Inheritance and Windfalls – Navigating the Challenges of 'Sudden Wealth'

Insight | by Tom Tracy

The ‘baby boomer’ generation (1946 – 1964) is the wealthiest in the UK. Soaring property values and the prevalence of final salary pension schemes during their working lives mean that one in five (20% of) Britons over the age of 65 is now a millionaire (compared with 7% in 2006)1. The current and ongoing transfer of this wealth to their children and beneficiaries in the coming years will be the largest intergenerational wealth transfer the UK has ever seen – estimated to be in excess of £5.5 trillion2.

Inheritance is not the only source of wealth that is becoming increasingly prevalent. A recent survey of SME business owners [with an annual turnover in excess of £5m]3 found that 65% are currently pursuing an exit strategy, and 26% intend to exit within 12 months.

Sometimes termed ‘sudden wealth’, inheriting a significant amount of money or selling a successful business can result in a set of circumstances that, despite the obvious financial benefit, comes with its own challenges. Not least, understanding the tax implications of your windfall, which for expats can be more complex and potentially more punitive, and determining how to manage the money going forward, so that you can look to the future with clarity and confidence.

In her book, ‘Sudden Money’, Susan Bradley suggests that if you are the beneficiary of a significant windfall, your priority should be to assemble a team of trusted professional advisers; a financial advisor; a tax advisor; and a lawyer. And as an expat, it’s extremely important that your team has international expertise.

This team of advisors will be able to identify each tax, legal and financial challenge, determine its complexity and urgency, and then help you navigate each issue in turn, to provide you with peace of mind, and the optimal outcome for your finances.

Specifically, your international financial advisor will work closely with you to define your short, mid and long-term goals, and agree on a plan that ensures your money works as hard as possible for you to meet those goals, and to secure your long-term financial freedom.

In summary, if you benefit from sudden wealth, there are three key points to remember:

1. Assemble a trusted team of professionals around you – ideally an international financial advisor who can introduce you to [and work closely with] an international tax adviser and international lawyer.

2. Work with this team of professionals to identify the issues that need to be addressed and the most time-sensitive decisions that need to be made.

3. Work with your financial advisor to create a plan that enables you to look to the future with clarity and confidence, knowing that the money from your windfall is contributing significantly towards your financial freedom.

Forth Capital has been providing expert international financial planning and wealth management advice to expats worldwide for two decades. To arrange an initial consultation and to discuss any questions you have relating to inheritance or a windfall with our international financial advisory team, contact us today.

1. Office of National Statistics.
2. Centre for Economics and Business Research.

3. Nationally representative survey of 504 UK business owners aged 18+ with turnovers of £5m+ conducted by Censuswide between 28th April 2023 to 9th May 2023.

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