Giving While Living: A Legacy That Lasts

The trend of early wealth transfer is gaining momentum as families look for practical ways to support the next generation. In this article, Simon Wotherspoon, Perks Private Wealth Director, highlights why this shift is happening, including rising property prices, smoother business succession, and tax considerations like superannuation death benefits and the Transfer Balance Cap.

Anthony Keane recently wrote an excellent piece in The Australian on the rise of early inheritances – a trend reshaping how families approach wealth transfer.

I was fortunate to contribute to the article, and I’d like to expand on the conversation with a few practical insights for families considering ‘giving while living’.

Why Are Families Fast-Tracking Wealth Transfers?

The traditional model of passing on wealth after death is shifting. We’re seeing more families act sooner, and the reasons are practical:

• Property prices and timing realities: It’s tougher than ever to get into the property market, so many parents are choosing to help their children buy a house now, rather than leave a lump sum decades down the track.
• Business succession without the scramble: For family businesses, the smoothest transitions happen gradually. Parents are starting the handover earlier so the next generation can learn while still under the guidance of mum and dad.
• Super Death Benefits Tax: Australia doesn’t have an inheritance tax, but superannuation death benefits can still attract tax – up to 17% to 32%, depending on who receives them. Adult children who aren’t financially dependent may face the higher rate.
• The Transfer Balance Cap also plays a role. It limits how much of your super can be moved into the tax-free retirement phase – currently $2 million. Anything above that stays in the accumulation phase, where earnings are taxed at 15%. Families with large balances are increasingly looking to move excess funds into more flexible structures earlier, before the cap becomes a constraint.

Potential Benefits of Early Wealth Transfer

Early inheritance isn’t just about generosity – it’s about strategy. Done well, it can:

• Support intergenerational planning with purpose: Parents want their wealth to do what it’s meant to do; whether that’s enabling home ownership, supporting education, or sustaining a family business.
• Reduce future conflict: Clearly documented early transfers reduce uncertainty and resentment later.
• Leverage superannuation opportunities: For parents with large super balances, moving excess funds out and re-contributing for adult children can be a smart move. It gives the kids a tax deduction on concessional contributions and keeps the capital invested for the long term.

Key Considerations Before Acting

Before making any decisions, families should:

• Start with “what’s enough” for you: Ensure your own retirement, health care and lifestyle are secure before committing to early transfers.
• Write it down and keep it tidy: Good paperwork prevents bad blood. Update wills, trust deeds, shareholder agreements and document loans or gifts properly.
• Communicate and build capability: Money without mindset doesn’t stick. Bring the family into the process and lift financial literacy early so everyone understands the plan.

Final Thoughts

Anthony’s article shines a light on an important shift in how families think about wealth. At Perks Private Wealth, we help families navigate these decisions with clarity and confidence; keeping families united and legacies protected for generations to come.

If you’re considering early wealth transfer or succession planning, now is the time to start the conversation – with structure, purpose, and the right advice.