Are you ready for the “Great Wealth Transfer”? 5 ways to prepare your estate

An estimated £7 trillion is expected to change hands over the next three decades, as Unbiased reports.

This so-called “Great Wealth Transfer” poses a significant opportunity for the generations set to inherit from baby boomers (born 1945 – 1965) and the silent generation (born 1928 – 1945).

However, without comprehensive estate planning, much of this financial opportunity could be eroded. In many cases, insufficient planning could see more of your wealth ending up in the hands of a beneficiary you wouldn’t have chosen yourself – such as HMRC or an ex-partner.

Keep reading to discover five key steps to prepare your estate to be passed to the next generation.

1. Make and update your will

First and foremost, having an up-to-date will can help ensure your chosen beneficiaries receive their intended inheritance. Without a valid will, your estate will be distributed according to the rules of intestacy, which may not align with your wishes and could result in a lengthy probate process for your loved ones after you die.

Wills can quickly become out of date. So, as your relationships and financial circumstances evolve, it’s important to regularly review and update your will to ensure it continues to reflect your wishes.

Your will should be unambiguous, signed by yourself and two witnesses, and stored securely where a trusted person can find it. If the document contains errors, ambiguities, or outdated information, you could run the risk of your will being disputed after your death.

A financial planner can help ensure your will remains accurate, clear, and up to date to reduce the risk of disputes after you pass away.

2. Calculate your estate’s Inheritance Tax liability

When deciding how to distribute your wealth, it’s important to understand how much Inheritance Tax (IHT) your estate might be liable for.

Typically, IHT is charged at 40% for assets exceeding the nil-rate bands. As of 2026/27, you can generally leave behind £325,000 without being subject to IHT (nil-rate band), or up to £500,000 if you’re leaving a primary residence to a direct descendant (including the £175,000 residence nil-rate band).

The executor or administrator of your estate will usually use your assets to pay the IHT bill within six months of your death. You might wish to make provisions to cover the bill, such as by setting the funds aside in a bank account or taking out life cover.

Otherwise, the tax could be deducted from your loved ones’ portion of your wealth, or they could even have to foot the bill themselves while waiting for assets (such as your property) to be sold.

3. Gift wealth in your lifetime

In some cases, gifting in your lifetime can help mitigate your IHT bill and leave more of your wealth in the hands of loved ones.

Typically, gifts made more than seven years before your death are excluded from your estate for IHT purposes. However, if you pass away within seven years of gifting, the value may be included in tax calculations.

As such, you may wish to utilise your tax-efficient allowances to reduce the risk of your gifts counting towards your IHT bill. As of 2026/27, these include:

• Annual Exemption: £3,000 a year, which you can gift to one person or spread across multiple recipients.
• Wedding gift allowance: £5,000, £2,500, or £1,000 upon marriage or civil partnership, depending on your relationship to the recipient.
• Small gift allowance: An unlimited number of gifts up to £250 per person (cannot be combined with any other allowance).
• Regular gifts: Gifts made from your regular income, subject to strict criteria.

So, if you’re worried about a large portion of your estate going to HMRC after you die, you might consider gifting early and using your allowances to pass more of your wealth to loved ones.

4. Consider using trusts

Depending on your circumstances, you might consider placing some assets in trust to mitigate your estate’s IHT liability.

The options for trusts are complex. There are several types to choose from, each with its own intricate rules and IHT charges. Broadly speaking, there are three main types of trust:

• Bare trusts: Also called “absolute trusts”, these work in a similar way to gifts. The assets immediately become property of the beneficiary and are generally excluded from your estate’s IHT calculations after seven years.
• Discretionary trusts: With these trusts, you assign a “trustee” to manage and distribute the funds among beneficiaries after you die. IHT is commonly charged on entry, at each 10-year anniversary, and on exit, often resulting in a lower IHT bill overall.
• Interest in Possession trusts: These allow you to grant a beneficiary rights to income generated from assets in a trust, while a different beneficiary gains ownership of the capital. IHT varies depending on the specific trust details, but may be applied similarly to discretionary trusts.

Assets placed in trust often cannot be transferred out by the donor. As such, it’s worth consulting with a financial planner for support in selecting a trust before making any irreversible decisions.

5. Help your beneficiaries make the most of their inheritance

Talking about money can be uncomfortable, especially when it’s linked to your death. But speaking to your beneficiaries about their inheritance can be a key part of estate planning.

Without transparent communication, your beneficiaries could make false assumptions about how much they’ll receive when you pass away. This can lead to issues and wasted opportunities further down the line.

In some cases, your loved ones could have staked their financial future on an expected inheritance, only to discover it’s smaller than they’d assumed. In others, they could receive a larger amount than expected, leaving them with a significant lump sum but no plans for how to use it.

By talking openly about your estate plan, you can support your loved ones to make the most of their inheritance. Not only can you offer guidance on how to save, invest, or spend the funds, but you can also plan to transfer your wealth in a way that suits their goals, such as by gifting early to help them reach key milestones sooner or placing assets in trust for your grandchildren.

Get in touch

For support in preparing your estate to be transferred to the next generation, get in touch to find out how we can help you:

• Marnel Stafford: email Marnel.Stafford@fosterdenovo.com or call 07305 970959
• Ryan Edwards: email Ryan.Edwards@fosterdenovo.com or call 07591 758136.

Alternatively, you can call our office on 0207 469 2800.

Please note

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

All information is correct at the time of writing and is subject to change in the future.

Please do not act based on anything you might read in this article. 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, trusts, or will writing.

Note that life insurance plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.