Housing Minister Gavin Barwell made the headlines recently in suggesting that it would help in bridging the intergenerational divide between affluent baby boomers and indigent millennials if grandparents were to leave wealth directly to grandchildren. Practising what he preaches, he and his brother have apparently acquiesced in being excised from their mother’s will in favour of the next generation.
This sort of thing does of course bring a potential inheritance tax advantage. Although it makes no difference to the IHT bill on the grandparent’s estate, bypassing the parent avoids a further charge on the same amount on the parent’s subsequent death.
Discussing such things with a grandparent can be tricky. No-one likes either to be reminded of the universality of mortality or to be told what to do with their own money: so a conversation combining the two may be awkward. Fortunately, death is not the end (speaking in financial rather than theological terms): post-death variation of wills to improve their tax-efficiency is often possible, though there are a number of pitfalls to avoid.
For more on generation-skipping, whether by careful will-drafting or by post-death variation please get in touch with your usual BKL contact or use our enquiry form.
