Financial Planning Affects All Generations

Be smart with family finances

Is this how you envision financial planning: The eldest living members of a family, probably the grandparents, sit with a financial advisor, an attorney, and their tax advisor to make a plan for who gets the house, the money, the investments, etc., when they die. They assign an executor and go about their lives. Upon death, their remaining family members meet to see what they each get from the estate. 

That’s what happens in the movies, right? Typically. But, it’s not the scenario you should shoot for. 

Financial planning, retirement, inheritance, and taxes are getting vastly more complicated. And, laws governing each change regularly. More importantly, the lifestyles, needs, and abilities of different generations of a family can be dramatically different. 

The better way to proceed is to involve all adult family members in the process and make arrangements according to their needs. 

Gift wisely 

A record £1 trillion in wealth is on the table to transfer to younger generations in the UK. In spite of this, only 35% of Baby Boomers (ages 58 – 76 in 2022) have received a gift of £1,000 or more from their parents. To avoid inheritance taxes, this amount could be substantially increased. Currently, the UK allows a gift of £3,000 per year tax-free, in either assets or cash, to children – but not to each child. But each parent can gift a total of £3,000. Children do pay income tax on these gifts. 

There are many ways to gift children money throughout life. There are separate amounts and rules for giving cash as wedding gifts, cash at different ages, etc. That’s where your tax and financial professionals shine as essential advisors. 

Housing as a financial foundation 

Many Baby Boomers – 59% – are concerned that their children will not be able to own their own home, like they do. Owning a home is a critical piece of building a comfortable retirement, as mortgage or rent payments can take the majority of one’s monthly pension. Millennials and younger children are finding it harder to get on the ‘housing ladder’ as housing prices have increased 259% over the last 30 years, while wages have increased just 68% during that time. 

A good financial advisor will have legal financial planning methods to get money to children for this purpose, while lowering your tax debt.  

Unique solutions for individual needs 

In addition to housing, younger family members are contending with higher costs of education, health care, child care, insurance, and other of life’s essentials. But not every adult child faces the same barriers. One may be financially set, but their children have different, costly, needs, like top-notch university or special healthcare requirements. Another child may be residing in another country, and has unique dual-country taxation and income considerations. 

Easier meetings, more often 

A great asset for financial planning is now widespread: internet meetings. There’s no need for far-flung families to come together once every 10 years in wood-paneled offices anymore. Through Skype, Zoom, or other more secure methods, financial advisors can provide guidance and implement decisions through face-to-face conversations that are convenient for everyone, in any time zone, as often as needed.  

An added bonus of this arrangement is that several generations can begin their own financial planning with an advisor they already know and trust, much earlier in life. 

The views expressed in this article are not to be construed as personal advice. You should contact a qualified and ideally regulated adviser in order to obtain up-to-date personal advice with regard to your own personal circumstances. If you do not then you are acting under your own authority and deemed “execution only”. The author does not accept any liability for people acting without personalised advice, who base a decision on views expressed in this generic article. Where this article is dated then it is based on legislation as of the date. Legislation changes but articles are rarely updated, although sometimes a new article is written; so, please check for later articles or changes in legislation on official government websites, as this article should not be relied on in isolation. 



Susan Austin

Susan Austin is a freelance writer living in Prague, Czech Republic. Originally from the U.S., she has written and worked in many industries, including healthcare, transportation, travel and leisure, museums, education, and archaeology.

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