future generations financial stability

Securing Your Next Generation’s Financial Future



Posted on: 3rd November 2023

With the rising costs of education, housing and everyday life playing havoc on the potential future generations financial stability, many parents and grandparents want to set money aside to help their offspring deal with their finances and future needs.

As today’s challenges were unforeseen by most, many parents today are looking at ways to ensure their young ones will be financially able to navigate such instances happening again in the future. Additionally, there has been a more prominent awareness of financial planning and wealth accumulation since the global pandemic affected how we live and survive, with many people taking more proactive steps to secure their children’s financial future.

As independent financial advisers Cheshire, Haven IFA have recently seen a surge in interested parties looking to safeguard their future generations from financial uncertainty. Here are some ways we advise our clients for future planning.

Strategic Investing

We advise our clients on the benefits of investing early and strategically to build a solid foundation for their child or grandchild’s economic stability.

Having the ability to give the next generation a secure head-start in life and give them a lifeboat to overcome waves of financial uncertainty is the main drive behind many parents and grandparents setting money aside for their loved ones. When considering tax implications and how to arrange your affairs best, tax-efficient structures – such as Junior ISAs (JISAs) or bare trusts – are possibilities to explore through our expert knowledge and guidance.

Passing Assets

A bare trust is commonly used for passing assets to younger people, where the assets would be held in the name of the trustee (such as a parent or grandparent) until the youngster reaches a specific age, usually around 18.

On the other hand, a JISA has a current allowance of £9,000 (tax year 23/24), and anyone can contribute towards it. There is no limit to the amount settled in a bare trust, whilst there are restrictions on a JISA, and a change of beneficiary is not allowed.

Income/Capital Gains Tax Exemption

Assets held with a JISA are exempt from Income or Capital Gains Tax, providing significant tax advantages. However, assets held in a bare trust will still have applied taxes.

If funds within a bare trust come from parents, and the return is £100,000 per annum or more, Income Tax will apply to the parent. Contributions to bare trusts and JISAs have potential exemption transfers for Inheritance Tax purposes if the donor survives for seven years from the gifting date.

It is worth considering alternatives to JISAs and bare trusts, such as setting aside savings for children and grandchildren. More complex trust and inheritance arrangements are also available. You should consult professional independent financial advisers Manchester to make the right decisions based on your circumstances.

Contact the team at Haven IFA today for more information and advice on retirement planning Cheshire, pension advice Manchester and investing in your future generations financial stability.