For children or grandchildren aged between 18-40 who are considering purchasing their first home or looking to provide an additional source of wealth in retirement, the Lifetime Isa offers a good solution.
Although it comes with a stiff withdrawal penalty if not used for a first home or for the pension, one of its key benefits is the 25 per cent government bonus (up to a maximum of £1,000) added to each contribution.
If the thought of your children or grandchildren being able to access these funds freely does not appeal to you, then the use of your own Isa allowance would prove invaluable.
It allows you to control when and how much money is paid over to them.
Alternative tax advantage options include Premium Bonds. While they promise no guaranteed return, they do offer a secure and safe option.
Close says: "Pensions are also a very good long-term investment option, with tax relief available on any contribution on behalf of your children or grandchildren.
"For those in a position to make larger payments, the use of trusts offers an opportunity to both move funds outside of your estate and oversee how these funds are to be dispersed."
Similarly, an annual gift of up to £3,000 or regular gift out of normal expenditure may serve to benefit all parties, with the recipient profiting through increased wealth and the donor profiting through the reduction of their estate for IHT purposes.
5. Review
Close adds: "Reviewing your plan on a regular basis will allow you to check whether you are on track to achieve your objectives or if further planning is needed.
"Given the uncertain and often volatile time we have had during the past 12 months, financial aspirations and long-term goals may have altered without it registering.
"Regularly reviewing your investment strategy allows you to amend the risk levels as well as contribution levels as your objectives come closer to fruition."
6. Seek financial advice
Finally, the value of paying for financial advice should not be underestimated.
A study conducted by the International Longevity Centre and supported by Royal London, concluded that in comparison to those who took no advice, individuals who did so between 2001 and 2006 benefitted from an average increase in the value of their assets by some £48,000 after 10 years.
He concludes: "Engaging with a financial planner may prove to be the shrewdest move in planning for your children’s and grandchildren’s future."
simoney.kyriakou@ft.com
