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Securing the Next Generation’s Financial Future

You’ve worked hard, made smart financial decisions, and are living comfortably on the wealth you’ve accumulated – but what about the next generation? For many of us, a primary motivator behind growing and securing wealth is looking after our family, so that even after we’re gone, they have a secure financial future to look forward to. While no two financial plans are the same, here are some key considerations to be made when looking to secure the next generation’s financial future.

Tax & Estate Planning for the Next Generation

Australia’s complex tax legislation framework means that the vast majority of people cannot effectively optimise their tax position without the help of a tax professional. While this is typically more of a concern for individuals minimising common things like income tax, there are often tax implications relating to looking after your family’s wealth that can catch some by surprise. Unexpected and unwelcome tax consequences can arise through capital gains, inheritances, the transfer of business shares, and more when assets change hands upon your death.

While Australia doesn’t have an “inheritance tax” as such, the disposal of assets from an estate and/or superannuation can trigger Capital Gains Tax and other tax events which may leave beneficiaries with much less than you might like. In a time of grief and loss upon your passing, the last thing your family needs to be worrying about is money, so measures should be put in place well in advance. Effective estate and tax planning caters to your family’s unique circumstances in order to safeguard what you’ve worked so hard to build, working within the existing tax framework. After all – the aim is to look after your family, not line the tax man’s pockets!

Financial Advice for the Next Generation

Establishing and maintaining an ongoing advice relationship with a trusted adviser is an ideal way to ensure your wealth is looked after – now and into the future – as well as giving yourself the best chance the experience everything you dream of. Your trusted adviser takes care of your money management, investments, insurance (more on that later) and a whole host of other important financial matters; and acts as an important sounding board to discuss options. When it’s your time to move on, it is critical that the next generation of your family receives the same level of sound advice and benefits from the relationship you’ve established. Not only will an adviser put in place measures to increase your current wealth, but the best advisers also have your kids and grandkids in mind as well.

For some, a Family Office solution may be beneficial, especially where significant inter-generational wealth is at play. The bottom line is, the importance of a strong advice relationship built on trust cannot be understated when it comes to safeguarding wealth for the next generation.

Insurance for the Next Generation

Another function of a good advice relationship is the implementation of appropriate insurance protection. The right protection takes into account the unique needs of you and your family, and proactively considers their likely future needs. There are plenty of horror stories out there about the perils of underinsurance, particularly where someone has suddenly passed away in a tragic accident and not had an appropriate life insurance policy in place; or where someone is unable to work due to sickness or injury and cannot fund the essentials. Some life insurance policies catch people out in the fine print, where clauses and exceptions might prevent families from receiving much of a payout (or any at all).

Much like the preventative methods of tax planning, ensuring your wealth is adequately protected is critical. The first step to peace of mind in this regard is engaging with your financial adviser so they can conduct an insurance review. They will perform a detailed assessment of the policies you have in place (whether they be within superannuation funds, or standalone policies); consider your present circumstances, family status and future plans; and then provide recommendations on what needs updating to fill any gaps. Where changes do need to be made, a financial adviser can coordinate the implementation of insurance policies and regularly review them against your changing circumstances so you, your family, and the next generation won’t be caught short.

Next Steps

Getting your finances in order and taking care of the next generation is all about peace of mind – assured they’ll be looked after when you’re gone and live the life they dream of for themselves and their family. By engaging with an accredited financial adviser, like those in the Wealth team at McKinley Plowman, that peace of mind can be achievable for you too. We specialise in holistic, integrated financial advice, including investment review, estate planning, insurance, family office management, and much more.

If you’re ready to safeguard the next generation’s financial future, get in touch with us today via our website, or call us on 08 9301 2200.

Please note the information provided within this article is general of nature and is not a personal advice recommendation. Prior to considering strategies discussed in this article we recommend you seek personal financial advice. Please be aware that, without the benefit of financial advice, you may be committing yourself to financial strategies or products that are not appropriate for your overall personal situation, needs and objectives.

written by:

Justin McMillan

Financial Adviser Justin McMillan has been with McKinley Plowman for several years, following our acquisition of his practice Smartwealth. He firmly believes that while financials, investments, and strategies are important in an individual's financial plan, they are simply the vehicles to allow clients to get where they want to be. Justin takes a holistic and rounded approach and focuses on the individual, taking the time to listen and understand what drives and motivates his clients.