Source : the age
Australia is in the midst of the greatest wealth transfer in its history. Over $5.4 trillion is set to change hands as one generation passes the baton to the next. Decades of rising property prices and solid investment returns mean many Australians now have more wealth than they ever thought possible.
Some have already started giving it away. Think school fees for the grandkids or early inheritances from the bank of mum and dad. But this “give while you live” trend is reshaping how we think about estate planning. If your children are already financially independent, what does legacy really mean?
With more of us passing on our inheritances while we live, an increasing number of Australians are looking beyond the family tree when estate planning.Credit: Simon Letch
More and more, Australians are thinking beyond the family tree and looking at how their money can make a difference in the wider community. At a time when everyday costs are rising and need is everywhere, charitable giving is gaining ground – not just as a heartfelt gesture, but as a smart financial move.
Giving while living is not a new concept. Many people already know that donations made during high-income years can support a good cause and shrink your tax bill at the same time.
Structured giving – like setting up a sub-fund in a Public Ancillary Fund (PuAF) or a Private Ancillary Fund (PAF) – is now on the radar for more Australians. You receive a tax deduction for the full amount you contribute, and if your deduction exceeds your income for the year, you can carry the balance forward for up to four years.
Best of all, you don’t have to donate it all at once – you can give to charities gradually, over many years.
Structured funds offer a clear, practical framework for ongoing family involvement.
This approach works especially well for those nearing retirement, when the goal is to reduce tax while there’s still taxable income to offset. It also suits those experiencing a one-off windfall – say, from selling a business or investment property – who want to lock in a tax deduction straight away, while retaining flexibility over how and when the money is given away.
Once the preserve of the ultrarich, structured giving has become much more accessible. Many sub-funds can be started with $40,000 or less. With over 80 per cent of Australians already supporting charities in some way, this form of giving is steadily becoming part of mainstream wealth planning.
Surprisingly, fewer than one in ten Australians include charitable gifts in their wills. That’s a missed opportunity, especially given the tax benefits available.
For instance, assets left to a Deductible Gift Recipient (like a PuAF sub-fund) may be eligible for capital gains tax rollover relief – meaning you can pass on appreciated assets without triggering a CGT bill, giving more to charity while reducing the tax burden on your estate.
When I set up my own sub-fund through the Australian Philanthropic Services Foundation, I saw the benefits immediately. I’ve already given away close to half of the original capital, yet the fund’s value has grown beyond the initial contribution – thanks to tax-free investment earnings. That means I can give more in future, and potentially keep giving long after I’m gone.
It’s one of the few ways to leave a legacy that grows, not shrinks, over time. Structured funds offer a clear, practical framework for ongoing family involvement. They give your children – and grandchildren – a chance to come together each year, reflect on your values, and decide how best to continue your legacy of giving.
For my family, these conversations have been priceless. Involving the grandchildren in our giving has sparked some wonderful discussions about money, meaning, and responsibility. Together, we choose the causes to support each year, and we get to see the impact up close.
I hope that these shared experiences – the values behind them and the joy of giving – become part of our family tradition. To me, that’s the true meaning of a legacy: something lasting, grounded in shared purpose, and passed on with pride.
Noel Whittaker is the author of Retirement Made Simple and other books on personal finance. Questions to: noel@noelwhittaker.com.au
- Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.
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