Building wealth and maintaining what you’ve worked hard for as a legacy for future generations is a noble endeavour that many families across Perth and Australia strive towards. We’re increasingly asked how best to safeguard investments and property from loss or the unforeseen, with some common issues including:
- Lawsuits, divorce settlements and other legal risks involving creditors
- Paying more tax than necessary
- Issues arising from the transfer of wealth between generations
- Market risk and economic downturns
Below are some key arrangements and structures you should consider when looking to protect your family and wealth.
Family Trusts
Family trusts are popular investment vehicles used often by families in Australia for the following reasons:
- Assets held in a family trust are generally protected from claims against individual beneficiaries if they are not a controlling party of the Trust.
- Income can be distributed to beneficiaries at their marginal tax rates discretionally, meaning that you have more control over who pays tax and when.
- As Trustee, you maintain control over assets held even when trust assets are part of your legacy. Income or capital for these same assets can pass through to the hands of your children however are ultimately owned by the Trust as opposed to individual beneficiaries.
Estate and Succession Planning
A well-considered estate and succession plan ensures your wealth is transferred to the next generation according to your wishes and legacy goals. Key areas include
- Wills and Testamentary Trusts which can provide you with certainty, control and protection from claims against family members.
- Powers of Attorney which enables you to appoint a trusted family member to manage your financial dealings in the event you’re unable to due to incapacity.
Succession Planning is a larger conversation which will enable a smooth transition of wealth over generations. An intermediary or financial planner will be able to guide you through this area and will facilitate meaningful conversations between family members on their individual goals, purpose and legacy needs.
Superannuation and SMSF’s
Registered Superannuation Funds and Self-Managed Super Funds are protected from claims against individuals and bankruptcy. Funds are held in a tax-advantageous environment, so can make for an excellent long term wealth store. Additionally, SMSF’s can have a flexible investment mandate and can involve multiple fund members, including your spouse and immediate family members.
Any future benefits upon your passing can be directed to beneficiaries tax-effectively through binding death nominations or via a reversionary pension.
Professional Advice and Education
There are many complexities which you will need to navigate, often requiring professional guidance and education from a financial planner, lawyer or accountant and often a combination of all three. Adequately protecting family wealth in Australia will have many legal, financial, and strategic measures to be considered.
Each family’s situation is unique, please reach out to the Boutique Advisers team for a confidential discussion on how we can help your family.
Sean Hocking works with successful individuals and families across Perth and Australia-wide to provide peace of mind and clarity around their financial future. Having a roadmap in place, which clearly articulates what’s important to them in the years to follow, gives his clients the confidence to make clear and informed decisions throughout their financial life journey.