Superannuation and Intergenerational Wealth Transfer

Posted in Wealth
29/04/2015 Level One

Increasing life expectancies and significant wealth accumulation in superannuation are set to transform the way that intergenerational wealth transfer occurs.

Younger generations are likely to have to wait until they are older, in many cases much older, to receive their inheritance. The family home may also lose its status as the central mechanism of intergenerational wealth transfer. With superannuation balances soaring, especially in SMSFs, it seems that many Australians will leave some super behind.

While all of this is good news, it does raise an issue: younger people may not be able to depend on inheritance to give them a financial kick start in life. For example, providing the deposit for a first home. For this reason, some Australians want to think about distributing some of their superannuation nest egg while they are still alive.

An advantage to doing this is that you will be able to enjoy seeing your beneficiaries spend their inheritance, and influence their decisions, if this is something that is important to you.

One alternative to gifts of straight cash can be to include your children in your SMSF and ensure that they will be the beneficiaries of your portion when you pass away.

Carefully accounting for your superannuation in your estate planning is also very important, and something that is often mismanaged.


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