Estate planning throws up all sorts of challenges, from managing the family’s expectations and ensuring assets are distributed fairly, to understanding tax implications and uncertainty around legal requirements.

Foresters Financial is built on a proud 174-year history of protecting our members’ financial interests, and we’ve put together three key actions that may help ensure a seamless and successful transfer of your wealth to the next generation.

1. Create an estate plan and a valid will 

Tax laws, estate planning choices, and family dynamics all play crucial roles in shaping how assets are passed down.  

At the very least, ensuring you have a valid, up-to-date will that specifically documents how your assets are to be distributed, is a vital starting point. This isn’t just a matter of making sure your wishes are honoured; there are also potential tax implications for beneficiaries.

In the case of a superannuation death benefit, distribution to a surviving spouse or dependent children is generally tax-free, however for non-dependents (including adult children) tax is usually applied on amounts they receive. On large superannuation balances, this tax can be a significant amount.  

Seek professional advice on estate planning to ensure your wishes are not contestable. With many families now blended due to divorce and subsequent remarriage (with resulting second families), disputes over inheritances are increasingly common. Well-structured estate plans ensure your wishes are maintained.   

2. Have open and honest conversations now with your family

Discuss the planned transfer of wealth with your beneficiaries to set expectations.  

3. Be informed about your options

Traditional estate planning using a will is not the only option for you to explore when it comes to asset protection and intergenerational wealth transfer.

Investment bonds can also play an important part as they sit outside of your estate and have these unique features:

• Investment bonds cannot be contested, the nominated beneficiary is entitled to the proceeds.
• They are not subject to inheritance taxes or other non-dependent taxes; the proceeds are tax free.
• They don’t require probate. Therefore, the proceeds can be released without stressful legal processes and quickly.
• They have non-lapsing beneficiary nominations. For blended families in particular, an investment bond can give peace of mind by ensuring the money allocated to specific beneficiaries (including non-dependents) does not lapse, cannot be contested, and offers flexibility to update your beneficiaries if circumstances change.

In summary

Transferring intergenerational wealth is a significant undertaking that requires careful planning and consideration. Being informed will help you to leave a lasting legacy that not only provides financial security for your family but also reflects your values and aspirations.

Want to learn more about investment bonds? 

As investment bond specialists, Foresters Financial grows wealth for tomorrow through approachable solutions and a considered investment approach. 

We offer dedicated local support when you need it, with over $400 million of funds under management.