Wealth That Lasts Begins With The Right Foundations

Australia is experiencing its largest-ever intergenerational wealth transfer, with an estimated $3.5 trillion to $5.4 trillion expected to pass to younger generations in the next 10-20 years.

Transferring wealth across generations is more than passing on assets, it’s about preserving family values, protecting capital and ensuring your financial legacy works for the people you care about. Choosing the correct legal structures and entities is one of the most important steps in that process. The right arrangements reduce tax leakage, guard against unnecessary risk and clarify how assets are managed and distributed over time.

At the heart of an effective strategy is alignment: legal structures must align with your family’s goals, the nature of the assets and the timeline for distribution. No single entity suits every situation. Trusts, companies, family partnerships and testamentary trusts each have strengths and limitations, and often a combination of entities provides the best outcome.

Trusts are commonly used for generational transfers because they offer flexibility and control. A discretionary family trust allows trustees to allocate income and capital among beneficiaries in a tax-efficient way and can protect family assets from creditors or relationship property claims when set up correctly. Testamentary trusts, established under a will, can deliver long-term tax benefits and asset protection for beneficiaries, particularly minors or vulnerable family members. However, trusts require careful drafting. A poorly worded trust deed or incorrect trustee appointments can undermine the benefits and create unintended tax or legal consequences.

Companies can also play a valuable role. Holding business interests or investment assets in a company provides a clear ownership structure, limited liability and an easier pathway for selling or transferring business interests. Shares in a company can be transferred or sold to the next generation in a controlled manner, often with staged transfers to manage tax exposure and preserve management continuity. But companies attract different tax treatments and compliance obligations, so their use should be intentional and coordinated with other structures.

Central to all these choices is clear governance. Establishing family charters, shareholder agreements, binding death benefit nominations and succession policies ensures everyone understands expectations and the decision-making framework. Governance documents reduce the risk of family disputes which often is the most damaging threat to maintaining wealth across generations.

Tax planning is another critical consideration. Structuring transfers without careful attention to tax consequences can erode value significantly. For example, capital gains tax events, stamp duty, or income tax implications can arise if assets are transferred without appropriate planning. Working with advisers who understand both the tax law and practical estate planning ensures transfers are efficient and compliant.

Finally, we can’t overlook the human side. Conversations about intentions, timing and responsibilities should begin early. Educating the next generation on financial stewardship, investment philosophy and the family’s values increases the likelihood that wealth will be preserved and used wisely. Combining robust legal structures with clear communication and education forms a powerful triad for successful generational transfer.

In closing, setting up the correct entities for generational wealth transfer is a technical and interpersonal exercise. The legal and tax frameworks protect and preserve capital, while governance and education protect the family’s ability to steward that capital effectively. Taking the time to get this right with tailored advice from lawyers, accountants and financial advisers can mean the difference between a lasting legacy and a missed opportunity. At Hewison, we help clients design structures that suit their unique circumstances so their wealth can work for generations to come.