Keeping it in the family

Previous generations of retirees commonly aspired to going on the age pension for the remainder of their years. Unless you came from a wealthy background it was rare to leave behind an estate comprising much more than perhaps a home or some personal effects. But things have changed.

The impact of superannuation

Superannuation became compulsory almost twenty years ago, and as a result, retirement nest eggs have grown substantially. There is also a plethora of retirement income products that offer more choice in how your money is managed. Accessing the age pension is a lot harder too, which places clear responsibility on the newest generation of retirees to be at least partially self-funded.

Intergenerational wealth planning

The traditional concept of a ‘family’ was once Mum, Dad and 2.4 kids. But nowadays, this ‘traditional’ view has been completely turned on its head. There are single-parent families, same-sex parents and blended families, to name but a few.

In contrast with your parents’ generation, there are a lot more factors to take into account when managing your finances and making your will.

Why make a will?

It can be confronting to think about the distribution of your assets after your death, and in what form your beneficiaries will inherit them, and it’s easy to put off this task for another day. But by being properly organised you can ensure that your loved ones have certainty and clarity about their financial position after you have gone.

An up-to-date will is essential so that your wishes for your estate are clear. Will kits are available, but it’s often not that much more expensive to have these documents properly drafted and executed by a solicitor. If you have a will, do your loved ones know where it can be found if needed?
Solicitors will usually securely store a will they prepare for no extra fee.

You can also use your will to set up testamentary trusts. These are a type of legal arrangement which is set up by the appropriate wording in a will and becomes operational upon the will maker’s death. These trusts offer flexibility regarding the distribution of income and assets, and this structure can provide tax advantages too.

Testamentary trust structures are most commonly used to protect the interests of beneficiaries with special needs, such as being a legal minor or in poor health. They can also be used by will-makers who have complex family, financial or business arrangements.

Child-allocated pensions

These can be quite a tax-effective way for a child to inherit a parent’s superannuation and any linked life insurance. To make sure that a child pension can be activated when it’s needed, the superannuation fund needs to have already noted the child as a beneficiary to their parent’s account. As not all superannuation funds provide this option, it pays to seek advice in this area.

Please contact us to discuss your family’s wealth planning needs.