Australia’s great wealth transfer is underway, with an estimated $5.4 trillion to transfer from those aged 60 and over to younger generations over the next 20 years.1 Currently, $150 billion in total annual inheritances are estimated to transfer in 2024, this wealth transfer opportunity is set to grow to an estimated $500 billion p.a. by 2044.1 With so much wealth changing hands, the role of financial advice has never been more critical. It’s about the right assets going to the right people, at the right time – without unnecessary tax burdens, legal disputes or financial mismanagement.

“Wealth transfer isn’t a single event—it’s the natural outcome of a well-structured financial strategy. When people ask, ‘How do you prepare for wealth transfer?’ the real question is, ‘How do you build a financial plan that leads to the right outcome?’”

Felipe Araujo
Chief Executive Officer at Generation Life

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.

"We all know a trust fund kid – my hope is that in the future, everyone will know an investment bond kid."

Felipe Araujo, Chief Executive Officer at Generation Life

Discover Generation Life Investment Bonds

Since pioneering Australia’s first truly flexible investment bond in 2004, Generation Life has been at the forefront of estate planning innovation. Learn how Generation Life’s investment bonds can help Australians build, protect, and pass on their legacy with control and certainty, tax-effectively.

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Sources:

1. JBWere Australia, Family Advisory and Philanthropic Services, The Bequest Report - Reshaping Australia by passing on more than assets, https://www.jbwere.com.au/content/dam/jbwere/documents/campaigns/JBWere-Bequest-Report.pdf July 2024, accessed 20 March 2025

2. Generation Life Reimagining Legacy 2023

Generation Life Limited (Generation Life) AFSL 225408 ABN 68 092 843 902 is the product issuer. The information provided is general in nature and does not consider the investment objectives, financial situation or needs of any individual and is not intended to constitute personal financial advice. The product’s Product Disclosure Statement and Target Market Determination are available at www.genlife.com.au and should be considered in deciding whether to acquire, hold or dispose of the product. Other than in relation to Generation Life’s product, information provided is factual information only and is not intended to imply any recommendation or opinion about superannuation products or superannuation investment.