Passing wealth to the next generation can raise a difficult question for families with substantial assets: how can money be transferred to children and grandchildren without giving up control too early?
For one couple with an estate worth more than £14 million, the answer involved starting their estate planning well before they expected to need it. Their approach combined cashflow modelling, discretionary trusts and regular reviews, allowing them to transfer wealth while retaining oversight of how assets could ultimately benefit future generations.
The couple, who were in their late 50s, had built their wealth through property, investments, private equity and pensions. Following the partial sale of their business, they recognised that they had accumulated considerably more wealth than they were likely to require during their lifetimes.
However, they were cautious about transferring significant sums directly to their children. The next generation was still developing its financial experience, and the couple wanted any support to create future opportunities rather than encourage dependency. They also wanted to retain oversight of how the assets were managed and ensure that future generations could benefit.
The planning process began with their wider financial position rather than inheritance tax. Detailed cashflow modelling was used to assess their long-term financial requirements and identify wealth that could potentially be transferred without affecting their lifestyle or future financial security.
The couple subsequently each transferred £325,000 into discretionary trusts and appointed themselves as trustees. This allowed the assets to be moved outside their estates while retaining control over how they were managed and providing flexibility over who could benefit, including children, grandchildren and future generations.
The strategy was structured as an ongoing process rather than a single transaction. Seven years later, after reviewing their circumstances and updating the cashflow modelling, the couple transferred a further £650,000 into trust.
The first £650,000 placed into trust in 2018 has since grown to approximately £1.15 million. According to the case study, the assets ceased to form part of the couple’s estates when they were gifted into trust. More than seven years have now passed since the original gifts, meaning they are no longer relevant for inheritance tax purposes under the circumstances described.
The second £650,000 transfer, made in 2025, has grown to approximately £692,000. Because the gifts were made within the previous seven years, they remain relevant for inheritance tax purposes. However, future investment growth within the trust is occurring outside the couple’s estates.
Beginning the process earlier can give families more opportunities to structure transfers, review their financial position and potentially move future investment growth outside their estates.
Arbuthnot Banking Group PLC (LON:ARBB), operating as Arbuthnot Latham, offers private and commercial banking products and services in the United Kingdom. Established in 1833, Arbuthnot Banking is headquartered in London, United Kingdom.
