Informed Choice chartered financial planner Nick Bamford was featured in the Independent on Sunday today, in an article looking at benefits and pitfalls associated with giving money to your children before you die.
So called ‘pre-inheritance’ is becoming more popular than traditional inheritance after death, with parents wanting to see their children benefit from the money during their lifetime.
“Overall, I guess, the parent in a position to help their adult children is going to do as best they can for them,” says Nick Bamford from the independent financial adviser (IFA) Informed Choice. “But they need also to consider their own financial security.”
Pre-inheritance is a good way to see your money in action during your lifetime. It can also be more tax efficient, with a Potentially Exempt Transfer (PET) free of inheritance tax if you survive at least seven years after making the gift.
Nick points out in the article that, to be efficient from a tax perspective, it needs to be a true gift:
“The gift also needs to be without reservation – if the parent is saying ‘here is some money but I want it back’, it’s not a gift in any sense of the word. A loan does not reduce the value of the donor’s estate,” says Mr Bamford.
You can read the article in full here.
If you are considering pre-inheritance to pass on some of your wealth to your children now, do speak with an Informed Choice Financial Planner first to ensure you cover all of the bases and make the right choices with your money.