Using financial advice to build wealth for your children

Financial advice can be one of the most beneficial things when it comes to building your wealth. However, it can also be important when you want to build wealth for your children too.

We’ve put together this article to show you how you might use financial advice to build wealth for your children effectively, and help secure their finances for the future.

Read on to find out more.

Why use financial advice?

Financial advice is key in various situations.

By consulting a financial expert, you can receive guidance on how to approach your unique financial situation with your children’s wealth, and explore the right options that align with your circumstance.

Your adviser will discuss various things with you, including your income, your children’s requirements, the goals you have for your children, and any potential concerns or obstacles you might be facing.

This can allow your adviser to offer more accurate recommendations on how to approach your children’s wealth, so you can grow their finances effectively whilst adhering to your own circumstance and realistic options.

The approach you take with your adviser can involve various different types of investments, depending on your unique situation.

To give you a better idea of how this might work, here are two specific ways you can build wealth for your children with expert financial advice:

Investing in junior accounts

One way to effectively build wealth for your children is through investing in junior accounts. A junior investment account allows you to grow your children’s finances tax efficiently.

There are two types of junior accounts – a Junior Individual Savings Account (JISA) and a Junior General Investment Account (Junior GIA).

A JISA lets you save a certain amount of money each year for your child that’s sheltered from tax. the amount you can save each year is decided by the annual JISA allowance, which as of the tax year 2023/2024, is £9,000.

This money can only be accessed when your child turns 18, and the funds can be withdrawn tax-free.

A Junior GIA works similarly, except there is no limit on the amount you can contribute each year, and the money can be accessed at any time. However, the returns on these accounts are taxable – income tax and Capital Gains Tax (CGT), for instance.

Your financial adviser can help you plan out your contributions to these accounts each year, so you grow your children’s savings as tax-efficiently as possible.

Also, with taxable Junior GIAs, your adviser can help you utilise your children’s personal allowances and CGT allowances to shelter the returns from tax.

Your expert can help you save in these accounts in the right way, so that when your child needs to access the money, they have the right funds in there to support their goals – education, property, etc.

Leaving an inheritance

Financial advisers can also help you build your children’s wealth by leaving an inheritance.

This involves you gathering together your estate and leaving it to your loved ones when you pass away. Your estate can consist of investments, property, trusts, personal items, and more.

There are various rules surrounding Inheritance Tax (IHT) that can impact your inheritance, which is why an adviser is necessary to help you structure your inheritance in the right way.

For instance, leaving your estate to your children can incur IHT if the value is above the threshold – £325,000. However, your adviser could help you with giving away your home to your children, which then increases your IHT threshold to £500,000.

Also, your adviser can make you aware of how gift-giving can help you hand over some of your wealth to your children whilst you’re alive, and shelter it from tax. They can help you plan your gifts each year to grow your children’s savings as much as possible, without compromising on tax efficiency.

If you’re trying to find the best way to build your children’s wealth, why not contact an expert financial adviser to begin creating the right approach for you?

Please note, the value of your investments can go down as well as up.