Creating a ‘giving while you’re living’ strategy is a great idea if you like the idea of helping your family out now. Rather than leaving all your money in your Will, this allows you to support your children and grandchildren with their current needs. Sharing your financial legacy whilst living is different to traditional estate planning and provides you the emotional benefits of witnessing the impact of your generosity.
Sharing your wealth while you’re still alive may create closer family bonds and demonstrates a culture of gratitude and responsibility. Knowing that your wealth is being used purposefully can be very rewarding and provide you with peace of mind. It is a way of reducing your estate and may simplify future administration and minimise potential conflicts. Strategic wealth transfer through trusts or funds can also facilitate continued financial growth for your family.
WAYS YOU CAN CREATE A LIVING LEGACY
Direct gifting
A straightforward financial gift is a way to provide immediate assistance with significant expenses such as home deposits, renovations, or educational costs.
Education funds
Funding education for grandchildren or even great-grandchildren is an investment in your family's future. Using specialised education savings plans or investment structures can maximise financial benefits, such as growth and tax efficiency.
Home loan security
Acting as guarantor can be a significant benefit to children needing security to purchase their first home.
Family Trusts
Trusts offer a structured, controlled, and tax-effective way to distribute wealth. They allow you to specify how your wealth is managed and distributed, helping to protect assets, and potentially offering significant tax advantages.
GET ADVICE
It is important that you understand the tax implications of creating a living legacy. There are benefits and disadvantages depending on which structure and strategy you choose. You also need to ensure your own financial and retirement needs are accounted for and consider your unique family dynamics to avoid potential conflicts among beneficiaries. Your financial adviser can guide you through the process and develop a strategy that is right for your family.
In Australia, while there are no specific gift taxes, it is important to know that gifting assets, particularly significant amounts, can impact your pension or other government benefits. Centrelink assesses gifts when determining eligibility for benefits like the Age Pension. You can gift up to $10,000 in a single financial year and up to $30,000 over a five-year period without it affecting your pension or benefits.
If you would like to incorporate a living legacy into your financial plan, we can help. Get in touch.
General Advice Warning: The information provided in this article is general in nature and does not consider your particular investment objectives, financial situation, or insurance needs; we therefore recommend you seek advice tailored to your individual circumstances before making any specific decisions.
Dobbrick Financial Services (Gympie) Pty Ltd ABN 48 931 205 109 and Dobbrick Financial Services (Ipswich) ABN 86 100 184 521 & DFS Oakland ABN 64 340 527 395 and their advisers are authorised representatives of Fortnum Private Wealth Ltd ABN 54 139 889 535 AFSL 357306.
