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Is the family property your legacy?

Martin Webb, Graham Financial Pty Ltd, 27/04/2012

Basically, you can do whatever you like with your money while you are alive.

But what control do you have over your assets when you die? It’s an interesting thought that most people don’t like to dote on, however with more wealth being created through superannuation funds, it’s a thought that will require action at some stage – and the sooner the better.

It has been estimated that members of the baby boomer generation will pass about $600 billion to their children or grandchildren over the coming decade or so. This wealth will in some cases come in the form of family businesses moving on to the next generation. In others, it might be more passive investments, such as shares, property and cash.

Each of us might only have control over a small piece of this inheritance bonanza. Nonetheless, how much thought have you given to what it will mean to your beneficiaries and how they’ll remember you?

Preparing your legacy

Many cattle producers would consider their legacy to be the family property. Do you know if this can be achieved? Is the business in a position to actually be passed on or will it have to be sold to fund your retirement? To pass a property within the family will require an accumulation of sufficient “off farm” assets to provide for the current owners’ retirement.

IMG_5614Accumulation of off farm assets can be challenging when you consider the variability of prevailing weather conditions and vagaries of markets. But, if the property is your intended legacy then accumulating assets “off farm” will need to be a long term priority and this will take some careful planning.

The first step is to make a true assessment of the ongoing viability of the business. If the business can not generate a sufficiently large and regular cash flow into the future, perhaps the realisation has to be that the property is not going to be the legacy.

Estate laws can treat off farm assets such as shares, direct property, superannuation or life insurance very differently. Consultation with your trusted adviser will help you understand how these assets can be passed between generations with minimal financial impact.

You might want to think about the opportunities and values you want to leave to your beneficiaries. Do you want to “rule from the grave”, or let them make their own decisions about how they tackle life’s challenges?

Who can help?

On the practical side, there are various professionals who can help you to create your personal legacy. We can advise on all your personal finance issues such as estate planning, the accumulation of off farm assets via superannuation or direct investments.  Your solicitor will be required to draft your will and related documents.  Your accountant will have a role in assessing the current ongoing viability of your business.

From a values perspective, think about who (or what) it is that best represents or inspires you. Who can guide you now in preparing to leave behind a personal legacy you would be proud of? It might be a good idea to take time out to reflect on these important issues.

Don’t wait until you’re sick or old to plan your legacy, it might just be too late.

 

The advice in this article is general in nature, your personal circumstances should be considered before you act on this advice. Graham Financial is a privately owned boutique financial planning practice which has been in operation since 1985.  AFSL 327520. Contact: 07 4613 0514 admin@grahamfin.com.au or www.grahamfin.com.au

 

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