Generational Wealth Advisers Brisbane

It’s one thing to build wealth. Ensuring that wealth lasts beyond your own lifetime, arriving intact in the hands of your children or grandchildren, is quite another. Creating a generational wealth plan entails a strategy that takes into consideration tax, asset protection, family, and the fact that your family’s financial picture will likely change dramatically in the coming decades.

Solace Financial is a Brisbane-based independent financial advisory firm that provides financial planning services to high net worth individuals and families in managing their intergenerational wealth transfers. Our financial planners have managed private wealth in all types of markets since our training with Whittaker Macnaught. If you’d like to talk through your family’s situation, you can book a free initial consultation with our team.

The majority of financial planning is done with the aim of preparing for someone’s retirement. This is important, but it does not address the need for a plan that covers a family’s goals beyond an individual’s life span. Planning for the transfer of wealth between generations involves a strategy that considers the tax implications for different family members and adjusts accordingly as the years go by.

At Solace, the process begins with getting to know your entire financial picture and your family situation. Who are the beneficiaries? What are their ages and income levels? What is their level of financial sophistication? Are there blended families or a family business to consider? All of this informs every decision we make, from trusts to investments to timing and method of transfer. This is why we offer a bespoke service as a high net worth individual financial adviser, where every strategy is tailored to your unique family situation.

Then we build a strategy which incorporates estate planning, tax planning, superannuation, and investment management all within one plan. We build structures where wealth passes from one generation to another with minimal leakage to tax and legal costs, and where the people receiving it are best placed to manage it.

The legal and financial systems you use to own and pass on your wealth are an important factor in what your family ultimately ends up with. You have more options and better tax consequences when you get it right early on.

The greatest expense in any transfer of wealth is tax, and the amount your family pays depends on the transfer of wealth from one generation to another. Without planning, capital gains tax and super death benefit tax can reduce a large part of what you want to leave by a significant amount, and income tax on trust distributions adds another level of complexity.

Effective tax planning for intergenerational wealth transfers is a matter of timing and structure, rather than tax planning per se. When to start gifting? Should you gift property during your lifetime or through your will? Should you crystallise capital gains when you are in a lower tax bracket during retirement? These decisions are interrelated, and getting any of them wrong can result in a tax bill elsewhere. For a broader overview of how these strategies work, our guide to legally reducing your tax liability contains many of the principles that apply.

At Solace, we work with your actual numbers to model these situations. We analyse the tax implications of these methods of transfer and their effect on your own retirement income, and then work to model these decisions’ impact on your eventual tax position as it relates to your heirs. The goal here is to reduce tax burden for everyone in your family, not just for one person, and to make sure you’re not hurting your own financial situation in the process.

A generational wealth plan requires an investment strategy with a time horizon longer than most advisors are accustomed to working with. When you’re investing for your own future, and then for your children’s future, and maybe even your grandchildren’s future, your attitude towards risk and growth, and liquidity, is different.

For business owners, generational wealth and business succession planning are really two sides of the same coin, and yet most advisors handle them as if they are distinct processes. The truth is, the manner in which you leave a business is a direct determinant of the amount of wealth you have to transfer and the tax you pay to get out, and that, in turn, dictates what makes sense for you to own and distribute to begin with.

If you are contemplating selling your business, the timing of the disposal in relation to your retirement can have a major bearing on your capital gain tax position. The small business CGT concessions, which include the lifetime exemption, retirement exemption, 15-year exemption, and active asset reduction, can have a profound effect in limiting the capital gain tax payable on the disposal of your business. However, there are eligibility requirements and maximum benefits for these concessions, and it is important to start planning for these at least a few years before the disposal to ensure that your retirement and estate planning are aligned.

If the business is being handed over to a family member, the factors will be different again. You need to consider whether the person is actually capable of running the business and how the handover can be done in a fair manner for the family members who are not involved in the business. You need to consider how your retirement will be funded if the business was your only source of income. Our retirement planning advisers can help you work through this as part of the broader succession process.

We work with you to ensure that you coordinate both plans so that the transition of your business and the transfer of wealth complement one another instead of working at cross-purposes. This may require working with your accountant and solicitor to ensure that your corporate structure, estate plan, and investment strategy are all aligned.

Approximately 70% of wealth transfers do not sustain the family’s wealth beyond the second generation. This is mainly due to the fact that the recipients were not prepared to handle what they inherited.

This is a difficult subject for many families to discuss, but we bring it up because we have seen the results of not talking about it. A 25-year-old inheriting $2 million with no knowledge of investments or taxes is in a real state of vulnerability. So is a 45-year-old with no previous involvement in the family’s financial planning processes and now needs to make decisions around trust fund distributions, property, or managing investments. Our guide to investing your inheritance in Australia covers many of the issues that a beneficiary has to deal with when receiving a large inheritance.

At Solace, we encourage families to think about bringing the next generation into the planning process at some stage. This may be by bringing adult children along to a meeting to discuss the family’s overall financial situation and the current structures in place. It could mean creating a small investment account for a young family member to start teaching them about finances. Or it could be a discussion about what the wealth is for, what responsibilities come with wealth, and what the family wants to achieve beyond just a dollar figure.

While we don’t offer a financial literacy service, we help families have this conversation as part of their overall planning process. Families who are successful in this area tend to have a few things in common, such as being open with their children about money, rather than secretive, and involving their children in a gradual manner so they’re part of the plan, rather than just recipients of it.

Solace Financial has its own Australian Financial Services Licence. We are not aligned to any bank, any insurance company, or any product provider. This is particularly relevant to generational wealth planning as our advice is based solely on your family’s needs, not on which products pay us a commission or meet a sales target.

This means, in practical terms, that we can recommend the investment structure or insurance product that is actually best for your individual circumstances, including the best superannuation solution, even if that means recommending you continue with your existing product rather than changing to a new one. We operate transparently when it comes to our fees, as you will be paying for advice and management, and we will disclose all fees before you commit to anything. More information on our approach to this can be found under our wealth management services.

For a family that needs to create a plan that takes decades to implement and has many members involved, the knowledge that all recommendations are made without conflicts of interest is the foundation on which the entire plan is built.