A recent study conducted by the private and commercial bank Arbuthnot Latham has revealed that nearly half of the UK’s wealthiest individuals are concerned about the financial stability of the next generation. However, despite these worries, only 26% of the wealthy have implemented strategies to mitigate tax liabilities for the future. The study also showed that the demand for online inheritance tax reduction strategies has surged by 13%.
In response to this concern, Arbuthnot Latham’s experts have provided key steps to assist high net worth individuals in communicating with the next generation about inheritance and protecting their financial stability. One significant method to mitigate tax liabilities is to take advantage of the various gifting allowances available in the UK. For example, individuals can utilize an annual gifting allowance of £3,000, make regular gifts from excess income, and give gifts of up to £250 per person each tax year.
Another important tool to consider is the use of trusts, which can be a powerful means of gifting to chosen beneficiaries. Additionally, pensions are an important wealth planning tool, as they are outside of an individual’s estate for inheritance tax purposes. However, it is crucial to carefully consider various factors, such as risk appetite and access options, when utilizing pensions for wealth planning.
In addition to these tools, it is crucial to review cash flow forecasts, consider future long-term care needs, and explore business relief opportunities for tax-efficient planning. Moreover, initiating conversations about inheritance and financial planning with family members is essential. Wealth planner Rachel Wyatt highlighted that such discussions can help remove uncertainty and empower beneficiaries to plan efficiently for themselves.
Wyatt also emphasized the importance of discussing values, responsibilities, financial education, estate planning, and inheritance expectations with children and grandchildren. These topics are critical for guiding the next generation in managing inherited wealth responsibly and effectively.
To gain insights for the study, Arbuthnot Latham partnered with Atomik Research to survey over 500 UK residents with investible assets of at least £100,000. The findings provide a glimpse of the key financial concerns of the UK’s high net worth individuals.
Founded in 1833, Arbuthnot Latham & Co., Limited is a London-based private and commercial bank with a focus on wealth management and specialist commercial lending. The bank aims to provide a comprehensive approach to private banking, commercial banking, wealth planning, and investment management to ensure the financial wellbeing of its clients.
In conclusion, navigating inheritance tax planning and wealth management can be a complex task, especially for high net worth individuals. However, with expert guidance and effective communication with the next generation, it is possible to secure the future financial stability of one’s family. By taking advantage of available tax mitigation strategies and initiating important conversations about inheritance and financial planning, the UK’s wealthiest individuals can work towards ensuring the financial wellbeing of future generations.