The growing challenges in wealth transfer
Leaving a legacy is a priority for many Australians, but it comes with challenges. According to Generation Life’s research, over 80% of Australians intend to leave a legacy, yet only one in five have a plan to do so—63% intending to pass their wealth to their children. Among high-net-worth individuals, this rises to 70%.² However, complex family structures, financial literacy gaps, and tax implications can make estate planning anything but straightforward.
Many older Australians are also embracing “living inheritances,” supporting their children financially while still alive. With rising living costs and housing affordability pressures, early wealth transfers are becoming more common, as parents help with home deposits and everyday expenses.
Superannuation is a retirement tool – not a wealth transfer solution
Australia’s superannuation is a world-class retirement system, but it was never designed as an estate planning tool. The recently defined objective of super makes this clear—its purpose is to fund retirement, not to accumulate wealth for inheritances. Over time, ongoing policy changes and tax reforms, such as the 2017 introduction of the total super balance cap and reductions in concessional and non-concessional contribution limits, reinforced this.
Superannuation death benefits can be taxed. When passed to non-dependant adult children, they may incur a tax rate of up to 17%, often creating unexpected financial burdens for beneficiaries.
Finding smarter estate planning solutions
Estate planning isn’t just about drafting a will or setting up trusts—it’s about selecting the right investment vehicles to transfer wealth efficiently. Investment bonds are gaining traction as a powerful estate planning tool, offering both flexibility and tax advantages.
Unlike traditional assets, investment bonds can be structured as non-estate assets, bypassing probate and minimising the risk of estate disputes. They provide greater control, allowing individuals to determine how and when their wealth is distributed—without the complexity of a trust.
Investment bonds can help your clients achieve their generational wealth goals by providing:
More certainty – As a non-estate asset, it sits outside of the will and doesn’t form part of the estate and therefore is less likely to be challenged.
More control – Ownership can be transferred tax-free before or after death, with options for how beneficiaries’ access funds.
More flexibility – Flexibility to control when and how nominated beneficiaries receive inheritances with the added layer of protection in the event of bankruptcy of the investment bond owner.
