Using Equity Release as Part of a Holistic Intergenerational Wealth Plan

With the financial needs of clients becoming increasingly complex, intergenerational wealth planning is an important consideration for many families. This is the process of managing, preserving, and transferring wealth across multiple generations. A well-structured plan can help assets to be passed on in a way that supports loved ones, both now and in the future.

Passing on wealth during one’s lifetime can allow parents and grandparents to see first-hand the positive impact of their financial help, sometimes referred to as a “living inheritance.” With 6% of all UK households saying they couldn’t have purchased their property without family help, is now the time to be exploring equity release options with your clients?

Unlocking Property Wealth

For some clients aged 55 or over, equity release may be an option to access a portion of their home’s value as tax-free cash, while retaining ownership and the right to live in their home.

This could be used to support children or grandchildren at key life stages, such as buying their first home, funding education, or starting a business.

When used as part of an intergenerational wealth plan, equity release may:

• Allow wealth to be passed on during a lifetime, rather than solely as inheritance.
• Potentially reduce the value of an estate for Inheritance Tax (IHT) purposes.
• Enable gifting that may, subject to the seven-year rule, reduce or remove IHT liability.

However, it is important to note:

• Equity release will reduce the value of your estate.
• Interest is charged on the amount borrowed, which can grow over time if not repaid.
• It may affect eligibility for means-tested benefits.
• There may be early repayment charges if you repay the plan early.
• Tax rules can change and depend on individual circumstances, therefore clients should seek professional tax advice.

Why It May Be Considered

Rising property wealth among the over-55s, combined with increasing living costs and house prices, means the “Bank of Mum and Dad” and now “Grandma and Grandad” often plays a greater role in family finances. Equity release can form part of this strategy if it is right for the client’s circumstances and goals.

Your Trusted Referral Partner

As advisers, referring clients to a specialist equity release provider, such as Key Partnerships, ensures they receive advice from a qualified expert regulated to provide this service. This advice will be tailored to the client’s needs and will consider their wider financial plan.

Any decision about equity release should involve:
• A full review of the client’s financial situation.
• Consideration of alternative solutions.
• Family discussions, where appropriate.
• Professional, regulated advice.

If you would like to find out more about referring your clients for expert equity release advice, please contact us.