Make sure more of your money passes to your loved ones amid the “Great Wealth Transfer”

In the coming years, an unprecedented amount of wealth will change hands within families amid what is known as the “Great Wealth Transfer”.

While it has already begun, it is set to accelerate as more of those born just before and after the second world war will die and pass their assets on to younger generations.

FTAdviser reports that roughly £7 trillion will transfer between generations in the UK over the next three decades. Yet this huge transfer of wealth does not guarantee long-term financial security. The same report notes that around 70% of wealthy families lose their wealth by the second generation, and up to 90% lose it by the third.

Although some wealth loss is inevitable, much of it is avoidable and can be preserved by ensuring your intentions are clear and that you’re well prepared.

So, read on to find out how you can ensure your money efficiently passes to your loved ones amid the Great Wealth Transfer.

Inheritance Tax revenue has hit record highs and is likely to increase further amid the Great Wealth Transfer

The key factor behind the Great Wealth Transfer is the rise in asset prices and ownership, namely property. And with this, there has also been an increase in Inheritance Tax (IHT) revenue.

Recent data from Statista shows that IHT receipts have reached record levels in the past four tax years and have risen consistently in 13 of the last 15 years, with only two exceptions during the Covid period. In 2024/25 alone, IHT receipts totalled £8.25 billion.

A key reason for this increase is that the thresholds before IHT is charged, the “nil-rate bands”, have been frozen, while the value of assets has risen sharply. The standard nil-rate band has remained unchanged since 2009, and all IHT thresholds are set to remain frozen until 2031. This has created a “stealth tax”, as a bigger portion of estates are liable to IHT as asset values rise, even though the thresholds themselves haven’t moved.

And IHT receipts are likely to continue rising as, alongside frozen nil-rate bands, the following reforms could also pull more estates into its scope:

• Pensions will be liable for IHT from April 2027, which could potentially affect around 50,000 estates. You can read more about this in our previous article on the topic.

• Changes to Business Relief (BR) and Agricultural Relief (AR), which come into effect in April 2026, will limit 100% IHT relief to the first £2.5 million of qualifying assets. Amounts above this limit will receive 50% relief instead.

So, to ensure your family’s wealth remains as efficient as possible amid the Great Wealth Transfer, careful planning is more important than ever.

5 ways to help keep your estate efficient

With so much wealth set to change hands over the coming decades, and with an expanding IHT net, it’s important to start planning for how to keep your estate efficient.

Here are five strategies that could help you.

1. Make full use of your Inheritance Tax allowances

Making full use of your IHT allowances is one of the most effective ways to reduce the tax your beneficiaries may pay.

In 2025/26, the nil-rate bands are:

• £325,000 for the standard nil-rate band – This is the estate value threshold above which IHT becomes payable.

• £175,000 for the residence nil-rate band – This is an additional allowance if you pass on your main residence to children or grandchildren. For estates valued above £2 million, this allowance tapers at £1 for every £2 above the threshold, meaning it disappears entirely for estates over £2.35 million.

So, by maximising your individual allowances, you can pass on up to £500,000 tax-free. You can also combine your allowance with your spouse’s or civil partner’s, passing on your estate to them IHT-free. This means that couples can pass on up to £1 million to beneficiaries without paying IHT.

In addition to the nil-rate bands, you may benefit from Business Relief (BR) and Agricultural Relief (AR). From April 2026, you can claim 100% relief on up to £2.5 million worth of eligible assets, and couples can combine the allowance to claim up to £5 million relief.

This means that with careful planning and the right investments, couples could potentially pass on up to £6 million tax-efficiently.

A financial planner can help structure your estate to make the most of these opportunities.

2. Nominate your pension beneficiaries

Nominating your pension beneficiaries won’t remove your pension from the scope of IHT. However, it ensures that your pension passes to the right person, which can help preserve more of its value.

Depending on their income levels, your chosen beneficiaries may pay lower Income Tax on the funds, which can reduce the overall tax burden and keep more of your wealth within the family.

It’s also important to note that your beneficiaries won’t pay Income Tax on the pension until they withdraw it. So, it’s a good idea to plan the withdrawals rather than take it all out as a lump sum, as this can keep the overall tax bill down.

3. Gift assets while you’re alive

Gifting assets to loved ones can be an effective way to reduce the value of your estate, as long as you survive for seven years after making the gift.

If you pass away within seven years, the gift is treated as a potentially exempt transfer (PET) and may be subject to IHT at a tapered rate unless it falls into certain exemptions.

As such, gifting can help protect your wealth and reduce potential IHT, but it’s important to build it in early and to ensure it doesn’t impact other elements of your financial plan.

A financial planner can help you explore gifting options and determine whether they would be a good approach for your circumstances.

4. Put assets in trust

Placing assets in trust removes them from your estate for IHT purposes and also helps make sure they are used in line with your wishes. It’s also possible to place investments into certain types of trusts while still retaining limited access during your lifetime.

Similarly, if you put a life insurance policy in trust, the payout is not subject to IHT. This means your beneficiaries could receive a substantial payout free from tax.

Indeed, with pensions set to become liable for IHT, using a portion of your pension to pay for a policy in trust can be a particularly effective method of ensuring it remains efficient. You can read more about this in our previous article on the topic.

5. Speak to a financial planner

If you’re concerned about how the Great Wealth Transfer could affect your family, a financial planner can work with you to create a watertight estate plan.

With trillions set to transfer between generations in the coming years, the time to start planning is now.

To speak to a financial planner, get in touch.

Email info@mlpwealth.co.uk or call us on 020 8296 1799.

Please note

This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.