After working hard to build up enough wealth for you to be able to pass some on to future generations, you might be wondering when exactly is the best time for you to do so — during your lifetime or after?
This does not constitute advice and advice should be sought in all instances before acting on it.
There are a number of reasons why you might be wary of transferring wealth while you’re still alive. Maybe you’re afraid you might run out of money to live, or you’re concerned about what your beneficiaries might do with the money, or perhaps you’re worried about the money staying in the family due to unforeseen circumstances.
While many people deem talking about money gauche, if you do discuss transferring your wealth, you actually have a better chance of passing on assets tax efficiently and in a way that all your family members will be happy with. Ultimately, deciding when is the best time to transfer wealth will depend on your age, the age of your beneficiaries, the value of your estate, the types of assets involved, tax implications, and of course, your personal circumstances.
Here is more information about four important considerations that should be a part of your wealth transfer plan:
One of the first things to consider when thinking about transferring wealth is how old you are. The younger you are, the more time you have to accumulate assets and grow your estate. This will likely not be a good time to transfer wealth as you are still in the midst of growing it and will need your money to work hard for you.
When you are older it might be the right time to transfer wealth as, for the most part, your wealth should be somewhat settled. If you want to maximise the amount that you can pass on to your beneficiaries, later on in life might be the right time to do so.
Age of Beneficiaries
Another thing to consider is how old your beneficiaries are or will be when you decide to transfer your wealth. Young beneficiaries may not need the money right away but can be put toward big expenses later on, like education or a home.
There are solutions for leaving money for very young beneficiaries, designed to hold on to the money until they come of age. For any beneficiaries who are older, they might need access to money to support themselves in retirement or cover expenses that may have gotten out of hand.
Value of Estate
Of course, the value of your estate is another thing to consider. With a large estate, you want to do as much as possible to avoid paying Inheritance tax so transferring wealth sooner might help you to do that. With a smaller estate, you won’t necessarily have to worry about IHT so much and you can put of transferring wealth until later on in life or after you pass.
Types of Assets
One more thing to include in your consideration is the types of assets involved in the transfer of wealth. Liquid assets, such as cash or investments, can be transferred right away. Other assets, like property, may take longer to transfer.
Ready to discuss transferring your wealth?
While it’s important to discuss the transfer of wealth with your family, it’s also important to involve a financial professional. Figuring out how and when to pass on wealth is a personal decision, but it’s not one that you have to make alone. In fact, working with a financial adviser will make the whole process less stressful, knowing that your plan is backed by an expert. To discuss your family wealth transfer plans, get in touch with the experts at Dental & Medical Financial Services today.