

Over 70% of household wealth in the UK is held by the over 50’s and over 70% of the wealth that is expected to be transfer is from property.

Several wealth transfer issues families are facing:

  • Tax efficiency
  • Wills, are they in place?
  • Powers of attorney
  • Making use of gifts and trusts
  • How you want things to progress i.e timing and transitioning of transferring business to the next generation and reflecting this in wills
  • Consider the changes that could be coming, later life planning
  • Considerations on transfer of major wealth to younger generations and impacts

70% of money being transferred from one generation to the next is lost weather it’s from tax or has been eroded.

Questions you should start thinking about:

  • What is your current position? Important you understand this before thinking of anything else, example: shape of assets, pensions, power of attorney, wills etc beneficiaries (listing minorities so the pension planners are aware they exists), share portfolios
  • Where do you want to be?
  • Be aware of tax reliefs, who do you want to benefit?
  • What do you want your legacy to be?
  • What steps do you need to take to get there?
  • What is stopping you from doing it now?

Other exceptions to keep in mind:

  • NIL rate band: each person in the UK has a nil-rate band of £352,000 in which they can pass on assets up to this value without creating an inheritance tax bill
  • Residence nil-rate band: the threshold is currently £175,000 which will mean spouses and civil partners can pass on up to £1 million tax-free
  • Annual gift allowance: each individual can gift up to £3,000 in a tax year
  • Gift consideration of marriage: parents can gift up to £5,000 and grandparents; £2,000
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Related content

Safeguarding your estate for the next generation Making tax free gifts Inheritance tax PDF


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This episode was recorded on 19/07/2021

This S&W The Pulse podcast is of a general nature and is not a substitute for professional advice. No responsibility can be accepted for the consequences of any action taken or refrained from as a result of what is said. The views expressed are not necessarily those of the presenter or of Smith & Williamson or any of its affiliates. No reproduction of this podcast may be made in whole or in part for professional or recreational purposes. No action should be taken based on this podcast and we accept no liability if we change your views on any of the subjects mentioned.

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Podcast information:

The Pulse from Smith & Williamson

Financial Planning Show: Wealth transfer considerations

Episode 9

Broadcast on Smith & Williamson at 09:00, 19th of July 2021

Available online from 10:00 on the same day.

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