Intergenerational Wealth Transfer – Getting the Transfer Right to Secure the Next Generation

When you come to your final years, will you be sure that your lifetime earnings and legacy will be safely transferred to the ones you care about most?

Approaches to wealth transfer do not always look the same. They can be within family business structures, through a gifted pre-death transfer, by way of a well organised will, or perhaps though death benefit nominations on your superannuation and life insurance policy.

Making sure that your estate plan is arranged and able to be carried out effectively will make certain that rather than your assets being administered according to the state, they will be executed in the way you wish them to be. This is important as it means that your estate will fall into the right hands and also allow for the person of your choosing to administer and make important decisions on your behalf, in the case that you cannot do so.

Ensuring your estate plan is in order and carried out well brings immense benefits both financially and relationally. The death of a loved one can be a time of grief, stress and sadness. Knowing that the estate will be carried on to the intended benefactors will ease anxiety and tension between family at your passing. The tax benefits are also worthwhile for the benefactor. Working with a financial advisor that specialises in estate planning, will allow you to properly outline your assets and work out the most tax effective ways of distributing your wealth according to your wishes.

Why a Will is so Important

An updated will is the first port of call when it comes to estate planning. A will allows you to keep full control of your asset distribution when you die. Without it, the state gets to decide who gets what, which means that you assets could fall into places you never wanted them to go. There are many ‘do it yourself’ will kits around, but having your will written up by a professional will avoid it being contested. It is important to have more than one copy, with one in a safe location, and another with your will executor and solicitor. This is to avoid any confusion or any rifts over your assets. Having a proper will in place is a surprisingly easy and inexpensive thing to have in place, yet somehow half of all Australians do not see the priority of it, as they do not have one in place. It is advisable to be like the other half of Australians, who got their act together and secured their financial legacy for the next generation.

Getting the Transfer Done the Right Way

While a will is a brilliant and essential part of your estate plan, there are other tax effective strategies you can implement while you are still alive. Speak to your financial advisor to see whether this strategy will suit your situation though, as you still need to consider your expenses in retirement, such a lifestyle and medical costs. You also need to speak to your accountant to mention the possibility of capital gains tax and stamp duty involved in a wealth transfer such as this, as well as the effect it may have on aged care pension and other entitlements.

What if you are the one Receiving the Inheritance?

If you find yourself being the beneficiary of someone’s estate, the first thing you might want to do is keep calm and wait a bit before you take any action. An inheritance does not come around usually more than once in your life. When you begin to feel ready, speak to your financial advisor to develop a plan to secure your financial future long term, as well as perhaps enjoying a little bit of it now. Your financial advisor has the experience of perhaps dealing with inheritances several times a year, and will help you understand tax implications, pitfalls and strategies for spending your inheritance wisely. Having an experienced professional to take a ‘birds eye view’ of your situation and create a plan completely tailored to your life goals will potentially save you a lot of time and money and leave you to enjoy your inheritance with the knowledge that you have managed it well.

To speak to a financial adviser regarding the future of your family legacy, make an appointment today on 02 4038 1623.

The information within, including tax, does not consider your personal circumstances and is general advice only. It has been prepared without taking into account any of your individual objectives, financial solutions or needs. Before acting on this information you should consider its appropriateness, having regard to your own objectives, financial situation and needs. You should read the relevant Product Disclosure Statements and seek personal advice from a qualified financial adviser. The views expressed in this publication are solely those of the author; they are not reflective or indicative of licensee’s position and are not to be attributed to the licensee. They cannot be reproduced in any form without the express written consent of the author. Elliot Watson Financial Planning Pty Ltd and its advisers are Authorised Representatives of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429.