Transferring wealth to children is not just about generosity, it's about doing it wisely. With the right structures, families can preserve more of their legacy and reduce future tax exposure. In this article we explore strategies for tax-effective estate planning and inheritance.
Consider Estate Planning Structures
Establishing family trusts or testamentary trusts can provide flexibility to distribute income and capital gains in a tax-effective way, as well as protect assets for future generations. The additional benefit of a testamentary trust being income to minor beneficiaries (under 18) is taxed at adult rates, providing access to full tax-free thresholds and lower marginal rates.
Strategic Timing of Asset Sales
For shares or property, selling after the combined 12-month holding period referenced above may qualify beneficiaries for the 50% CGT discount. Beneficiaries can also time the sale of inherited assets in years when their overall income is lower to reduce CGT payable.
Estate Equalisation
In estates with multiple beneficiaries and asset types, it may be possible to allocate assets with higher ‘unrealised’ capital gains to those with lower income or carried forward capital losses, improving the overall family tax outcome.
Recontribution Strategies For Superannuation
Withdrawing part or all your super tax-free and recontributing it as a non-concessional contribution (where eligible) can convert the taxable component to a tax-free component, reducing death benefits tax for adult children.
Superannuation Nominations
Review and maintain up-to-date beneficiary nominations for your superannuation, considering whether binding, non-binding, or reversionary nominations best suit your wishes and family circumstances. A valid nomination ensures your super is distributed according to your preferences and can help avoid delays and disputes.
Gifting Versus Loan Arrangements
Gifts can be an effective way to transfer assets to family members pre-death. However, using properly documented loan agreements rather than outright gifts helps maintain control and may prevent adverse tax or legal outcomes in family disputes or relationship breakdowns.
Small Business CGT Concessions and Staged Succession
Business owners can access valuable concessions by planning ownership transitions over time and meeting eligibility requirements for the Small Business CGT Concessions . Staged succession also allows for mentoring the next generation of leaders in a family business. Learn more about tax strategies for business succession .
Ongoing Estate Planning Reviews:
Regularly review your will , superannuation nominations, and family trust deeds to ensure they remain current and aligned with your intended outcomes and the latest tax rules.
Need Support with Family Wealth Transfer and Estate Planning?
At BlueRock, we help families navigate the complexity of succession, inheritance, and intergenerational wealth transfer. Our financial advisors can provide practical, tailored strategies for your needs. Submit the form below and we’ll be in touch to explore how we can help.
Disclaimer: The content is intended as general information only and should not be considered as advice on any matter and should not be relied upon as such. This has been prepared without taking into account any individual objectives, financial situation or needs. You should therefore consider the appropriateness of the information in regard to these factors before acting or seek advice before making any financial decisions. Blue Rock Investments (Melb) Pty Ltd is the holder of an Australian Financial Services Licence (AFSL No: 335588).
