Feb 03, 2020  | Tags: wealth transfer, estate planning

Our Insights

You might've heard the term 'wealth transfer' lately. Simply, it is the process of passing on your wealth and assets to others when you pass away.

This process isn’t an automatic one, however, nor is it always easy. Wealth transfer can be a source of anxiety and contention among family members so many people tend to avoid the subject until it’s too late.

Have you been putting off that dreaded task of estate planning?

Now is the time to face down this uncomfortable topic because planning for wealth transfer is more important than you may know.

Planning Is Key to Maximise the Benefits

The process of transferring your wealth does come with some legal stipulations. It’s not as simple as burying a box of cash in your backyard for your children to dig up after you die.

Certainly, you want your beneficiaries (especially your kids and grandkids) to get the most benefit from what you leave behind. This means investigating the best options for increasing interest accrual and minimising tax liability when ownership is transferred to their name.

If you leave your wealth transfer to chance or wait until the last minute, then you risk losing a lot and this can affect the end amount that ends up in the bank accounts of your beneficiaries.

Careful Wealth Transfer Planning Will Minimise Conflict 

You want to leave behind a lasting legacy that the next generation will be grateful for. You don’t want that legacy to be one that fosters jealousy, competition and friction in your family.

Although it can be uncomfortable to discuss wealth transfer with your relatives, you can only resolve conflict, settle disputes, ease anxiety, clarify your intentions and satisfy everyone’s desires while you are still alive. So tending to this important issue by talking about it now can help you create a clear-cut plan that everyone will support and abide by and benefit from long after you’re gone. 

Transferring Your Wealth Sooner Can Have Greater Impact

Like many other Australians, you might be inclined to assume that wealth transfer is something you don’t need to worry about until you’re on your deathbed.

But the data shows that humans have longer life expectancies than in years past. If you don’t let your wealth pass on to your children until you’re in your eighties, your kids may already be in or nearing retirement themselves. Not planning your wealth transfer early enough could see it lose impact.

Instead of putting off your estate planning until you’re close to passing, you might want to consider transferring a portion of your wealth at a time when it will do your family the most good. This could mean making certain funds available for starting up businesses and funding university education.

There are certain legal and tax implications for parting with your wealth early, however. That’s all the more reason to begin your planning as soon as possible so that you have plenty of time to do your research and get advice.

Creating and Implementing a Unique Wealth Transfer Plan Takes Time

No two families are alike and the same goes for their financial situation and goals. There isn’t some pre-packaged financial plan that you can fall back on and rest assured that your wealth has been distributed fairly. 

Indeed, it will take some time to work out all the details and ensure that your assets are successfully transferred, but that’s what makes it so important to get started now. 

Begin having those uncomfortable conversations about your own mortality and about the financial expectations of your beneficiaries. It’s not always easy to discuss these topics, but if you get started sooner, it will be easier to execute your will later on.

Wealth Transfer: Are You Ready or Putting It Off?

According to a 20-year study by The Williams Group, there are three main reasons that Australians are not transferring their wealth successfully: 

- There’s a lack of communication in the family as regards to financial expectations
- Beneficiaries are underprepared to manage the assets they receive
- There’s no clear plan for the family wealth

It’s not that there isn’t enough money to go around. It’s not that wealth transfer is a waste of time and effort. It’s simply that people aren’t talking about how to do it.

Successfully passing on your wealth according to your wishes depends on having those (initially) awkward conversations. 

To help you get started, plan a consultation with a financial planning expert who can offer you sound advice coming from an impartial and unbiased perspective.

Get Advice

To successfully execute a transfer of wealth, it is crucial to work with a trusted financial adviser. We can help.

Talk to the team at Calder Wealth Management. Call us on (08) 8373 3333 to schedule your free initial appointment. 

Written by Ben Calder at Calder Wealth Management.