News » Navigating the Great Wealth Transfer: Inheritance Planning Insights

September 8, 2023

Inheritance planning is a vital conversation families need to embrace. With the next two to three decades heralding the largest intergenerational wealth transition in history, addressing the division of assets and wealth treatment is more crucial than ever before, Aspire2Wealth’s Mitchell Mackenzie explains. 

The Great Wealth Transfer

Dubbed the “great wealth transfer,” this phenomenon will witness trillions of dollars in assets transition from the hands of Baby Boomers (those born between 1944 and 1964) to their heirs and descendants. As we stand at the crossroads of this unprecedented event, it’s estimated that around $3.5 trillion of assets will shift within Australia by 2050, according to a Productivity Commission report in 2021.

Primarily comprising residential properties, unutilized superannuation funds, and various investments, this wealth transfer will reshape financial landscapes. Inherited assets, currently tallying about $120 billion annually in Australia, are projected to escalate almost fourfold, reaching nearly $500 billion annually within the next quarter-century.

The Importance of Inheritance Planning

Inheritance planning is an overlooked facet of family discussions. Topics like future wealth division and estate planning often trigger discomfort, especially when multiple heirs are involved. However, fostering open conversations within families about asset treatment and future inheritances can be immensely beneficial.

Creating a valid will stands as a crucial step in the inheritance planning process. Clearly documenting how your assets should be distributed upon your passing is vital. Residential real estate and superannuation comprise a significant portion of inheritances, totalling over three-quarters of household assets.

In terms of superannuation, Treasury estimates suggest that superannuation death benefits will increase from $17 billion to almost $130 billion by 2059. Ensuring these funds are distributed according to your wishes necessitates a binding death benefit nomination from your super fund.

Navigating potential tax implications surrounding inherited superannuation and other financial assets demands careful consideration. Estate planning is intricate, making it wise to engage a professional adviser. They can help you and your beneficiaries devise an inheritance framework tailored to your circumstances while addressing tax responsibilities tied to inherited assets.

Aspire2 is recognised as a leading Financial Advisory firm in Perth.

Financial planning can at times be stressful, complicated and time-consuming; but it doesn’t have to be.

 At Aspire2 we aim to ‘Simplify What’s Possible’ and instil you with confidence to make the tough decisions.

Book a no-obligation appointment with us.