Inheritance move thousands of wealthy families are | U.Ok.Finance News
Wealthy dad and mom within the UK are more and more donating more to charity to cut back their inheritance tax (IHT) payments and keep away from passing on an excessive amount of money to their kids.A new examine of high-net-worth dad and mom with average property over £3million discovered that 75% imagine leaving a massive inheritance will be “a curse on their children’s lives”. Many are anxious that in the event that they go away an excessive amount of money, it is going to be spent irresponsibly or undermine their kids’s ambitions. Over three in 5 (61%) expressed considerations that their kids would possibly misuse the inheritance, whereas 57% mentioned their grownup kids have already got enough money and that there are more important makes use of for his or her wealth.In response, the examine by wealth management firm Rathbones confirmed that more than half (53%) of these dad and mom have elevated their charitable giving over the previous two years, motivated by rising income and a need to create constructive social impression.Charitable donations offer a sensible solution to ease the growing inheritance tax burden. With nil-rate bands frozen and pensions set to be included in estates from April 2027, many families face rising tax payments.However, presents to charity are exempt from IHT, and donating at the very least 10% of an property to charity reduces the IHT fee from 40% to 36%. Additionally, donations made during one’s lifetime benefit from Gift Aid, which boosts the donation’s worth by 25%, with higher-rate taxpayers eligible to reclaim additional tax reduction.Gemma Gooch, head of charities distribution at Rathbones, mentioned: “Our analysis shows many wealthy parents, already concerned about inheritance tax, fear the impact of too big an inheritance on their children’s aspirations and drive. It is, therefore, no surprise that more are increasingly turning their attention to charitable giving.“Incorporating charitable giving into financial planning allows parents to create a meaningful legacy, support causes close to their heart, and potentially pass on a greater share of their estate to their chosen beneficiaries, rather than the taxman.”Olly Cheng, financial planning director, added: “We’re seeing more clients aiming to strike a balance between reducing their IHT burden, supporting good causes, and leaving an inheritance that doesn’t dampen their children’s ambition.”For these involved in regards to the latter, Mr Cheng famous that contributing up to £2,880 a 12 months into a baby’s pension, which is topped up to £3,600 with tax reduction, may very well be “a good option”. The funds stay locked till retirement age, permitting a long time of tax-free growth.Mr Cheng continued: “For those wanting more control over how and when wealth is passed on, a trust could be worth considering. Trusts can stagger access to funds, reducing the risks of sudden wealth undermining ambition. While more about control than tax efficiency, they remain a valuable option, especially for blended families. Professional advice is essential to find the right solution.”
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