Planning, talking, and protecting more of your legacy from tax and disputes
Death and money are two of life’s unavoidable realities, yet they remain subjects many of us hesitate to discuss. This reluctance often extends to inheritance, a topic filled with discomfort for many families. The consequence of this silence is significant, as an increasing number of estates are affected by Inheritance Tax (IHT), and disputes over Wills are becoming more common in UK courts.
Learning how to discuss succession planning is no longer just wise; it is essential. Recent research highlights a significant communication gap between generations[1]. It shows that 36% of Generation X (those born between 1965 and 1980) are unaware of their parents’ inheritance plans. Additionally, 23% say their parents have never discussed the topic with them at all. Although the issue is slightly less severe for Millennials, with 27% in the dark, it indicates a widespread problem.
The challenge isn’t just about conversation; it’s also about preparation. When older generations were asked about the potential IHT bill on their estate, only 52% had any idea. The remaining half was completely unaware of their potential liability.
Risk of not having a Will
Alarmingly, research shows that 21% of Baby Boomers (those born between 1946 to 1964) do not have a Will. By not creating one, they are effectively leaving the control of their assets to the legal system. The rules of intestacy, which apply when someone dies without a will, are strict and may not distribute assets as you would expect or prefer. A spouse or children might not inherit in the way you had intended.
Making a Will is the only sure way to decide where your home, savings, and belongings go after you die. For some families, silence over inheritance may not come from avoidance, but simply because no plans have been made.
Great wealth transfer is underway
Regardless of the reason, families need to find ways to plan for and discuss succession. Currently, a significant intergenerational wealth transfer is taking place. Baby Boomers, the wealthiest generation in history, hold over £2.5 trillion in property wealth alone, according to the analysis. Over the next twenty years, an estimated £5.5 trillion will pass to younger generations in the UK.
The risk is that these assets are transferred in a disorganised manner. Heirs may be unprepared for what they receive; IHT liabilities could be unnecessarily high, and the next generation may lack the knowledge to manage their inheritance. With some estimates suggesting half of UK millennials are considering investing in volatile assets like cryptocurrency, the need for sound financial advice has never been greater.
Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment, and you are unlikely to be protected if something goes wrong.
Rising stakes and growing disputes
A widening wealth gap between generations complicates this financial transition. Median wealth for those in their 60s is 55% higher in real terms than it was for the same age group in 2006 to 2008, while for those in their 30s, it has decreased by 34%. This indicates that younger people are increasingly dependent on inheritance to reach financial milestones such as buying a home or retiring comfortably.
With so much at stake, IHT disputes are increasing. Modern family arrangements, often a complex mix of stepfamilies, half-siblings, and subsequent marriages, can create multiple potential claimants on an estate. When money is involved, old grievances can re-emerge, leading to painful and costly legal battles.
Practical steps to protect your legacy
The analysis reveals that not planning could be a costly mistake. IHT is expected to impact over 37,000 estates each year by 2027, generating nearly £9 billion annually for the Treasury. Taking proactive steps allows you to employ various strategies to reduce the amount payable by your loved ones. For example, there is no IHT on assets transferred to a spouse or registered civil partner.
There is also an additional residence nil-rate band of £175,000 per person (£350,000 for a couple) when a family home is passed to children or grandchildren. Gifting is another simple way to reduce the size of your taxable estate. The sooner you start, the more effective it can be, allowing you to use your £3,000 annual gifting allowance. You can also make regular gifts out of surplus income, which are immediately IHT-free, provided they don’t affect your standard of living. Larger gifts, known as potentially exempt transfers, become fully tax-free if you survive for seven years after making them.
Start the conversation today
Succession planning is essential to pass on wealth smoothly and efficiently. Talking with family members about your plans can help manage expectations and prevent potential conflicts. Although these talks can be complex and uncomfortable, they can avoid significant heartbreak and costs in the long term.
Your wealth deserves the same attention as your business
If you’re seeking advice on inheritance planning and safeguarding your assets for the next generation, we can assist. For further details and personalised assistance, please feel free to contact us today.
THIS ARTICLE IS FOR INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE TAX, LEGAL OR FINANCIAL ADVICE. TAX TREATMENT DEPENDS ON INDIVIDUAL CIRCUMSTANCES AND MAY CHANGE IN THE FUTURE. FOR GUIDANCE, SEEK PROFESSIONAL ADVICE. THE VALUE OF INVESTMENTS CAN GO DOWN AS WELL AS UP, AND YOU MAY GET BACK LESS THAN YOU INVEST. THE FINANCIAL CONDUCT AUTHORITY DOES NOT REGULATE TRUST PLANNING, WILL WRITING, LEGAL ADVICE OR ESTATE STRUCTURING.
Source data:
[1] Censuswide carried out the research among a sample of 3,001 ‘mass affluent’ consumers, aged 18 and over (defined as those earning above the UK average pre-tax salary (£33,000) and with at least £1,000 in accessible cash or savings). The data was collected between 14.02.2025 and 21.02.2025.