Protecting wealth for future generations

It is said that failing to plan is, in fact, planning to fail.  That certainly seems to be the case when it comes to protecting your wealth for future generations.  Nicola Ward, Associate and Financial Planning Manager at Birkett Long IFA, explains:

The following statistics illustrate that many people are not planning ahead to protect family wealth:

  • £4.7 billion was paid in Inheritance Tax in 2015/2016*
  • Almost two thirds of British adults do not have a will**
  • Two thirds of millionaires worry about paying too much tax***
  • 42% of marriages end in divorce*
  • 51% of business owners leave no instructions about company shares in their will****

As many people do not make a will, it is likely that they have not considered the importance of seeking advice on how to protect assets for future generations.  Planning is essential but all too often we see clients who try to address these issues when it is too late, for example as a result of a serious illness.  The following are just some of the areas I highlight to clients who are planning for the future:

  • A will can ensure that assets are kept within the family and passed down through the generations, and can assist with inheritance tax (IHT) planning.
  • A will takes effect when you die, whereas a lasting power of attorney gives you control, by nominating attorney(s), to deal with your wishes in your lifetime should you lose capacity.
  • Trust investments - gifts into trust can potentially help to reduce IHT.
  • Many people do not realise they can utilise annual gift “exemptions” and give away £3,000 (currently) each tax year without it being added to their estate.  Other gift exemptions also exist.
  • Consider your options in regard to the new Residence Nil Rate Band and seek advice on whether existing trusts could be affected.
  • The new pension freedom rules to allow pensions to pass to future generations.
  • Pre-nuptial arrangements, covered elsewhere in this newsletter, can be invaluable, as many do not consider the impact of a divorce on family assets.
  • Business owners should have appropriate agreements in place.  Those who set up a business with family or friends sometimes fail to consider the importance of shareholder agreements as they assume that nothing can go wrong.  Together with appropriate life assurance and critical illness cover, such agreements can safeguard the future of a business.

In summary:

  • Do not assume that your assets will pass to your intended beneficiaries automatically; without a will, they will pass under the laws of intestacy. 
  • Make a will and keep it up to date!  Consider the value of a lasting power of attorney.
  • Review pensions and existing trust arrangements.
  • Annual gift exemption “allowances” can be a very effective way to transfer wealth.
  • Above all, start planning early and obtain expert financial and legal advice.  Many leave it too late to provide a successful route to pass on wealth to the next generation.  Birkett Long IFA and legal teams work together to help clients fulfil their financial goals.

Nicola Ward is based at our Colchester Office and can be contacted on 01206 217309 or email

*Office of National Statistics
**Investec Wealth Survey 2014
*** Coutts Survey 2014
****Legal & General Survey 2017