Creating Your Living Legacy
Will you give with a warm hand or a cold one?
For many affluent and high-net-worth individuals, particularly those approaching or enjoying retirement, the idea of creating a 'living legacy'—sharing wealth and making a difference while you're here to see it—is increasingly appealing. Unlike traditional estate planning, a living legacy empowers you to witness the impact of your generosity firsthand, bringing significant emotional and financial benefits.
At Arrow Private Wealth, we often assist clients in exploring and implementing living legacy strategies tailored to their unique goals and circumstances.
Ways to Create Your Living Legacy
1. Direct Gifting
Giving directly to your children or grandchildren can provide immediate assistance, such as helping with home purchases or educational expenses. This approach allows you to actively participate in your family's life achievements.
2. Philanthropic Giving
Gifting to charities or community organisations you're passionate about not only supports meaningful causes but also enables you to experience the satisfaction and joy of seeing your contributions in action.
3. Establishing Family Trusts
Trusts offer a structured, controlled, and tax-effective way to distribute wealth. They allow you to specify how your wealth is managed and distributed, helping to protect assets and potentially offering significant tax advantages.
4. Family Foundations
Creating a family foundation can formalise your philanthropic goals, involve multiple generations, and foster a shared family commitment to giving. This approach encourages family unity and engagement in charitable activities.
5. Education Funding
Funding education for grandchildren or even great-grandchildren is an investment in your family's future. Using specialised education savings plans or investment structures can maximise financial benefits, such as growth and tax efficiency.
6. Succession Planning for Family Businesses
Developing clear and considered succession plans ensures the smooth transition of family-owned businesses, protecting your legacy and the ongoing financial security of future generations.
Key Considerations
When establishing your living legacy, there are important factors to consider:
Tax Implications: Understand potential tax liabilities or benefits associated with different gifting strategies and structures, such as gifting limits and capital gains implications.
Impact on Your Retirement: Ensure gifting or wealth distribution does not compromise your own financial security or lifestyle needs.
Control and Governance: Decide how much control you wish to retain over gifted assets, including trusts or foundations.
Inter-family Dynamics: Be mindful of fairness perceptions and potential conflicts among beneficiaries. Clear communication and equitable distribution are essential.
Legal Structures: Proper legal advice is critical to establishing trusts, foundations, or succession plans to ensure alignment with your goals and compliance with Australian regulations.
Benefits of Creating a Living Legacy
Fulfilment and Satisfaction: Experience deep personal satisfaction by witnessing your generosity making a difference in your family’s lives or the wider community.
Strengthened Family Bonds: Sharing wealth while living can foster closer family relationships and instil a culture of gratitude and responsibility.
Peace of Mind: Knowing your wealth is being used effectively and purposefully can bring comfort and happiness.
Tax Advantages: Structured gifting can minimise estate tax liabilities and maximise the efficiency of wealth transfer.
Estate Planning Efficiency: Reducing your estate during your lifetime simplifies estate administration and can minimise potential disputes.
Growth Opportunities: Strategic wealth transfer through trusts or funds can facilitate continued financial growth for your family or chosen charitable organisations.
Making Your Legacy Count
Creating a living legacy allows you to shape your financial legacy in meaningful ways. By thoughtfully planning and taking action now, you not only gain the unique privilege of witnessing your legacy unfold but also set a lasting example for future generations.
At Arrow Private Wealth, we're here to help guide you in shaping your legacy with clarity and purpose. For more information or to explore your options, please contact us.
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General Advice Warning:
Any general advice on this page does not take account of your personal objectives, financial situation and needs, and because of that, you should, before acting on the advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. Information contained on this page was correct at the time of posting.