Why it’s Important to Plan for your Children’s Inheritance

Saving for your child’s future is one of the most worthwhile things that you can do as a parent, and it’s arguably never been more important than in the current economic climate.

After all, the macroeconomic climate is making it increasingly difficult for people to save their hard-earned cash, while it was recently revealed that some 5,400 estates were investigated by the tax office for the underpayment of Inheritance Tax.

In this post, we’ll offer some actionable advice that can help you to manage your estate and plan successfully for your child’s inheritance.

1. Start by accessing the best possible advice

Attempting to organise your finances and successfully manage your estate is an exceptionally challenging past-time, and one that requires expert guidance if you’re to do it effectively.

Firms such as Tilney can help in this respect, as they provide a comprehensive estate planning service that helps you to build, manage and organise your estate.

This creates the type of informed and holistic financial plan that can be implemented over time as you look to build wealth and work out the best way of passing this on to your child in the event of your death.

Most importantly, you’ll be able to create a plan that is tailored to your earnings, outgoings and wider financial circumstances.

2. Understand the Finer Details of Saving

By partnering with a financial adviser or wealth management firm, you can also understand the finer details of saving money towards your children’s future.

The first step is to understand precisely when the money is needed as you’ll need to create a time-sensitive plan and allow for the fact that some accounts restrict access to funds until a child reaches 16 or 18.

At the same time you’ll need to determine whether or not you’re the best person to invest capital on behalf of your children. In some instances, for example, it may be more tax-efficient for grandparents to invest for a child, so this is one of the areas you should focus on when planning your estate.

3. Consider Gifting as a way of Reducing Inheritance Tax

We spoke earlier about Inheritance Tax, and this remains a controversial issue for governments across the globe.

Fortunately, there are ways in which you can reduce the amount payable on your estate without raising the eyebrows of the taxman.

In fact, more than seven million parents look to give their children an inheritance early in order to minimise tax, by capitalising on the so-called ‘seven-year’ rule surrounding gifting.

This rule states that if you survive the seven years after giving a gift, the gifts are not counted towards the value of your estate, so offering them early optimises the value of your holdings. However, This can make a huge difference from a financial perspective.

 * Collaborative post