Uncertain economic situations can bring a level of worry and anxiety, but there are always options to safeguard your nearest and dearest.

Seeking professional financial advice can make you aware of options that you may not have previously considered. Whether it’s finding surplus income that you can transfer directly to your loved ones in need, gathering funds from portfolios and pensions, or utilising investment opportunities, there are ways to lend your loved ones a helping hand through this turbulent time.

“The younger generation are seeing mortgage rates increase rapidly, whilst energy, fuel and other living costs also continue to soar,” observes Nick Lawson, wealth management director at HGH Wealth Management in York.

Nick tells us more about current market fluctuations, the importance of having an effective financial plan and what you can do to support your child’s future.

Great British Life: By releasing funds to your children and grandchildren, you can help them through the cost-of-living crisisBy releasing funds to your children and grandchildren, you can help them through the cost-of-living crisis (Image: Getty Images)

Q: What are peoples’ main financial concerns as living costs rise?

A: One of the major concerns that my clients speak to me about is the amount of debt amongst the younger generation. Purchasing their first home, going through a divorce or even buying a car can incur far heavier debts for young people than they did over the previous two decades.

Mortgage rates, whilst we don’t advise on them, are another important factor. In the past decade, fixed rates were the most popular option, but with inflation being bumped up to over 10 per cent, the Bank of England Base Rate at three per cent (at the time of writing) and mortgage rates increasing it may be wise to look at all available mortgages – including variable rate as well as fixed rates products.

For those aged 40 or younger, it can be more difficult to accumulate shares, property or other assets to shield them from economic volatility. However, if you have an estate that is in good order and an effective investment plan, you are much more likely to be able to provide assistance.

Q: How can people use their financial assets to help their families?

A: There are several methods for releasing funds to your loved ones. Ensuring that transfers are completed in the most tax efficient way is crucial, so you don’t incur additional expenses. Money withdrawn from pensions and ISA portfolios may be tax free, so it's worth checking with an adviser to see how much you can afford to give away.

Gifts from regular or excess income are a very neat way of releasing funds to children or grandchildren. From an inheritance tax point of view, these gifts can be highly advantageous as any surplus income you give away is immediately regarded as outside of your estate and not subject to the seven-year potentially exempt seven-year rules (PET).

Q: What are the important things to consider before transferring funds?

A: The seven-year PET rule is an area that causes some confusion, in terms of how much people can give away and where they can take it from. If you make a gift which exceeds the £3000 annual threshold and you live for seven years afterwards, the gift is completely free from any potential inheritance tax liability.

It’s a common misconception that you can only give up to £3000, when in fact you can make gifts of up to £3000 each tax year without incurring any inheritance tax implications.

You can give as much as you like, but to protect the long-term value of your estate it may be worth examining how much of your income is regular as opposed to excess. It’s worth checking this with a financial adviser before allocating funds elsewhere.

Q: What are the advantages of having a financial plan?

A: Considering your long-term aims is always a good idea, and your finances are key to providing your family with security in the face of economic difficulties. Whether you’re concerned about the later stages of retirement and possible care fees or want to ensure that your children and grandchildren have suitable funds to help them, an effective financial plan is vital.

Investment portfolios can build on your existing assets and increase your wealth over time. There are low-risk and high-risk portfolios, as well as everything in between, however the recent market fluctuations have hit low-risk portfolios harder than high-risk ones.

Whilst it can feel like a sucker punch at the time, it will only hurt you if you withdraw your money – the shares will gradually return to value and may even exceed their previous worth later down the line. Remember, time is your biggest friend with this type of investing.

Speaking with professional, accredited financial advisers to create a bespoke financial plan is the best way of capitalising on your assets. We offer reassurance and peace of mind and can help you allocate monies to help your loved ones through the cost-of-living crisis.

For professional and trustworthy financial advice, visit hghwealth.co.uk or call 01904 655202 to book a free consultation.

HGH Wealth Management Ltd is an appointed representative of InvestAcc Ltd which is authorised and regulated by the Financial Conduct Authority. Company No. 3203520. Registered Office: Club Chambers; Museum Street; York; YO1 7DN.