With retirement plans in place, your clients will also have given thought to their estate, contemplating the wealth they intend to leave behind.

The concept of inheritance – of living our desired lifestyle in retirement and then passing on whatever is left – is part of our culture. But could that culture be changing?

The concept of “giving while living” began in America and became mainstream when it was adopted by Bill Gates and Warren Buffet’s The Giving Pledge. Aimed at US billionaires, the philanthropic enterprise asked the world’s richest people to consider how best to give their wealth away.

With the Giving Pledge’s founders among those donating huge sums now, while they are still able to enjoy the difference the money makes, others followed. But you don’t need to be an American billionaire to reap the benefits of giving while living.

Here are three ways your clients could benefit from giving money now.

1. Creating lifelong memories

Your clients will have spent their working lives saving for retirement. Once they retire, they’ll be keen to live their desired lifestyle, ticking off the things they always wanted to do, whilst keeping a watchful eye on the amount they leave behind.

Inheritance Tax (IHT) and estate planning is a complex area and the penalties for a poor decision can be significant. Allowing a trusted adviser to take care of IHT calculations could leave your clients free to enjoy more important things, such as making lifelong memories.

If your clients aspire to travel and have the money put aside to afford it, inviting the whole family along can create memories for them and their families to cherish for the rest of their lives.

2. Helping with life milestones – and seeing the difference the money makes

As life expectancies rise, it has become sensible to plan for a thirty- or even forty-year retirement. Your client’s children could be in their fifties or sixties by this time, on the brink of retirement themselves.

A recent report from the Institute for Fiscal Studies confirms that the average age when a person’s last-surviving parent dies is rising, from aged 58 for those born in the 1960s to aged 64 for those born in the 1980s.

Important life milestones – education, home buying, and marriage – are likely to occur much earlier in life, long before an inheritance is received. Waiting for death to pass on wealth could be too late.

A shift to giving while living means that your clients could help their children and their grandchildren at the time in their lives when they need it most – and when they will most appreciate it. Helping a loved one through these milestones is great, but being there to enjoy the effect the money has might bring even more joy.

The money might be used to:

  • Help a child onto the property ladder
  • Help a grandchild through further education
  • Give a loved one’s career a jump-start by funding a business start-up.

Seeing a child or grandchild enjoy a dream wedding, or settled into a perfect home, and knowing that they part-funded their loved one’s happiness, might be a fantastic way for your clients to use their estate.

It could also give your clients much greater control over how their money is used.

3. A living legacy

Depending on the age of your client’s children and grandchildren, your client might not feel confident giving a considerable sum of money in one go. Inheriting a large sum is a huge responsibility and the recipient will need to be mature enough to judge where the money is best spent.

Putting money aside regularly, or placing it in trust, could help your clients ensure the money is used prudently. Money placed into a Lifetime ISA, for example, could help a grandchild onto the property ladder.

Putting up to £4,000 aside each tax year, your client’s contributions will be increased by 25% as a government bonus. The money must be used towards a first home or left invested until age 50.

Individuals might also contemplate putting money into a trust that stipulates the age the money can be accessed. Your client can put money aside and choose when it is released, such as when they deem a child or grandchild ready for the responsibility, for example.

Factors to consider when giving while living

  • Be sure to keep enough money back – With life expectancies rising, your client’s retirement might last decades. They must leave enough money to live their desired lifestyle and be sure that they cover themselves against future potentialities, such as the need to fund later-life care.
  • Make full use of gifting rules – Last year we looked at teaching your clients the value of intergenerational planning. Understanding HMRC allowances and annual exemptions will help your clients manage the gifts they make and avoid unexpected tax charges.
  • The benefits of speaking to an adviser – Estate, and Inheritance Tax planning can be complex. Calculating the amount that a client can afford to give away during their lifetime, could prove even trickier. We can help.

Get in touch

At Boolers, our years of combined experience and expertise help our clients manage their wealth throughout their lifetimes.

If you have clients who would benefit from financial help to provide a living inheritance whilst maintaining their standard of living, please get in touch. Email enquiries@boolers.co.uk or call 0116 2407070.

Please note

The Financial Conduct Authority does not regulate estate planning, tax planning or will writing.