The 2024 budget has underscored the growing importance of collaboration between financial advisers and estate planning professionals. With key changes in tax thresholds, exemptions and reliefs, family succession planning has never been more critical.

Financial advisers now have a unique opportunity to deepen their role as trusted partners by aligning financial planning with estate strategies to address inheritance tax liabilities and ensure smooth transitions of wealth.

Here is why tighter integration between these disciplines will become a necessity.

Changes in tax rules and their implications.

The 2024 budget introduced a range of measures directly affecting inheritance tax and estate planning including;

• Freezing or reducing tax thresholds meaning that more estate will exceed the IHT threshold
• Revised exemptions and reliefs with regard to business and agricultural property making it important to reassess how assets are structured
• Pension reforms (the details of which are still to be finalized) which may cause clients to review their overall planning strategy as a result of being dragged further into the IHT net.

Whilst financial planning focuses on optimizing investments and liquidity, estate planning ensures that assets are transferred tax efficiently and according to the clients wishes.

Managing family dynamics in succession planning

Wealth transfer is often more about family relationships than it is the numbers. Aspects such as multiple beneficiaries, blended families or charitable intentions can add layers of complexity.  Together, financial advisers can bring estate planning to the table and;

• Ensure clarity and certainty by designing appropriate plans that align both with family values and legal requirements.
• Prevent disputes by reducing ambiguity that can lead to conflicts therefore safeguarding both relationships and legacies.

Planning ahead needs both emotional and financial factors to be simultaneously addressed and advisers should be well placed to help clients navigate difficult conversations at the same time as delivering robust solutions.

Growing importance of lifetime gifting strategies and tax efficient investments

The budgets emphasis on taxation of intergenerational wealth highlights the benefits of lifetime planning and efficient investment strategies, taking a synchronized approach;

• The financial planning role can assess the impact of lifetime gifts on the clients financial security factoring in cash flow, investment returns and lifestyle needs. Structured portfolios can be presented to optimize tax efficient options such as ISA’s, trusts and possibly, pensions as well as mitigating IHT liabilities with the use of appropriate protection policies perhaps.
• The estate planning role can help to ensure gifts are maximized for tax efficiency tracking annual exemptions and planning around the seven-year rule. In addition, the use of appropriate trusts within wills to ensure any tax allowances are not compromised by inappropriate planning.

Building collaborative teams

To thrive in a post 2024 budget environment, actively developing partnerships across the financial and estate planning landscape will become more important than ever to deliver value and effective solutions to clients.

We can work with you to develop your knowledge of estate planning principles as your extended estate planning team to enable you to proactively engage and support your clients.

With the option of directly managing the client relationship by taking estate planning instructions yourself (with our back office support) or referring clients to us, our business model has the flexibility to adapt to the unique needs of you and your business.

The future of family wealth management demands teamwork – are you ready to lead the way?

Call us on 01522 500823 or email enquiries@btwc.co.uk to find out how we can collaborate.

This article does not constitute as financial or legal advice. Independent advice to meet your personal circumstances should always be sought.