4 Ways to Successfully Manage the Transfer of Family Wealth

Kim Bryant - Thrive Plan LogoIn Australia over the next 20 years it is estimated that $3.5 trillion in wealth will be transferred from the Baby Boomer generation to Gen X and beyond through inheritances and gifts*.

This passing on of wealth, known as intergenerational wealth transfer, is essential in helping those receiving the wealth achieve a financially successful and secure future into their retirement.

But with younger generations living longer than ever before, it can be difficult to know what exactly you can do to ensure that you and your loved ones are equipped with the knowledge and tools you need to manage this transfer of wealth successfully.

In order to help you get started, we’ve shared four ways you can ensure you’re successfully utilising your sudden growth in wealth to secure a brighter financial future.

1.    Have A Frank Conversation With Your Family About Inheritance

For many, the cultural taboos surrounding money and family expectations mean that you’ve likely never had the all-important discussions with your loved ones surrounding inheritance. But, in order to ensure the passing on of wealth in your family is utilised in a way that is constructive to your financial future, it’s essential you take the time to have a frank conversation about your expectations.

If you’re a member of the older generation of Australians and want your wealth to contribute to a specific legacy or cause after you’re gone, it’s important your family is made aware of this so they can uphold your wishes and account for the impact this will have on their inheritances.

And if you’re a member of the younger generation, you may be planning on using your inheritance to pay off your mortgage or top-up your savings for retirement. It’s always a good idea to share these plans with your older parents or grandparents, to make sure you’re all on the same page for the amount of money that will be transferred and how it can best be utilised to help you build a brighter financial future.

2.   Learn More About Wealth Management Strategies

Once you’ve discussed the above, it’s essential you take time to understand (or teach your inheritors about) the financial strategies available that can help you successfully manage and grow a sudden increase in wealth.

This is where a professional wealth management advisor can really help you on your journey to achieving financial success and security. You see, a professional wealth management advisor can help you identify the financial strategies and paths available to you and decide on what will best suit your particular financial goals and needs.

3.   Set Realistic Expectations for Your Retirement

Unlike our grandparents’ generation, who on average worked until 60 and lived until 72, the current and future generations are likely to live well into our 90’s. If you plan to retire at 60, that could leave a whopping 30 years without an annual salary to plan for.

When you combine this with statistics from the McRindle Wealth Transfer Report – which claims that when many of Gen X are retiring from the workforce a comfortable, self-funded retirement is likely going to require between $2.09 and $3.98 million in savings – the importance of successfully utilising your inheritance to grow your wealth for the long-term can’t be stressed enough.

One way you can ensure you are correctly utilising any sudden growth in wealth, is to set a realistic expectation of what you’d like your life (and retirement) to look like and make sure you’re working with an adviser to create a financial plan that matches these goals. Now being realistic doesn’t have to mean looking forward to a retirement of counting every penny, but it does mean taking the time to work out your priorities when it comes to what a comfortable retirement means for you.

Once you have a clearer picture of what the ideal retirement looks like to you, identifying which financial strategies can help you successfully grow your wealth and achieve this retirement becomes much simpler.

4.   Seek Guidance from A Professional

Research shows that, time after time, professional financial planning not only helps those receiving advice to comfortably achieve their financial goals but also to sleep better at night knowing that their financial world is taken care of.

Nowhere is the importance of having the right financial advice behind you more evident than when it comes to making the most of the sudden growth in wealth that an inheritance or gift can result in.

Having a team of dedicated wealth advisors only a phone call or email away means always having access to the expert knowledge and tools you need to utilise your growth in wealth to achieve long-term financial success and security.

And when it comes to ensuring you’re successfully using an inheritance or gift to build a brighter financial future, having this sense of guidance is essential to achieving your financial goals.

* Source – Australian Bureau of Statistics (2016) ‘Talking ‘bout our Generations: Where are Australia’s Baby Boomers, Generation X & Y and iGeneration?’, https://www.abs.gov.au/ausstats/abs@.nsf/ Previousproducts/3235.0Feature%20Article12014

Privacy Policy | Privacy Collection Statement | Complaints | Financial Services Guide (FSG) Part 1 | FSG Part 2 Advisors

Thrive Plan Pty Ltd ABN 69 611 096 470 is a Corporate Authorised Representative 1256624 | GPS Wealth Ltd | Australian Financial Services Licence 254544 | ABN 17 005 482 726  | www.gpswealth.com.au | Tel: (02) 8074 8599

General Advice Warning The information provided on this website has been provided as general advice only. We have not considered your financial circumstances, needs or objectives and you should seek the assistance of your GPS Wealth Ltd (GPS) Adviser before you make any decision regarding any products mentioned in this communication. Whilst all care has been taken in the preparation of this material, no warranty is given in respect of the information provided and accordingly neither GPS nor its related entities, employees or agents shall be liable on any ground whatsoever with respect to decisions or actions taken as a result of you acting upon such information.

Start to Thrive.

You may be surprised by how quick we get back to you.
We pride ourselves on our response rates. Try us.

Continue Reading