Transcript
Katie: What's the difference between gifting to your children now, or waiting to leave the money as an inheritance?
Ed: Early gifting is a great way of passing your legacy on and seeing it in action. So gifting money to your children to buy their first house or gifting money to grandchildren to go to higher education, university, all that sort of great stuff. And being able to see it in action is a huge part of what early gifting is. It's also one of the options you have to help mitigate your Inheritance Tax later down the line by moving that money out of your estate, and therefore leaving a bit more time for it to hopefully be clear of Inheritance Tax.
Katie: So in a way, that's the shift that people need to be making – not so much thinking about what they're giving away as thinking about the benefit of what they're handing over to their loved ones.
Ed: Yeah, I think that's exactly the point. And it's being able to see those gifts in action. But also building it into that wider plan.
Katie: And what are some of the biggest misconceptions when it comes to gifting to children?
Ed: I think the biggest misconception is that you make a gift and that gift immediately sits outside your estate for Inheritance Tax planning. So you've got to be really careful. You need to learn the rules. And I think that gifting is a really important part of legacy planning, but it's also a part that you should really seek professional advice from before you start making those gifts.
Katie: And why might people be reluctant to make a decision about gifting now?
Ed: Majority of that is an emotional one. It's a sense of control of that asset. Giving away cash to your family can feel like you're giving a part too early of your estate or the worry that you might need that money at some point. But I think it's really around learning the rules, how those might benefit you from gifting earlier rather than waiting for a lump sum in the will, and seeking professional advice.
Katie: That's really helpful. Thank you so much.