The so-called “great wealth transfer” is underway and, according to Unbiased, could see up to an estimated £7 trillion pass between generations over the next few decades.
Careful estate planning means you might have a good idea of the assets you will pass on. What’s harder to predict, though, is how your beneficiaries will manage and use your hard-earned wealth.
With potentially large sums involved, this transfer of wealth is an urgent family conversation. Now is the time to begin preparing your heirs.
You might do this via education – through financial lessons that will build their knowledge and confidence – or through an assertion of your values and an introduction to intergenerational financial advice.
Key takeaways
- Wealth transfer is a family process, not just a tax event.
- The next generation requires preparation as much as provision.
- Strong communication can reduce future conflict and anxiety.
- Early, thoughtful conversations are usually more powerful than late technical fixes.
Keep reading to find out why wealth transfers are a conversation for the whole family, and how to start these important discussions now.
Successful wealth transfers rely on early preparation in a few key areas
1. Communication
Wealth transfers fail when they occur in silence. A lack of communication can breed anxiety and resentment, laying the groundwork for potential future conflict.
On the other hand, early discussions can allay fears, allow potential grievances to be aired, and create an open environment based on trust in which resolutions can be found. Family conversations that occur in this space are likely to be much more powerful than late technical fixes, both financially and emotionally.
Estate and legacy planning can sometimes feel like something to think about only in later life. In reality, the process is much more involved than this, so the earlier these conversations start, the better.
2. Education
You have likely built up your wealth over a long career and formed a long-standing relationship with a financial adviser along the way. This relationship will have provided peace of mind, confidence, and a sense of control. It might also have furthered your financial education.
When the next generation receives their inheritance during the great wealth transfer, they may well receive large sums in one go. This can be daunting but also exciting, and emotional decision-making could follow, especially in cases where the inheritor lacks sufficient financial education.
You’ll no doubt have helped to instil positive values and a respect for money that will allow your beneficiaries to make decisions for themselves, but financial education is an ongoing concern.
Financial education has been part of the secondary curriculum since 2014, while recent curriculum changes mean it’s expected to become statutory in primary schools in England through Citizenship from September 2028.
Simple financial lessons can begin at home too, from the difference between saving and spending to the fundamentals of investing and how to secure a mortgage. A healthy relationship with money will be crucial when a sudden windfall arrives, so preparation is vital.
3. Values
Understandably, different generations hold different views and values when it comes to money. Baby boomers experienced postwar rationing, and this generation is generally more likely to be wedded to cash. Rationing and physical money might seem like ancient history to Generation Alpha (born between 2010 and 2024), who have grown up in the age of next-day Amazon deliveries and cryptocurrency.
Discrepancies like these can give rise to intergenerational tension, but as we’ve seen, communication and education are important tools for smoothing these differences.
Talk about the values that matter to you and how you’d like to see these carried forward. Explain how you manage your wealth now and your intentions for it in the future.
Ultimately, the choice of how their inheritance is used lies with your beneficiaries, but through careful preparation, you can give them the tools they need to make prudent choices and set them on the best possible path.
Intergenerational advice can aid a smooth transition of wealth
You might know the assets you plan to pass on, but the next generation must have the education to manage them.
At HFMC Wealth, we understand that succession planning works best when it is based around preparing people, not financial structures. That’s why professional financial advice isn’t just about figures and tax. It’s about the human side of wealth too.
Exposure to advice from an early age can help to spark important family conversations, build knowledge and confidence, and give you peace of mind that your hard-earned wealth will be passed into safe hands.
Get in touch
Communication and education alone won’t alleviate the issues that can lead to an unsuccessful wealth transfer.
Some level of governance will be required too – from family charters and letters of wishes to regular reviews that help you maintain control – so ensure they’re part of the conversation.
Wealth transfer is a family process, not just a tax event. If you have any questions about successfully passing your wealth to the next generation, get in touch with HFMC Wealth today. Contact us online or call 020 7400 4700 today to help plan your loved ones’ financial future.
Please note
This article is for general information only and does not constitute advice. The information is aimed at individuals only.
All information is correct at the time of writing and is subject to change in the future.
The Financial Conduct Authority does not regulate estate planning, cashflow planning, or tax planning.
