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 under an investment-linked insurance plan (ILP) combining life insurance coverage with an investment component.
If you go down the ILP route, there are three options:
- Single-premium ILPs (investing your funds in one lump sum)
- Regular-premium ILPs (spreading your investment on your grandchild’s behalf)
- Recurring single-premium ILPs (letting you make top-up investments)
Good to know: you retain control over your ILP until you die, so you can always change 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.
