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18th June 2019
Money. It’s a bit of a tricky subject these days, isn’t it? Grandparents may not know where to invest their money, and grandchildren might not have enough money to save.
Frustration and stress are what we’re all dealing with now, no matter where you stand on the generation spectrum. So, let’s take a deep breath, remember that we’re all in this together, and try to make this generational problem a little easier for everyone!
Some current common advice being given to grandparents, is to skip a generation when leaving property and other wealth to their families.
Generally speaking, people in their sixties and seventies are already retired and have saved enough in their pension to live comfortably.
By contrast, people in their twenties and thirties are the first generation in history to be less well-off than their parents. Without their own property, their rent is likely to take up at least half of their income, leaving little left to save.
Given that by the time their parents die, they will, on average, be 50 themselves – this might be too late for inherited money to be of real use.
Of course, we’re not saying grandparents should offer up every penny you can spare. It’s your money, and you’ve earned it, you’re entitled to do whatever you want with it. But if the topic of money and who to leave it to has left you befuddled, maybe this might be a good way to go if you want what’s best for your family.
Not only that, but if you do choose to present your grandchildren with a large sum, it would be in everyone’s best interest to make sure these young adults are responsible. Not only that, it’s important to ensure that they understand what kind of financial situation they’re in (if they don’t already). You might want to talk to advisers and your own family when determining when to share your money with the younger generation, and whether they’re mature enough to use that sudden donation wisely.
But if none of that is an issue, if you’ve already discussed this with your family and your trust is solid, then firstly – great! Communication is important, and you have saved yourself potential problems by talking things through in a responsible manner. Secondly, it might be good to know that by giving your money away now you can both enjoy the benefit of the gift while alive and cut down on the inheritance tax your children might have to pay.
One existing method – a deed of variation – allows anyone who is left money in a will to give it up in favour of someone else. But this, of course, relies on beneficiaries to relinquish their rights.
So, grandparents, if you really want to ensure your youngest family members get access to the money when they need it, you may need to skip the well-off middle generation entirely in favour of your harder-up grandchildren.
Whatever you end up deciding, having an honest and open discussion with your children and grandchildren, whether together or separately, is an opportunity to really see any problems they might be facing privately – and how you might yet be able to help!
Read our tips on how to talk to your family about money here.
Reference – BL067 – June – 2019
