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Intergenerational Wealth Transfer

Intergenerational Wealth Transfer: an Estate Planning issue…

In the coming decades, a significant shift of wealth will occur, with billions of dollars moving from the baby boomer generation to their descendants. The success of this intergenerational wealth transfer hinges on how tax-efficient these transfers are. While some families begin the process while the asset owners are alive, others may not plan ahead, leading to less optimal outcomes through intestacy.

Strategies for Wealth Transfer

Families might employ various strategies, such as:

  • Gifting assets before death;
  • Utilizing family business structures;
  • death benefit nominations in superannuation and life insurance policies;
  • Or, structuring a well-planned Will.

Others will arrange their affairs through a carefully structured Will. The unfortunate outcome for those who don’t plan ahead, will be a transfer through their intestacy. Our website Library article on intestacy was well received and prompted a few to undertake the Estate Planning process.

The Challenge of Estate Equalization

When transferring wealth, two primary concerns arise:

  1. Ensuring fairness among beneficiaries;
  2. Managing the tax implications.

Tax laws can complicate efforts to distribute assets fairly, affecting both personal income and capital gains taxes. It’s crucial to arrange transfers carefully to meet intended goals, with life insurance products often serving as a strategic tool.

Considerations for Effective Planning

Watch out for specific issues, such as:

  • The status of real property (pre-CGT or with exemptions);
  • The tax-dependency of superannuation beneficiaries;
  • Proper management of asset-owning structures.

Addressing these concerns requires careful planning, particularly with business structures holding valuable assets. Ensuring effective management and control of these assets post-death is essential. (For more about what assets can be bequeathed in an estate plan, refer to this article in our 13-part series on Estate Planning.)

Looking for guidance on intergenerational wealth transfer matters?

The experienced wealth management advisers at Continuum Financial Planners Pty Ltd are well able to assist you with ensuring that intergenerational transfers of wealth within your family are made effectively – ‘we listen, we understand and we have solutions‘ as to how to achieve your financial goals. Phone our office (07-34213456), or Contact Us to discuss any concerns you have in relation to these matters – whether for you as a potential beneficiary; or as a deponent of wealth wanting to ensure special needs are met in the process.

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