Are you looking for a tax-friendly way to give your grandchildren a helping hand? If so, generation skipping is ideal for reducing inheritance tax.
Generation skipping: leave part of your wealth to your grandchildren
Generation skipping enables you to leave part of your wealth directly to your grandchildren. This can be attractive where your children have enough money of the their own. Your grandchildren can then put their inheritance towards buying a home or starting a business.
In this way, your grandchildren are only taxed once. If your children inherit your assets first and your grandchildren inherit them in turn from their parents, your children and your grandchildren will both end up being taxed on what you leave them.
How do you leave money to your grandchildren in a tax-friendly way?
Have you decided to leave part of your wealth directly to your grandchildren? If so, it’s advisable to make them a beneficiary in your will or a life insurance policy.
If you choose the life insurance route, there are three options:
• A lump-sum contribution to your life insurance policy
• An investment plan with life insurance to spread your investment on your grandchild’s behalf
• A combination of a one-off contribution and an investment plan with life insurance cover
Good to know: you retain control over your life insurance policy until your death. So you can always alter the beneficiary if you change your mind.
Need advice?
Feel free to make an appointment. We’ll be happy to help you work out your plans.
