15th May 2017

The ‘Baby Boomer’ generation, intergenerational wealth and concerns re financial prudence.

Many of the over 55s wish to retain some control over how any money they leave to their offspring is spent. The recent growth in pensioner wealth and the obstacles to accessing the property ladder for many of the younger generations mean that a large portion of the older generation will bequeath large sums to children and grandchildren, and that the younger generation will not have had the experience of making decisions regarding such large asset values beforehand.

How should you go about ensuring that that wish for control has some likelihood of being adhered to? How should you try to give it some teeth?

To ensure any money from their estate is spent wisely (in the older generation’s view), the older generation may want to specifically set out how it can be spent. They also may wish to specify that the recipients should take financial advice, particularly if they have themselves had that habit, which in turn may explain in part the unprecedented level of pensioner wealth in this generation.

Inheritances from the baby boomer generation are likely to play a large part in financing future generations, in part because of the size of the aggregated pool of assets, but perhaps more because the younger generations have not had quite the fortuitous set of circumstances such as final salary pension schemes, a housing ladder that was accessible to them whilst they were young allowing them to have many decades of property ownership in an almost continually rising market.

Many persons considering what they can leave the next generations will be concerned about their money going to the spouse of a child should they get divorced. Many will want some mechanism to make sure that their grandchildren should benefit from their inheritance in due course. Some will wish to try to prevent the risk, as far as they see it, of their children being frivolous with any wealth they received.

The current state of the economy, has perhaps led to people having a greater desire to hold on to family wealth.

With two in five marriages ending in divorce, it is easy to understand why the problem of keeping wealth within their family is a growing concern for parents when they’re planning to leave money to children and grandchildren.

Whilst it is very easy to be distracted by the undoubtedly important topics of inheritance tax mitigation and trying to protect against the costs of long term care, it has always been the corner stone of prudent Will planning to have the dialogue about one’s concerns with the solicitor drafting the Will and to gauge with them how likely those risks are of occurring.

A well drafted Will with suitable trusts provisions within, as well as provisions such as restating the need for taking financial advice and discussing the areas of expenditure that the older generation would be content to see their legacy spent on as well as those they would not via a letter of wishes is sensible, although the limits as to enforceability of a letter of wishes needs to be fully appreciated.

Now, perhaps, more than ever, the good value of expert legal advice on your Will should be evident. For details as to how we can assist you, contact Edward Walter, Partner in our Private Client team on 01892 502 320 or email ewalter@bussmurton.co.uk


Edward Walter

Edward Walter