Intergenerational planning: how advisers can help families deal with difficult times

We’ve discussed previously how financial planners can help their clients find a way forward through positive life events. But what happens when a client’s life takes an unexpected negative turn? Of course, these are the times when good financial planning takes on even greater importance, not only on behalf of the client, but for their family too. In this article, we discuss more challenging scenarios where intergenerational wealth planning could make all the difference.

Helping clients deal with elderly or infirm parents

One situation many financial planners will recognise is when a client needs their help with putting their parent’s financial affairs in order. These types of conversations can often happen after the parent has experienced a recent health scare or received a critical medical diagnosis. Even in cases where the parent already has estate planning strategies in place, such as settling assets into trust or making potentially exempt transfers (PETs), the client may be concerned the parent may not live the full seven-year period for those strategies to achieve full IHT exemption. In the case of a failed PET, the person who received the gift would be required to pay any IHT bill due.

However, if the parent made an investment into the Triple Point Estate Planning Service, their shares would be expected to qualify for Business Relief – and therefore be exempt from IHT – after two years, provided they still held the shares at the time of their death. Reducing the time needed for IHT exemption from seven years to just two could make a huge difference when the parent’s estate – and IHT liability – is calculated. 

When the parent dies

Of course, when a client’s parent passes away, this means the client has a number of emotive and difficult issues to deal with all at once. And in financial terms, they now may also have an inheritance to consider as well as questions over how that inheritance affects their own estate planning. It can easily be overwhelming. At times like these, it’s important that investment providers recognise the difficulties people are facing and respond in the most helpful and understanding manner.

For example, if the client’s parent had invested into the Triple Point Estate Planning Service, the client would need to decide what to do with that Business Relief-qualifying portfolio. That’s why we created a dedicated Estates and Probate Team which is available to talk through any questions that either the beneficiaries and the executors of an estate have about the Triple Point Estate Planning Service, or the different options available to them after the Grant of Probate has been issued. These options are:

• Once probate has been granted, they can ask for the investment to be transferred to the nominated beneficiaries and continue to be held in their name. Provided those shares had been held for a minimum of two years at the time of the deceased parent’s death, the shares inherited by the beneficiaries should immediately qualify for Business Relief without restarting the two-year holding period.
  
  
• Once probate has been granted, they could ask us to sell the investment on behalf of the beneficiaries and ensure that all proceeds are paid directly to them.
  
  
• They could ask us to use the investment to pay an outstanding IHT bill due on the deceased’s estate. This is particularly important as probate cannot be granted until any outstanding Inheritance Tax bill has been settled. In cases where the estate has an outstanding IHT bill the executors can instruct us to sell the investment before probate has been granted and we can facilitate payments directly to HMRC, regardless of whether the investment had been held for two years.

In cases where the estate has multiple beneficiaries, the executors can instruct us to carry out a combination of these options, transferring a portion of the investment to some beneficiaries while paying out a share of the proceeds to others.

Securing wealth from one generation to the next

Another advantage of the Triple Point Estate Planning Service is that it can continue to be passed down from one generation to the next, retaining its IHT mitigation benefits despite ownership being transferred. It’s a great example of how Business Relief can play an effective part in intergenerational wealth planning, staying ‘in the family’ for generations, thereby staying true to the original intention of Business Relief legislation. It’s also an excellent way for advisers to build meaningful relationships with generations of clients, while demonstrating the value of long-term financial planning.

Advising on life events with Triple Point
At Triple Point, we say that “significant events need significant planning” because it helps to highlight the advice opportunities for advisers. To find out more about how tax-efficient investing can help with all manner of life events, including intergenerational wealth planning, visit our website at tpeps.triplepoint.co.uk.

Important information

The Triple Point Estate Planning Service places capital at risk. As with any investment, there is no guarantee that the target return will be achieved and investors may get back less than the amount they invested. Past performance and forecasts are not a reliable indicator of future performance. Tax treatment depends on the individual circumstances of each client and is subject to change. Tax relief depends on the companies we invest in maintaining their qualifying status.