In the decades ahead, an unprecedented amount of wealth will change hands between generations.

The Silent Generation and Baby Boomers – broadly, those born between 1928 and 1965 – are passing on estates in what has been dubbed the “Great Wealth Transfer”.

The transfer is already underway and is set to accelerate in the coming years, so it’s important to have a clear plan in place. Whether you’re preparing to leave an inheritance or receive one, planning early can help protect your family’s wealth.

Read on to find out what the Great Wealth Transfer is and how it could affect you.

The Great Wealth Transfer will see trillions pass between generations over the coming years

Research from FTAdviser estimates that around £7 trillion will transfer between generations in the UK over the next 30 years.

However, despite the size of the sums passing through families as part of this shift, maintaining wealth across generations is a significant challenge. The same report notes that up to 70% of wealthy families lose their wealth by the second generation, and as many as 90% by the third.

Taxation, expenditure, and the division of assets mean that some loss is normal, but much of it could be avoided through careful planning and clear communication.

Inheritance Tax receipts have reached record levels and are likely to increase further

A significant portion of family wealth is often lost to Inheritance Tax (IHT), and the revenue has been rising considerably in recent years.

Figures from Statista show that receipts reached around £8.25 billion in 2024/25, which marked the fourth consecutive year of record highs.

One of the main drivers behind this rise is the ongoing freeze on IHT thresholds, alongside rising asset prices.

The nil-rate band, which is the amount you can inherit before you pay IHT, has remained fixed at £325,000 since 2009. Meanwhile, the residence nil-rate band, which offers an additional £175,000 when you leave your main home to direct descendants, has been unchanged since 2020 and will remain so until at least 2030.

It’s important to remember that the residence nil-rate band starts to taper once the total estate exceeds £2 million, meaning it’s gone completely for estates worth over £2.7 million for couples, or £2.35 million for individuals.

Over the same period that the standard nil-rate band has been frozen, the average UK house price has almost doubled, rising from roughly £150,000 in 2009 to £273,000 in 2025.

The widening gap between frozen thresholds and rising asset values, namely property, has quietly increased the tax burden on estates, creating what is known as a “stealth tax”.

Furthermore, several upcoming reforms to IHT could bring even more of your estate into its scope. These include changes to:

• Business Relief (BR) and Agricultural Relief (AR) – From April 2026, only the first £1 million of assets eligible for 100% BR or AR will receive the full amount, and any amount above that will receive 50% instead. Additionally, certain investments that previously benefited from full relief will see their exemption capped at 50%, regardless of their value.
• Pensions and IHT – From April 2027, pensions will be liable for IHT.

These reforms could substantially increase your IHT liability, and your family may need to rethink traditional estate planning strategies to ensure your estate planning remains tax-efficient during the Great Wealth Transfer.

How to improve your estate’s efficiency during the Great Wealth Transfer

With the IHT scope widening and trillions of pounds expected to change hands in the coming decades, taking steps now can help ensure that more of your wealth stays within your family.

Below are some of the key strategies a financial planner may explore with you.

Make full use of your nil-rate bands

Making the most of your nil-rate bands remains one of the most effective ways to reduce your IHT liability, even though these thresholds have been frozen for several years.

By maximising your allowances, you can pass on up to £500,000 before IHT is due (2025/26), though estates valued at more than £2 million may lose some or all the residence nil-rate band.

Transfers between spouses or civil partners are IHT-free, and any unused allowances can be combined. This means that you can collectively pass on up to £1 million to your beneficiaries without paying IHT.

A financial planner can help you restructure your estate to make the most of your nil-rate bands and ensure your assets are passed on as efficiently as possible.

Give gifts

Gifting can be an effective way to reduce the value of your estate for IHT purposes, provided you live for seven years after making the gift.

If you pass away within that seven-year window, the gift is considered a potentially exempt transfer (PET) and may be subject to IHT on a tapered scale, depending on how long ago it was made.

However, several exemptions allow you to make certain gifts free from IHT:

• Annual exemption: You can give away up to £3,000 each tax year without it being subject to IHT. This can be carried forward for one year, and couples can combine their exemptions, meaning you can collectively gift up to £12,000.
• Wedding gifts: Depending on your relationship to the couple, you can gift up to £5,000 towards a wedding or civil partnership.
• Small gifts: You can give up to £250 to as many people as you want, as long as it doesn’t form part of a larger gift.
• Regular gifts from income: You can also make regular payments from your income, provided these do not reduce your standard of living.

A financial planner can help you build gifting into your wider financial plan.

Consider placing assets in trust, including life insurance

Putting assets in trust takes them outside of your estate for IHT purposes. This can help ensure your wealth is efficient and distributed according to your wishes.

Similarly, placing a life insurance policy in trust means any payout from the policy won’t form part of your estate. This can keep the payout efficient and could even help cover some or all of the IHT due on your estate.

Explore Business Relief schemes

Although BR is set to change, it can still play a role in mitigating IHT on qualifying assets.

A financial planner can help you assess whether BR could form part of your estate planning strategy and keep you informed as new rules come into effect.

Get in touch

If you want to start getting your estate ready for the Great Wealth Transfer, get in touch.

Email info@blueskyifas.co.uk or call us on 01189 876655.

Please note

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

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The Financial Conduct Authority does not regulate estate planning, tax planning, trusts, or will writing.

Note that life insurance and financial protection 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.