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Wealth planning across the ages

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For previous generations of Australians, retirement usually meant ceasing work and hoping to live long enough to qualify for the age pension. Apart from the family home and personal belongings there were usually no substantial assets to leave behind for children or other family members. Superannuation has changed this considerably.

The super impact

Superannuation became compulsory more than 20 years ago, and as a result, retirement funds have grown exponentially. There is an abundance of retirement income products that offer more choice in how super is managed. Accessing the age pension is becoming harder, which places clear responsibility on the newest generation of retirees to be at least partially self-funded.

Intergenerational wealth management

The traditional concept of a ‘family’ was once “Mum, Dad and 2.4 kids”. This ‘traditional’ view has been completely turned on its head with single-parent families, same-sex parents and blended families, to name a few.

Compared to earlier generations, there are a lot more factors to take into account when managing money.

Is a Will really necessary?

It can be confronting to think about who gets what when you’re no longer here, so it’s easy to ignore this task. However, the upside of being properly organised now is that your loved ones will have certainty and clarity about your wishes after you have gone.

Inexpensive will kits are available, but it’s not too costly to have these important documents properly drafted, executed and stored by a solicitor or trustee.

Put your trust in a trust

You can also use your will to establish a testamentary trust. This is a type of legal arrangement which becomes operational upon death. These trusts offer flexibility regarding the distribution of income and assets, and the structure may provide tax advantages too.

Testamentary trust structures are 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 or to provide tax advantages to beneficiaries..

Dependent child pensions

These can be quite a tax-effective way for a dependent 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.

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