How to pass on your assets to the next generation

Who does not love their children?

We often quickly think of passing our assets to our kids on death.will testament legal power of attorney death taxes estate plan law

But do we really know who will actually receive them?

This is a modern day conundrum.

We don’t know when we are going to die, and as such, do not know our children’s circumstances at that time.

They could be with a loving partner; they could be in a violent relationship or in a household with drugs; or they could be in a broken relationship.

How will grandchildren be looked after and what happens with blended families?

These are all vexing questions and ones which the traditional will which passes assets to the named beneficiary may not property handle.

Once your assets pass from you on death to the nominated person, they are available to liquidators, family law courts and there are punitive (60%) tax implications on income/capital gains that go to children under 18 if they did not have “work” for this income/capital gains.

So what is the answer?

While there is no ‘one size fits all’, there is an alternative direction and for once it is relatively simple and should not be cost prohibitive for the majority.

That solution is a Testamentary Trust.

This is a different way to pass assets and unlike the more traditional will, assets do not go to the beneficiary; rather they go to a trust and the control of the trust is with the beneficiary.

As normal, on death there is no Capital Gains Tax or Stamp Duty liability on the transfer.

You give your children control, not ownership.

They can be free to sell, keeps or share the assets or benefits within their desired family group unlike a normal will which restricts these benefits to only the new owner.

The difference is your children do not own the assets, so in a liquidation or family law court proceedings the assets in the testamentary trust, if properly drawn up, would not normally be available.

They are protected. Also income/capital gains directed to a minor child from a Testamentary Trust is taxable at adult tax rates with the tax free threshold applying i.e. no 60% tax.

If these three benefits are important to you then a testamentary trust as part of your will should be considered  Will

This sort of treatment can even occur between spouses to protect the assets for children.

So if the surviving spouse remarries and dies, assets can be retained for the original children and not the new partner  (and family) of your surviving spouse.

A Testamentary Trust must be part of the will when prepared.

It is however completed and auctioned by the executor after your death as part of their responsibilities.

The bulk of the will remains the same i.e. which assets, who gets what (now controls) and any other special requirements but the new addition is the Testamentary Trust.

Your executor cannot put a Testamentary Trust in place if you did not include the requirement in your will.

Be prepared and get professional advice so as to leave a lasting legacy to who you intend.

Here’s what you can do about Estate Planning:

Why not have a Strategic Session with me at Metropole Wealth Advisory?

If you want to be confident that you and your family’s financial future is secure, but you don’t necessarily have the time or expertise to manage your investments or your maximise your returns, Metropole Wealth Advisory can develop a tailored solution for you.

Before we recommend any investment strategies we take the time to fully understand your particular situation, your life goals, the relevant family dynamics and any existing financial structures.

By understanding your financial goals, your aspirations and needs, the purpose of your wealth, your priorities and your “end game” we can we can tailor a solution specifically for you.

Click here now and learn more about Metropole Wealth Advisory’s range of services and book a time for a Strategic Consultation.

Want more of this type of information?

Ken Raiss


Ken is director of  Metropole Wealth Advisory and gives independent expert advice for high net worth individuals and their families, professionals and business owners. He is passionate about property investing and small business and shares his wealth of experience in his blogs. View his articles

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