Future proofing wealth during uncertain times

After a long period of relative stability dating back to the 2008 financial crisis, the wheels seem to have come off the global economy in recent times.

Side-swiped by COVID in 2020, the world initially wobbled before recalibrating itself somewhat the following year, sending financial markets surging higher in anticipation of a return to sunnier times.

But the rapid deterioration of conditions from late 2021 has caught many off-guard, including the central banks now fighting an unexpected inflationary outbreak with ever-increasing interest rates.

The current heightened market volatility presents some real challenges for Australian families trying to build and protect their wealth.

Richard Beal, Partner at BDO Private Wealth

outlines, that amid the rising uncertainty about the future, there are certain things we know for sure and need to prepare for now “Estate planning is looming as the number one issue for many families during what will be the largest ever generational transfer of assets in Australian history” Mr Beal explains.

An estimated $3.5 trillion of wealth is slated to shift between generations over the next decade or so but it is unlikely to be a smooth transition for some families.

Without due care about the estate planning process, family fortunes could easily be frittered away through unnecessary taxes, legal fees or poor investment choices.

A recent global study by BDO, pointed out that wealthy families, in particular, need to work together (along with professional advisers) to plan well ahead of any expected transition time to ensure a successful succession.

As the report states: “Understanding who makes decisions, how to access information and establishing effective channels of communication will be particularly key.”

And while estate planning is necessarily complex, as well as different for each family, there are a few general tips that apply to all, including:

• Collect relevant information from all family members. BDO has made the process easy with a Personal Information Register form (download here)
• Connect the dots between generations with regular discussions involving all parties, canvassing problems as well as plans – this tends to go better with the help of independent advisers
• Co-ordinate – the many pieces of the estate planning puzzle, it’s essential to find trustworthy professionals to help fit them together in coherent ways, and;
• Continue – to establish sound governance structures and ongoing monitoring to keep the family wealth-generation engine on track for generations to come.