Estate Planning Issues of Intergenerational Wealth Transfer

As Australia’s largest transfer of wealth is underway, $3.5 trillion of assets are poised to be inherited over the years to come. Now is the time to start the conversation and take proactive steps to tackle any estate planning concerns and help facilitate the transfer of this wealth to the next generation. Importantly it is worth seeking guidance on how to preserve this wealth as it transfers, this could involve having an estate plan drawn up to help structure how assets should be treated under the will which can have numerous considerations.

The tax implications of an Estate are also worth considering. Consider superannuation for example, should upon a person’s demise these super benefits be paid directly to a non- financially dependent beneficiary, such as an adult child, then the taxable component of that benefit will incur a 17% tax.

Alternatively, if the same benefit is paid to the estate, via a trust, which then distributes the payment to the beneficiary, only 15% tax needs to be paid, saving 2% of the taxable component balance of a super fund!

Another important estate discussion is around enduring powers of attorney and enduring powers of guardianship. Careful thought is needed to avoid problems, such as one child gaining control and wielding it over siblings or taking advantage of an incapacitated parent. However, as long as prudent steps are taken, this risk can be mitigated.

It is vital to seek guidance on what will be most appropriate to you based on your circumstances.