Safeguarding Your Legacy: Considerations for Protecting Generational Wealth in England

At Hedges Law, we understand the importance of family.

Part of that commitment extends to helping you protect the financial security of future generations.

Building wealth takes time and often sacrifice.

Ensuring it’s passed on effectively requires planning.

Here, we explore some key considerations for couples and families in England seeking to safeguard their generational wealth.

1. Communication is Key:

Open and honest discussions are paramount.

Talk to your spouse, children, or beneficiaries about your wishes.

What are your financial goals for them?

Understanding their aspirations can help tailor a plan.

Consider involving your family in the process, especially adult children.

This fosters transparency, reduces the risk of future conflict, and allows them to ask questions about your wishes.

2. Wills, Trusts and Estate Planning:

A well-drafted Will is essential. It dictates how your assets are distributed upon your death Wills and Estate Planning can be relatively straightforward for smaller estates, but for complex ones and those involving multiple assets or blended families, legal guidance is crucial.

Trusts can offer additional flexibility.

They allow you to designate beneficiaries and set conditions for how the beneficiaries receive their inheritance.

This can be particularly helpful if you have concerns about a beneficiary’s financial responsibility or if you want to ensure funds are used for specific purposes, like education or housing for children.

3. Pre-nuptial Agreements:

For couples embarking on a new chapter, a pre-nuptial agreement can be a wise precaution.

It can also provide an effective way to safeguard gifts or inheritances from one side of the family.

A pre-nuptial agreement can outline how pre-marital assets brought into the relationship, such as inheritances or family property, and potential future joint marital assets will be handled in the event of divorce. 

Pre-nuptial agreements can be viewed as unromantic, but they are becoming increasingly popular. 

They are no longer the preserve of the rich and famous or celebrities, they are efficient and effective tools to provide clarity and a level of financial security for both partners, especially those entering marriage with significant assets, generational wealth or children from previous relationships.

4. Cohabitation Agreements:

With more and more people choosing not to marry/civil partner and the increased financial support provided by family members to get on the property ladder, it is vital that everyone is clear about what should happen in the event that the property is sold or a relationship breaks down.

A cohabitation agreement provides scope for the couple to set this out in a way that will be legally binding on them, providing peace of mind for everyone. 

5. Tax Planning:

Inheritance Tax (IHT) can significantly erode the value of your estate.

Strategies like lifetime gifts, utilising trusts, and investing in tax-efficient assets can help mitigate its impact.

An experienced solicitor can advise on the most effective strategies to meet your specific and unique circumstances, and they will often work alongside specialist Financial Planners. 

IHT rules are complex and subject to change; many solicitors will not and cannot provide financial advice, so seeking ongoing financial advice is recommended.

5. Review and Update:

Life circumstances change, and often without warning. 

They can be unpredictable but regularly reviewing your wealth planning to ensure it reflects your current situation and family dynamics is advised. 

Marriage, divorce, the birth of children or grandchildren, and fluctuations in your asset value are all reasons to revisit your plan.

Additional Considerations:

  • Spousal provisions: Ensure your surviving spouse is adequately provided for. While Inheritance Tax spousal exemptions exist, it is crucial to discuss and plan to meet your spouse’s long-term financial needs.
  • Business succession planning: If you own a business, consider strategies for its smooth transition to the next generation. This might involve identifying a successor, grooming them for leadership, and establishing a clear ownership structure.
  • Guardianship for children: Designate guardians for minor children in the event of your absence. Discuss your wishes with your chosen guardians and ensure they are willing and able to take on this responsibility.

We Can Help

Protecting generational wealth is a multifaceted endeavour.

At Hedges Law, our experienced family law solicitors can guide you through the process.

We will work with you to understand your unique circumstances and alongside other teams within the firm, we can craft a comprehensive plan that safeguards your legacy and provides peace of mind.