By Craig Keary, CEO of Selfwealth
So far in this six-part series with the Australian Shareholders Association, Craig Keary, CEO of Selfwealth, has unpacked several topics crucial to the intergenerational wealth shift. To do this, a new framework has been introduced: ‘FAMILY.’
Within this FAMILY acronym are the six key elements considered crucial to a successful intergenerational wealth transfer. The ‘I’ represents inheritance strategies – a critical area that deserves adequate thought, planning and the appropriate professional advice.
Planning for the future is an important part of life, and an inheritance strategy helps ensure that your loved ones are cared for in a way that aligns with your wishes.
Without a clear inheritance strategy, families can face legal hurdles, unexpected tax bills, and even disputes that could have been avoided. Taking the time to plan allows your estate to be distributed fairly and tax-efficiently, offering peace of mind for both you and your beneficiaries. So, what are the key considerations to make your inheritance strategy both fair and effective?
Principles of an effective inheritance strategy
• Fairness vs. equality
When it comes to inheritance, fairness doesn’t always mean an equal split. Each family’s situation is unique – some children may have greater financial needs, while others may have already received support in different ways. A thoughtful inheritance plan takes these factors into account to create a balanced and fair outcome.
• Preventing family disputes
Inheritance can be a sensitive topic, and emotions often run high. Clear communication, open discussions, and legally sound documentation can help reduce misunderstandings and potential conflicts. The goal is to ensure that your wishes are respected while maintaining family harmony.
• Ensuring financial security
Beyond simply distributing assets, a good inheritance plan considers the financial well-being of beneficiaries. This might mean providing ongoing support for dependents, ensuring funds are managed responsibly, or setting aside resources for future needs like education or healthcare.
Key steps for fair and distribution
• Writing a will
A legally valid will is the foundation of any inheritance plan. It provides clear instructions on how assets should be distributed, appoints executors to carry out wishes, and helps avoid complications that can arise if no will is in place.
• Setting up trusts
Depending on the circumstances, trusts can be a useful way to manage and protect assets for the long term. They can allow for greater control over how and when beneficiaries receive their inheritance, helping to safeguard wealth and reduce potential tax implications.
• Considering superannuation
Superannuation is often one of the largest assets in an estate but isn’t automatically covered by a will. Making sure a binding death benefit nomination is in place ensures that your super is distributed according to your wishes and, where possible, in a tax-effective manner. Seeking professional advice is important in this regard and you should consider your own circumstances.
• Gifting and philanthropy
Giving whilst still alive can be a rewarding way to see loved ones benefit from generosity. It can also help reduce the overall size of an estate, potentially lowering tax obligations. Charitable giving is another meaningful way to leave a lasting impact.
Where expert, professional advice is needed
Inheritance planning involves more than just writing a will. Estate lawyers, financial advisers and tax advisers can help structure an estate in a way that protects assets, minimises legal risks, and ensures that beneficiaries receive their inheritance in the most effective way possible.
While Australia doesn’t currently have a direct inheritance tax, other tax implications – such as capital gains tax (CGT) – can apply when assets are passed on. Professional guidance can help to navigate these complexities and make informed decisions.
A well-planned inheritance strategy ensures that a legacy is handled the way intended, providing both financial security and peace of mind for loved ones. By taking proactive steps today, and creating a plan that reflects values, supports family, and makes the transition as smooth as possible.
If you haven’t yet started, now is the perfect time to explore your options and ensure that your wishes are carried out in the best way possible.
The information has been prepared without considering the objectives, financial situation, or needs of any individual. For this reason, any individual should, before acting on this information, consider the appropriateness of the information, having regards to the individual’s objectives, financial situation or needs, and, if necessary, seek appropriate professional advice.
This article is brought to you by Selfwealth, a proud partner of the Australian Shareholders’ Association.
