{"id":18386,"date":"2025-11-13T19:11:42","date_gmt":"2025-11-13T19:11:42","guid":{"rendered":"https:\/\/www.rbcwealthmanagement.com\/en-eu\/?p=18386"},"modified":"2025-11-13T19:11:43","modified_gmt":"2025-11-13T19:11:43","slug":"when-is-the-best-time-to-pass-on-wealth","status":"publish","type":"post","link":"https:\/\/www.rbcwealthmanagement.com\/en-eu\/insights\/when-is-the-best-time-to-pass-on-wealth","title":{"rendered":"When is the best time to pass on wealth?"},"content":{"rendered":"\n

Traditionally, people wait until their death to pass on wealth to children and grandchildren. But there are several reasons why gifting assets during your lifetime could be worth considering.<\/p>\n\n\n\n

While the approach that\u2019s right for you will depend on your individual circumstances, making lifetime gifts could not only prove tax efficient, but also make a bigger difference to your family\u2019s financial wellbeing.<\/p>\n\n\n\n

Here, we look at what to consider when deciding when to pass on wealth to your loved ones.<\/p>\n\n\n\n

What\u2019s your estate\u2019s IHT liability?<\/strong><\/h2>\n\n\n\n

Leaving assets to children and grandchildren via a will is very common, but it can be one of the least tax-efficient ways to pass on wealth. When you die, your estate will be valued for inheritance tax (IHT) purposes.<\/p>\n\n\n\n

For a single person, assuming no gifts above annual allowances in the past seven years and full inheritance tax allowance is available, the estate will be assessed for IHT upon death. Any proportion exceeding \u00a3325,000 (the IHT nil-rate band) will be taxed at 40%.<\/p>\n\n\n\n

On a sizeable estate, IHT of 40% could translate into a significant sum of money. Despite this, RBC Brewin Dolphin\u2019s research <\/a> of 7,000 people \u2013 2,000 of whom were over 55 years old with children, and 5,000 of whom were under 55 with living parents \u2013 found that almost a third of parents with \u00a31m+ in savings and investments said they expect to pass on money when they die.<\/p>\n\n\n\n

If you give your main residence (or the sale proceeds of it) directly to your children or grandchildren (direct descendants) when you die, you might qualify for the additional residence nil-rate band. This allowance is currently up to \u00a3175,000 per person and dependent upon the property value. It is also gradually reduced if your estate exceeds \u00a32m.<\/p>\n\n\n\n

Overall, an individual could potentially pass on a maximum of \u00a3500,000 before IHT kicks in. It\u2019s possible to transfer any unused element of your IHT allowances to your living spouse when you die, which effectively doubles the limit to a maximum of \u00a31m.<\/p>\n\n\n\n

Could lifetime gifts be more beneficial?<\/strong><\/h2>\n\n\n\n

Another way of passing on wealth is to gift money while you\u2019re still alive. As well as being tax efficient, passing on wealth through lifetime gifts could be more beneficial for your children and\/or grandchildren.<\/p>\n\n\n\n

Rising life expectancy means that those who receive an inheritance via a will could be well into their 60s, by which point they may not need as much financial support. For a young adult, however, a financial gift could make a huge difference \u2013 perhaps enabling them to graduate from university debt-free or put down a deposit on their first home.<\/p>\n\n\n\n

Our survey found that among respondents aged 18 to 24, nearly two-fifths wanted financial help from their parents \u2018now\u2019 \u2013 far higher than those in older age groups.<\/p>\n\n\n\n

Having an open conversation<\/a> with your family about their needs and expectations could be a good place to start.<\/p>\n\n\n\n

Are you making the most of gifting allowances?<\/strong><\/h2>\n\n\n\n

Another benefit of giving away money during your lifetime is that it reduces the size of your estate, which in turn can help to reduce your estate\u2019s IHT liability<\/a>.<\/p>\n\n\n\n

There are a range of allowances that can enable you to gift money tax efficiently. These allowances aren\u2019t straightforward, so it\u2019s important to speak to a wealth manager before getting started. Gifting allowances include:<\/p>\n\n\n\n