Securing your family’s financial future – Now is the time for open conversations

Open conversations about financial legacies are crucial, especially in a diverse generational landscape, to ensure a smooth wealth transfer and empower the next generation with financial management skills.

In an era defined by a diverse generational landscape, the significance of preparing the financial legacy for future generations cannot be overstated. From Builders to Gen Alpha, it’s crucial to adapt financial planning strategies for differing generational needs and the generational wealth transfer.

Empowering conversations: Unlocking the future with family discussions

Wealth transfer is no longer an exclusive concern for the wealthy; it’s an issue that resonates with families across all socioeconomic backgrounds and it is projected that there is a $3 trillion wealth transfer that will occur in the coming two decades.
Individuals and families of all generations must proactively engage in open conversations about their financial legacies to ensure the preservation of wealth and empower future generations with sound financial management skills. Anyone with wealth or assets to pass on to the next generation is impacted. Without action, families risk losing their wealth by the second or third generation, as poor wealth transfer practices have historically been common.

Understanding your family’s wealth structure

To address the challenges of wealth transfer in a diverse generational landscape, it is important to consider business and investment structures. It is important to ensure the structures in place can be utilised inter-generationally.

For family groups that include discretionary family trusts, it is important that trust deeds and vesting dates allow for intergenerational transfers. As trusts became popular in the 1960s, the 80 year vesting dates are fast approaching. There could also be situations where vesting dates may have been less than the maximum 80 year period. In addition, consideration needs to be taken regarding transfer of the Appointor role in the Trust (the position that is the ultimate controller of the Trust) and Family Trust Elections and the Test Individual used for tax purposes. This could limit the potential beneficiaries for tax purposes (trusts in South Australia can operate in perpetuity and are not limited to a maximum life of 80 years).

Other matters for consideration are who are the controllers of family structures, for example:

• who has control of a company?
  • directors
  • shareholders voting rights
  • trustees of trusts and SMSFs
• who has control of a trust?
  • the Appointor
  • the Trustee (individual and/or company)

Any of these factors above can affect the control of a family structure and allocation of wealth.

How SW can help

Each family’s circumstances are unique, warranting personalised advice tailored to their specific needs. Relying solely on general information found online is not recommended. It is important to take the time to speak to qualified professionals. SW also encourages families to sit down together and discuss their financial legacies. Advisors can provide support and guidance for these important conversations, empowering families to secure their financial legacy for the benefit of future generations.

Over the past 30 years SW have provided estate and wealth management advice to a variety of clients, from private families and businesses to small investors, all the way through to complex advice, structures and strategies for Ultra High Net Worth clients.

Should you have any queries in relation to generational wealth, please reach out to your SW contact or Key Contacts listed on this page.