Engaging with Children of Asset Rich Boomers ( CARBs )
Managing The CARBs – Intergenerational Estate Planning
Following on from our article on planning for the Asset Rich Boomer ( ARB ) Generation, we are seeing a significant amount of discussion surrounding the topic of intergenerational planning. How do advisers engage with the next generation of clients, the Children of Asset Rich Boomers – The CARBs?
The Silent Generation:
Professionals in all industries should also be considering the extent to which the ‘Silent Generation’, those born between 1926 and 1945 and typically aged between 96 and 77 years old, undertake their estate planning. Attention should also be focussed towards women of this generation.
By 2025, it is estimated that women will hold 60% of Britain’s wealth, having inherited most of it from their deceased spouses. (Centre for Economics and Business Research).
More specifically, professionals should also consider investigating whether it is feasible to skip the wealthiest section of society, the ARB Generation as part of their estate planning objectives. Thereby, preventing any further swelling of wealth in their estate and passing assets directly down to the younger generations who may be facing financial difficulty during the recent cost of living crisis.
According to the Financial Times, £450 billion worth of housing value is in the hands of those aged between 55-64, of which only £100 billion is mortgaged. Therefore, in reality, does this generation need any further wealth passed down to them?
Considering Trusts as part of the Intergenerational Planning:
We are seeing an increasing amount of ARB Generation and Silent Generation clients who are very keen on ways to further assist their offspring’s families, specifically with maintenance and school/nursery fees.
Typically, utilising trusts can be a useful way for grandparents to consider gifting assets to grandchildren and great grandchildren. Those individuals that may have property assets with significant Capital Gains or shares in family businesses, could consider undertaking a Grandparent’s settlement.
The Grandparent’s Settlement:
It is worth noting that all non-tax-paying minors are eligible for a full personal allowance. Also, parents who wish to settle assets into trust for their minor children will fall under a parental settlement, therefore any yielding income for a minor child is taxable on the parent.
A Grandparent’s settlement can protect assets and allow family members to remain in control of what happens during their lifetime. It can assist in maintaining relationships with different generations in the family and specifically building those relationships with the CARBs.
Becoming Debt Rich:
We are also seeing more consideration from advisers and clients towards later life mortgages. Although it has been a recognised perception that when you reach retirement age, you no longer have a mortgage, some clients are considering the ability to die with debt. Debt is a liability of the estate for Inheritance Tax Purposes. Although many lenders impose an age cap at 65-70, there are still lenders who will cap at 75 or even 80 if certain eligibility criteria are met.
With the reluctance of older people, with a healthy income, looking to downsize, the capital raised can be gifted to the younger generation as a Potentially Exempt Transfer (PET). Turning a debt into a PET and opening up the opportunity of passing wealth down to the younger generations efficiently.
Our skill is recognising planning opportunities that benefit the client but also looking at the family unit holistically. We can assist in communicating those opportunities effectively to the client and their younger family members, helping to build long term and intergenerational relationships.
CONTACT US:
The Ralstan Group prides itself on being a ‘go to’ resource for clients and their advisers.
If you would like further information on Grandparent Settlements or to discuss dynastic planning strategies for families to consider, please do get in touch.
We can also arrange a call with you to discuss planning opportunities that exist for the engaging with the Children of Asset Rich Boomers The CARBs generation.
Consequently, if you have any questions, please give Andy a call on 0161 282 0444. Alternatively, email us today on enquiries@theralstangroup.co.uk.
Click here To read our article on Planning for the Asset Rich Baby Boomer Generation.
Sources:
The Mortgage Hut. Financial Times, 2022 and June 2022. Centre for Economics and Business Research.
