Australia is on the cusp of the biggest intergenerational
transfer of wealth it has ever seen, with assets held now by the so-called
‘builders’ or over 65s, plus assets held by the younger baby boomers, amounting
to more than 60 per cent of the nation’s private wealth.
Award winning financial planner, CEO & business success
coach –Steve Salvia says however that “behind these simple statistics are
personal stories and sadness, as inheritance often follows the loss of someone
close. It should be no surprise that an inheritance can trigger a range of
emotions, making it harder to make good decisions about personal goals, and
about the best use of any windfall”.
In many cases, there may be quite a long time before the
inherited assets are actually transferred, as the processes of settling an
estate can take time to unfold. On paper, this is time which could be used
planning for the future, but it may also be a time of major adjustment when
people are dealing with loss and grief.
Asking questions
The fact that it takes some time to settle an inheritance
can be a blessing in disguise as it allows time to review, to plan, and to
prepare for any transfer of assets. For some people, it amounts to a
break-through moment, a chance for a fresh start, an opportunity to move
forward financially.
There are some typical questions you may face whenever a
significant sum of money is involved. Do you sell the new assets to pay off the
mortgage, or to prepare for an early retirement? What do you hold onto as
treasured possessions for the next generation? Do you take a long-awaited
holiday, or just put the money ‘away’?
Receiving an inheritance, of money or assets, can be the
perfect trigger to take stock of your own financial situation. Depending on
your age and circumstances, and the size and nature of the inheritance, it may
also be a good time to review your own estate plan.
For many people an inheritance could be the foundation for a
comfortable future. And, suddenly, that realisation can put the provisions you
have made for future generations — or not made — into sharper focus.
Finding answers
When you want to make decisions which allow you to take
advantage of your good fortune, it is important to know that a financial
adviser will assist you. Together, you can plan ahead and step through the
decisions required to manage a windfall; to find answers to questions like
whether to keep or sell assets, and how to best plan for your future income
needs and those of your family.
Advisers will work with other professionals involved in
estate planning, especially legal advisers and accountants. This is important
because, for example, the legal framework with estates can be complex; it also
varies from place to place as both state and national laws can be involved.
Similarly, there may be significant taxation issues to
address if you inherit shares, an investment property, or if there are
superannuation benefits to consider.
By Steve Salvia
Steve is the CEO of Southern Financial Strategies, Accounting Focus and 10X The Business X Factor Perth Central East. A Plumber & Gas Fitter by trade and experience in the Mining & Construction industries, Steve has been a Financial Planner since 1994. He has completed his Advanced Diploma of Financial Services (Adv Dip FS(FP)), was honoured as ‘WINNER’ of the prestigious AFA Financial Adviser of the Year Award 2010 (Finalist 2009)(National Award), recognised as ‘WINNER’ AXA WA State Adviser of the Year 2010.
This editorial provides general information only. Before making any financial or investment decisions, we recommend you consult a financial planner to take into account your particularly investment objectives, financial situation and individual needs. Charter Financial Planning and its authorised representatives do not accept any liability for any errors or omissions of information supplied in this editorial. Charter Financial Planning Limited ABN 35 002 976 294 AFS Licence No. 234665