Whilst traditionally wealth has passed from one generation to the next upon death, intergenerational wealth management allows families to alleviate financial disparities amongst different generations within the family here and now.

Keeping it in the family

As we continue to live longer, many families now have four, or sometimes five generations alive at the same time. Within these generations, the majority of wealth sits with the over-55s – the baby boomers.

The baby boomers are often considered to be the ‘sandwich generation’ in that they are approaching, or already retired, but at the same time sandwiched between providing financial support for millennial children who may be struggling to get on the property ladder or facing student debts and supporting the care provision of elderly parents. This can lead to adynamic where those most in need of wealth are at the two opposite ends of the generational spectrum.

This is where intergenerational planning comes in. By assessing their collective wealth, families can look at how to use this wealth more collaboratively to support each other during their lifetimes, whilst also passing on wealth in the most effective way.

Establishing a family finance roadmap  

With family dynamics more complex than in previous generations, planning ahead is vital when it comes to ensuring the smooth transition of wealth.

This is particularly relevant considering that younger generations are set to inherit an estimated £5.5 trillion over the next 25 years, as a result of the dramatic increase in personal wealth in the UK over the last 30 years, due to increasing pension freedom, and growth in property prices.

Mufaddal Travadi, Chartered Financial planner here at Smith Cooper Independent Financial Solutions (SCIFS) comments:

“Many people feel uncomfortable talking about their finances with their family members, but when it comes to passing on wealth, being open, and involving the entire family in planning is paramount. Intergenerational planning can provide a structure for addressing any money-related concerns, and ensure you remain in control of your finances, whilst family aspirations are met and wealth preserved.”

“When considering how to pass on wealth, families should look to create a family roadmap, which details who money should go to, and how it should be used. This offers opportunities for tax mitigation and estate planning, in order to retain and protect wealth”.

Passing on wealth in a tax-efficient way

Understanding how to pass on wealth in the most tax efficient way is an important consideration when it comes to intergenerational planning, as the amount of Inheritance Tax (IHT) you are eventually subject to could impact the amount of money you are able to pass on.

Pensions can be one of the most tax-efficient ways to pass on wealth.

Natalie Pollard, Tax Manager within the private client division at group company Smith Cooper comments:

“Whilst most people prepare to live off their pension in retirement, your pension can be a valuable tool for estate planning. There are multiple advantages of leaving your pension to be passed on. A pension can potentially be used to give your beneficiaries a tax-free income, if you die before the age of 75. If you die after 75 the money would be taxed as income when it is withdrawn. Regardless of the age you die, your pension is outside your estate and consequently exempt from IHT. For this reason, you could potentially save IHT by leaving your pension untouched and funding your retirement with other assets that do form part of your estate. Beneficiaries would also be able to access the money in the pension at any age to use to pay off a mortgage for example. If you are able, your pension should be the last thing you touch in retirement”.

“When considering intergenerational financial planning there are other options to consider, such as passing on wealth through equity release, or transferring assets whilst older generations are still alive. There are many considerations to take into account for any plan, meaning it is important to speak to a financial planner to get advice on what would work best for you and your family.


Here at SCIFS, we look after both families and individuals, guiding them on the most effective, flexible and straightforward ways to pass on their wealth.

If you would like to arrange an initial discussion with one of our dedicated chartered financial planners, please do not hesitate to get in touch.