Sophie Cohen 

This year has certainly prompted people to think about what’s really important to them and their families, and has been the catalyst for many of our clients to revisit their succession arrangements.

We are an aging population with some $3 trillion of wealth set to change hands from the baby boomer generation over the next couple of decades; and in a world where complicated family dynamics are the norm, some 70% of intergenerational wealth transfers fail to achieve their full objectives through lack of effective planning.

So, what can we do to ensure our wealth ends up in the hands of our loved ones at the right time and in an effective way?

  • Put a robust estate plan in place and consider establishing tailored testamentary trusts under your Wills to enable tax effective management of your estate, maintain the inheritance in a protective environment, and provide a powerful legacy.
  • More than $750 billion is held in self-managed superannuation funds (SMSFs), highlighting the need to implement a strategy for the payment of superannuation death benefits, control of the SMSF, and the transition of ‘lumpy’ or illiquid assets.
  • Carefully consider the succession of control of discretionary trust structures, and in particular the appointor, guardian and trustee roles. What are the tax and practical consequences of terminating the trust, and can the vesting date be extended? What about trust splitting or cloning (e.g. amongst adult children) in light of recent tax rulings? And how best to deal with loan accounts?
  • Do you run a business or family farm? What are the operating structures? How will the wealth and assets from the business be handled after you are gone? Do you have a business partner? Do you have children involved in the business? Think about insurance funded buy sell agreements, shareholders’ agreements, or tailored company constitutions.
  • Put in place enduring powers of attorney. Who should be appointed to make financial, personal and lifestyle decisions if you lose decision-making capacity? How far does the authority extend? Can the attorney act in relation to an SMSF, and in particular change a binding nomination?
  • Should you empower a family council, board or office to make decisions in relation to the family’s wealth in alignment with an agreed vision, values and governance framework?
  • Lay it out on the table and consider a facilitated family meeting. Having conversations early and often can be very powerful in making such a morbid topic a positive experience and can be invaluable in avoiding conflict down the track.

If this article raises more questions for you than answers, please connect with us on (03) 7035 1300 or and our team will be happy to help you.

*My Generation is a song by English rock band The Who, released in 1965 during the childhoods of the baby boomers. Fun fact: I miss the baby boomer generation by 8 years, but am the eldest daughter of two amazing baby boomers, and part of Generation X.