It’s a question I often get asked: “Should I leave assets directly to my children, or skip a generation and go to the grandchildren?”
The answer? It depends on tax, family circumstances, and the purpose of the gift.
Why Skipping a Generation Can Work
- If your children are already financially secure, leaving wealth directly to grandchildren can avoid IHT being charged twice – once on your estate, then again on your child’s estate.
- Certain trusts can be set up to provide for grandchildren while protecting the capital.
Why It’s Sometimes Better to Leave to Children
- If they still need financial support.
- To allow them to decide how and when to pass assets on.
- If you’re concerned about grandchildren’s age or maturity.
The Tax Angle
Gifts to children or grandchildren are both potentially exempt transfers (PETs) if given during your lifetime. But passing directly to grandchildren through your will can sometimes trigger extra charges under the “generation-skipping” rules unless planned correctly.
An Example
We helped a client set up a discretionary trust for grandchildren. This allowed the children to access funds if needed but kept the bulk of the capital ring-fenced for the next generation, avoiding two layers of IHT.
The Hartey Wealth Management Edge
Our estate planning doesn’t just look at your lifetime, it considers how wealth flows across two or three generations. That’s where real efficiency (and family harmony) lives.
If you want your legacy to last more than one generation, let’s plan it that way from the start.
