Australians are being urged to act now to protect their estates from unexpected tax bills, as financial experts warn that poor planning could see a significant slice of the nation's $5 trillion intergenerational wealth transfer eaten up in fees and taxes over the next two decades.
A Once-in-a-Generation Wealth Shift
Over the next 20 years, up to $5 trillion is expected to pass from older Australians to the next generation, making it one of the largest transfers of private wealth in the country's history. Financial advisers say the sheer scale of this shift is creating both significant opportunities and serious risks for families who have not prepared adequately.
"We've seen intergenerational wealth transfer getting larger and larger for families," said Cameron Unicomb, a private wealth adviser at Shadforth Financial Group. "Because of that, there are actually more opportunities, but there are also far more risks."
One striking detail is the average age at which Australians receive an inheritance: 50 years old. That means many beneficiaries are already retired or approaching retirement when a windfall arrives, limiting the time they have to manage or invest the funds effectively.
The 'Death Tax' Most Australians Don't Know About
While Australia does not have a formal inheritance tax, financial experts say many families are blindsided by tax obligations tied to superannuation. If super is not left to a financially dependent spouse or child, adult beneficiaries can face a tax rate of up to 30 per cent on those funds.
"Most people are shocked to learn that there is a death tax," said Josh Lee from Link Wealth. "If that money goes to your adult kids and they are not financially dependent upon you when you are to pass away, they could be up for, worst-case, up to 30 per cent taxes."
Super Consumers Australia CEO Xavier O'Halloran acknowledged the complexity many retirees face. "It's not a very easy system to navigate, particularly in retirement, and the way tax works can be quite confusing," he said.
Why Older Australians Are Acting Early
The prospect of large tax bills is prompting a growing number of older Australians to transfer wealth while they are still alive, rather than leaving it entirely to their estates. This approach can help reduce tax exposure and, in some cases, maximise Centrelink entitlements for all family members involved.
"Older generations are now, more so, looking at how they can help their kids get a leg up earlier in life," Lee said.
For those aged between 60 and 75, one strategy involves withdrawing superannuation and reinvesting it in ways that reduce the eventual tax burden on beneficiaries. Lee noted he regularly helps clients navigate this process, though he stressed it requires careful professional guidance given the complexity of Australia's retirement tax rules.
What Families Should Do Now
Experts recommend Australians seek financial advice sooner rather than later, particularly those with substantial superannuation balances or property assets. Simple planning steps, including reviewing beneficiary nominations and considering early gifting strategies, can make a meaningful difference to how wealth is received across generations.
With trillions of dollars set to change hands in the coming years, the message from financial professionals is clear: the time to plan is well before death, not after.
