How do I ensure my wealth will effectively transfer to my beneficiaries?

Published on: September 8th, 2020

When we talk about financial goals and future planning with our clients, a common question or priority is about wealth transfer to beneficiaries. For many, it’s not only about ensuring that the transfer occurs efficiently, but also making sure that the money is managed effectively by those beneficiaries.

You’ve spent considerable time and effort accumulating your assets, so it makes sense you want to see them go to the right people to be used in the right way, but, as the saying goes “you can’t rule from the grave.”  You can, however, put plans in place to give your beneficiaries the best possible opportunity to make the most of their inheritance. Here are five tips to plan for and manage wealth and asset transfer.

#1 Talk to your beneficiaries

This is a critical one that sounds simple but is often overlooked: Make sure your beneficiaries know what you want them to do with their inheritance. You can’t tell them after you have gone, but many people fail to do this in their lifetime, and it can increase the chances that your money won’t achieve the outcomes you want for your beneficiaries.

If your beneficiaries are children (or adults with financial literacy gaps!) it’s a good idea to start educating them about money and finances as soon as possible. There are a ton of resources out there to develop financial literacy, including the Apt Knowledge Centre, which is free for Apt clients and subscribers.

#2 Include your family in financial planning

Only 4% of Australians hold regular meetings to discuss financial issues as a family, but it can have a host of benefits, both within your lifetime, and after it. Helping your family understand your financial values and plans for the future, and supporting them to develop their own, can put everyone on the front foot.

We do this with many of our clients, and find that setting goals and objectives as a family can help to create a clear vision for the future and a succession plan that ensures your family can make the most of inheritances and that you leave the legacy you want.

It also teaches your family members about the importance of financial planning in achieving life goals, setting them on a course for success in whatever they want to achieve.

#3 Plan wealth transfer to protect assets

There are many ways you can structure the transfer of your wealth to best protect it. From setting up trusts to having the right insurances in place, the plan that is right for you will depend on your situation and what you want to achieve.

We’ve helped many clients to set up the right structure for a range of circumstances, whether it be protecting your money from poor financial decisions or from people outside the family. For example, if you leave a significant inheritance to an adult child, without the right structures in place, it can become part of the assets for division in divorce proceedings – something that won’t suit everyone’s objectives.

#4 Structure super to minimise “death” tax

We all know that superannuation can be a fantastic, tax-effective saving vehicle, but what many don’t realise is that when it is transferred to your non-dependent beneficiaries, such as adult children, a tax up to 17% may be levied.

This is because, unlike other assets that you own, such as property, super isn’t typically covered under your will as it is held in trust for you and governed under superannuation law. The good news is that you can potentially avoid this levy by structuring the transfer of your super in the right way.

A good financial planner should be able to help you navigate this, so that you can maximise the amount that your loved ones receive.

#5 Build an expert team

When it comes to your wealth transfer and ensuring you leave the legacy you want, it’s best to get your trusted advisers, such as your lawyer, accountant and financial planner, working together to help you turn your vision into a reality.

It’s something we do often for our clients, and we think it’s the best way to help them and their families to live their best lives today and protect their finances for the next generation.

When it comes to planning for your wealth transfer, communication is critical. Talking to your family and getting advice from your trusted advisers is the best way to make sure you achieve the outcomes you want.

The most important thing to remember is that it is never too early to have these discussions – but one day it will be too late.  Contact the Apt team today to find out how we can help you live for today and leave a lasting legacy for tomorrow.

General Advice warning

The information provided in this blog does not constitute financial product advice. The information is of a general nature only and does not take into account your individual objectives, financial situation or needs. It should not be used, relied upon, or treated as a substitute for specific professional advice. Apt Wealth Partners (AFSL and ACL 436121 ABN 49 159 583 847) and Apt Wealth Home Loans (powered by Smartline ACL 385325) recommends that you obtain professional advice before making any decision in relation to your particular requirements or circumstances.