In this weeks thought piece, we wanted to discuss Intergenerational Advice and how our PLAN, NURTURE and ACHIEVE model ensures we get to advise different generations of the one family.
Here are some key (but not all) reasons for everyone to consider Intergenerational Advice.
In a changing society of an aging population and ever-increasing livings costs intergenerational advice is an integral component when discussing your financial future and security. Traditionally intergenerational advice was considered merely as the transfer of wealth between family members upon death, however this only one aspect of this type of advice. Below we discuss different features of intergenerational advice and why it is imperative to ensure you have strategies in place, before it’s too late.
The usual trigger… Asset protection is one of the biggest aspects of intergenerational planning and incorporates both Estate Planning (Wills, Power of Attorney’s and trusts), as well as personal risk insurances such as life, TPD, Income Protection and trauma cover for those unexpected and serious injuries, illnesses or deaths.
Without a sound Estate Plan, your assets may end up in the wrong hands upon your death, and where an inheritance was expected, it can quickly become non-existent. Having a Will (and additional structures) in place ensures your loved ones receive what is left upon your death, while a trust will guarantee the assets are protected once the Will has been executed. Examples of this could be where a beneficiary is in a disjointed relationship and the assets are held on trust until such time as the trustee is satisfied, or where the assets are held on trust until the beneficiaries are old (or responsible) enough to receive them.
Protecting the younger generation, protects the older… One aspect of intergenerational planning that usually goes untouched is the protection of income and assets in the event of death, disablement or illness of a member of the younger generation.
It is the nature of the older generation to help in difficult times, but unfortunately it is often to the detriment of their own retirement when such serious illnesses, death or disabilities occur to their kids or adult kids. As a retiree, pre-retiree or just someone with adult children, ensuring your younger family members have sufficient cover in place in the event of something serious happening will keep the accumulated assets for retirement and lifestyle purposes, not for very costly and unexpected family emergencies. Is your family, retirement and assets protected in the event of serious illness, injury or even worse?
When enough used to be enough… According to the 2015 Intergenerational report, there will be 40,000 Australian’s turning 100 in 2055 so planning for longer living will end up impacting multiple generations as accumulated wealth will be required to fund our longer living. It is imperative that our younger generations start the financial planning process earlier to make sure their lifestyle and financial goals are met and the reliance on their parents is minimised dramatically.
Of course, we have already discussed the fact that our older generation is a very giving generation and want to help as much as they can, but with advances in technology and medication, we are going to live longer on average so introducing our younger generations to financial advice earlier is a step in the right direction.
Intergenerational Financial Planning goes on to include SMSF’s, investment decisions / advice and a whole lot more but getting the basics sorted now will ensure a much smoother financial future for all generations.