\n\t\t\t\t\tAs pensions will be drawn into the inheritance tax net as of April 2027, more people are looking to give away their assets earlier to avoid being taxed\t\t\t\t\t <\/p>\n
More young people are approaching financial advisers because they stand to come into wealth sooner than they expected. As a result of Labour<\/a>\u2019s plan to bring pension pots into the inheritance tax (IHT) net from April 2027, more families have been deciding to hand over assets earlier than previously planned to avoid their descendants being taxed.<\/p>\n Charlotte Ransom, the chief executive of financial planning service Netwealth, said: \u201cThe proposed changes on IHT have driven a marked acceleration in clients bringing forward their gifting plans.<\/p>\n \u201cThis shift has led to a rise in enquiries from younger adults, often children or grandchildren of existing clients, looking for wealth management advice and support.\u201d<\/p>\n Currently, unspent pensions are typically passed tax-free to beneficiaries at the trustees\u2019 discretion. But under the proposed changes<\/a>, these funds could be taxed at rates of up to 40 per cent as part of the estate if it exceeds the IHT threshold.<\/a><\/p>\n As a result, people have been looking to take advantage of the \u201cseven-year rule\u201d, whereby you can gift money to children or other loved ones and, provided you live for another seven years, no IHT is due.<\/p>\n In turn, younger adults are inheriting large lump sums much earlier than they may have expected.<\/p>\n Claire Exley, the head of advice at the investment management service Nutmeg, said: \u201cIn the past few years we have certainly noticed more younger people seeking free financial guidance or paid-for financial advice in order to help with their financial needs.<\/p>\n \u201cWith recent rule changes around inheritance tax and passing on wealth and assets, we anticipate that this will continue to grow.\u201d<\/p>\n \u201cPassing on money or assets while you are still alive can also help to minimise complexity later. Even relatively modest estates can become complicated after a family bereavement.\u201d<\/p>\n A study earlier this year by the investment platform AJ Bell found that 53 per cent of advisers had had new clients approaching them for advice as a result of Chancellor Rachel Reeves\u2019s proposal to impose IHT on death, with 84 per cent of advisers saying that queries about estate planning had increased.<\/p>\n Phineas Hirsch, a private client partner at the law firm Payne Hicks Beach, said: \u201cWe are seeing younger clients who are inheriting earlier \u2013 most recently driven by \u2018early inheritances\u2019 of family businesses which would previously have been retained until death by the parents.\u201d<\/p>\n Saleem Sheikh, a senior partner at the law firm Seddons GSC, added: \u201cWe have definitely seen a rise in younger clients coming to us for estate and inheritance planning. People in their 20s and 30s are now engaging with these issues much earlier than previous generations.<\/p>\n