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Wealthier families pass three-quarters of their wealth to the next generation

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A third of wealthier individuals plan to pass on wealth to their children during their lifetimes, according to research by Lloyds Private Bank.

In general, wealthier families (those with £250,000 in investable assets) will set aside almost three quarters (72%) of their financial assets as an inheritance to go to the next generation – either before or after death – with half of those surveyed aiming to give their children more than 90% of their money and assets. Those with assets over £1m are the most generous.

Gifts made during an individual’s lifetime are most commonly made in cash, with almost a quarter (23%) of respondents planning to pass on wealth in this way. Other ways to pass on wealth include handing over a share in the family business. Property assets are usually passed on after death (76%), as are other investments such as stocks and shares (54%).

When it comes to deciding how to transfer estates to the next generation, half (49%) of parents planning to transfer wealth to their children rely on their instincts and do what they feel is the right thing for the family. A third (36%) use their own research to make up their mind. Those with assets above £1m are most likely to seek professional financial advice (41% compared to 36% overall).

Grandchildren also get a share of the pie. Those who have grandchildren plan to leave almost a quarter (21%) of their overall assets directly to their children’s children, equivalent to an average of £203,948 per grandchild.

Jon Wingent of Lloyds Private Bank, said: “We are seeing a growing trend of wealthier families beginning to spread their assets across the generations while they are still alive. Anyone thinking of doing this needs to consider a myriad of factors, including whether there is any tax due at the time of the gift and then further down the line on death. In addition to this, they will need to figure out the best way to pass on any wealth. An absolute gift is sometimes the simplest approach, but many families choose a trust arrangement which allows the older generation to retain an element of control for a period of time.”

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