It’s time to talk intergenerational wealth planning

By Sue Wakefield, Director at ZEDRA

We often hear about intergenerational wealth planning and the importance of effectively passing wealth down through the generations but how often do we ensure that all family members are aware of these plans?

Making the decision to engage professional help is a step in the right direction towards effective wealth planning and ensures that all factors are discussed and considered.

Families of today come in all shapes and sizes, and modern families are often larger and very different to those 40 or 50 years ago. This makes planning ahead and discussing strategies with everyone even more important.

You may feel uncomfortable talking about money with your family; however this is where the right professional advisor can support you by facilitating family meetings and discussions.

Triggers for discussing family wealth planning

There is no magic formula for involving next generation in wealth transfer conversations and every family is different; involving children or grandchildren in their mid to late twenties is often a time when they want to be trusted and involved in the family finances. But any conversation at whatever age is better than no conversation at all.

As a parent or grandparent, there are usually some key milestones which might be a good time to consider and discuss your plans and address your growing family’s needs. These include:

• The birth of a child or grandchild;
• Starting school or higher education arrangements – perhaps facilitating a private school education;
• Early adulthood firsts such as a first home, vehicle or offering career development support;
• Marriage and protecting wealth in cases where relationships might not last;
• Retirement planning to protect you whilst also allowing family members to access family wealth;
• Later life arrangements to protect your affairs should you lose capability, but also ensure your wishes and later life care preferences are followed.

Discussions involving children and even grandchildren serve so many purposes; they prepare the next generation, they help manage expectations, and they give your loved ones the opportunity to think about their own wealth planning. Talking openly also prevents any nasty surprises further down the line and provides much needed education about wealth and finance to the younger generations.

How can you start a conversation around succession planning?

You can start by thinking about what your aims are for your wealth – establish what’s important to you and how you want your wealth to impact your family. You can then create a long term plan for your family, and involve them in the conversation at this stage. Involving a professional advisor can provide a deeper understanding of all the options available and put those plans into action. You then need to continuously review the actions you have taken to ensure you are making the most of any new allowances or options available, and your actions are aligned with your changing family structure.

The Great Wealth Transfer

We are currently in a period that many experts are calling the biggest wealth transfer period in history due in part to large increases in house prices and the stock market over the last few decades. Ensuring this transfer happens effectively, harmoniously and that wealth is optimised is in no small part due to family’s communicating their plans with each other and involving their loved ones in discussions with their advisors.