A family affair: Four persuasive reasons to approach financial planning as a unit

As more people look to help family during the cost of living crisis, find out four persuasive reasons to approach financial planning together.

If you are seeking ways to gain more value from financial planning, have you ever considered involving your family in your plans?

While you may be financially comfortable yourself, you could be worried about your family’s wealth security during the cost of living crisis. Indeed, a survey of 200 financial advisers, published by Royal London, found 55% said their clients were more worried about their families than themselves.

Making financial planning a family affair could mean there are more “cooks” working on your “broth”, but it does have measurable benefits too.

Keep reading to find out four persuasive reasons to approach financial planning as a family unit.

  1. Being on the same page can reduce marital conflict

In another study conducted in 2022, Royal London found that money is the most common source of conflict for couples.

The findings revealed that 33% of couples said they are “incompatible” when it comes to spending and saving, while a further third of participants said they kept “financial secrets” from their partner.

Simply put, approaching your financial planner as a couple could work to eliminate mismatched goals, financial incompatibilities, and conflicts that arise between you and your partner.

Discussing your finances with an impartial party may be what you need to align your goals and work as a team.

  1. Listening to your children’s concerns can let you provide more effective help

If you have adult children or grandchildren, it’s very likely they are experiencing some financial stress at the moment.

With the Office for National Statistics (ONS) reporting that inflation has remained in double figures as of March 2023, and the Bank of England (BoE) pushing the base rate to 4.5% in May, young professionals may meet fewer opportunities to save and invest than in previous years.

This can be evidenced by the Royal London study, which found 25% of advisers said clients are facing requests for financial help from struggling adult children. If you’re considering becoming the Bank of Mum and Dad during the cost of living crisis, family financial planning could be a hugely effective step to take.

When you meet with us alongside your adult children, we can:

  • Listen openly to concerns and questions from both sides
  • Ensure an agreement that works for both parents and children
  • Assess the tax implications of financial gifts or property transfers
  • Create an interlinked financial plan that keeps you and your adult children on the same page.

Knowing where everyone stands in any financial agreement between family can serve everyone’s financial and emotional needs, ensuring peace of mind at every stage.

  1. You could more easily organise care and improve financial security for elderly relatives

Not only could including the younger generations in your wealth planning journey be beneficial, but factoring your elderly relatives into your plans could also be invaluable.

Indeed, as you may know, the cost of elderly care (for those who are not entitled to state-funded support) can be high. According to care home research group Lottie, in 2022, the average weekly cost of residential care was around £800, and the weekly cost of nursing care was approximately £1,078.

If your parents or other older relatives are reaching the age when they may need care soon, or are already under some form of care agreement, there could be many financial elements to discuss as a family.

These factors include:

  • Whether your elderly relatives can afford their own care, or if they need your help
  • Registering both a health and wellbeing, and financial Lasting Power of Attorney (LPA) in case your relatives lose capacity
  • Ensuring you and your relatives have financial protection in place<
  • Organising the sale of any properties your relatives own if they move into a full-time care facility.

Even if you can’t bring your loved ones to a meeting with a Kellands financial planner, visiting us with family wealth matters in mind can help you discuss all the relevant details in plenty of time.

  1. Family financial planning can streamline the estate planning process

Finally, if you are approaching (or already in) retirement, it is likely you are beginning to plan how your estate will be inherited by your loved ones when you pass away.

With so many moving parts involved in estate planning, consulting a financial planner as a whole family can streamline the entire process.

Importantly, family financial planning can help your loved ones understand approximately how much inheritance to expect. What’s more, this process could ensure your protective documents, including your will, are fully up to date.

Plus, it could be prudent to work together to reduce the value of your estate over time. Inheritance Tax (IHT) is charged at 40% of the value of your estate that exceeds the nil-rate band, standing at £325,000 in the 2023/24 tax year. You might be able to pass on an additional £175,000 if you pass your main residence to your direct descendants. However, any value over these thresholds could be subject to the 40% charge.

So, decreasing the taxable assets you hold by slowly passing them to family over the years could mean there’s a smaller IHT bill to pay when you die.

As of 2023/24, you can normally make cash gifts of up to £3,000 a year, split among whoever you like, which could work to mitigate IHT later on. Additionally, you can gift up to £250 to different people as many times as you like, so long as you have not used another allowance on the same person.

Approaching estate planning as a whole family can help you start the process in a low-stress way, and may enable your children and grandchildren to benefit from your wealth tax-efficiently in the coming years.

Get in touch

We are here to form a longstanding relationship with your whole family, so everyone feels financially supported. To discuss financial matters as a unit, email us at hale@kelland.co.uk, or call 0161 929 8838.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

All contents are based on our understanding of HMRC legislation, which is subject to change.

The Financial Conduct Authority does not regulate estate planning, tax planning or will writing.

Remember that taper relief only applies to gifts in excess of the nil-rate band. It follows that, if no tax is payable on the transfer because it does not exceed the nil-rate band (after cumulation), there can be no relief.

Taper relief does not reduce the value transferred; it reduces the tax payable as a consequence of that transfer.

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