Should I start gifting money to my loved ones now?

Category: Estate Planning

Thinking about your death is an uncomfortable topic. Combining this with money makes this even worse.

There are three places your assets can go at your death. They can go to your family and friends, charities and other institutions, or the government in the form of taxes.

Almost half of all Baby Boomers say they can afford to gift money during their lifetime, new research shows [1]. The figures, collected by YouGov, suggest 48% of Baby Boomers say they could afford to give money to family members before they die. Less than a third (29%) ruled it out, and 26% say they are unsure.

Of those who say they can afford to make lifetime gifts, 40% say they would favour multiple small gifts and a third (33%) would prefer larger one-off wealth transfers. A further 30% are unsure which would better suit their needs.

Despite the considerable number of people who estimate they can afford to pass some of their savings and assets to family members, government statistics suggest only between 31% to 39% of people aged 50-69 have ever made such a gift. And just a small minority have a plan for regular annual gifting, with just 15% of 50-59-year-olds having gifted in the last two years.

A careful balancing act to figure out

Estimates on the amount of money which will flow down a generation over the next 30 years are at the £5.5 trillion mark [2].  Older generations generation have accrued significant personal wealth and may want to give younger generations a financial boost. In contrast, younger generations often find themselves facing high house prices and the need to save much more to secure a decent retirement.

Gifting between the generations will increasingly become a lifeline for some younger people. It will also become one of the most important aspects of financial planning. Gifting is a fantastic way to help you make the most of your financial assets and enjoy seeing your life savings helping your children and grandchildren.

Despite this, there is still a clear ‘gifting gap’ between the number of people who can afford to gift and those who have a lifetime gifting plan in place. It is vital helping the younger generation does not come at the expense of your standard of living. There is a careful balancing act to figure out if you can afford it. We are well placed to work this out and to consider the various, and vitally important, Inheritance Tax and gifting rules.

Working out who gets what, and when are, generally, personal matters. However, these decisions can have significant financial implications. An effective plan can lessen the likelihood of family conflict, reduce estate costs, reduce taxes, and preserve wealth. It needs to be flexible so it can be adjusted periodically when things change. If you want to have a chat about anything, feel free to book in a free no-obligation chat here or get in touch.

[1] Research commissioned by Quilter and undertaken by YouGov Plc, an independent research agency. All figures, unless otherwise stated, are from YouGov Plc. The total sample size is 1,544 UK adults, comprised of 529 Baby Boomers, 501 Generation Xers and 514 Millennials. Fieldwork was undertaken between 07/07/2020 – 08/07/2020. The survey was carried out online

[2] Passing on the pounds – The rise of the UK’s inheritance economy. Published May 2019. Author: Kings Court Trust

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