We have put together a summary from our recent Webinar covering Inter-Generational Wealth Transfer and Estate Planning with the help of our presenters Zee Zhang – Director at MGI, Jaxon King – Managing Director at Scion Private Wealth and Michael Klatt – Partner at Mullins Lawyers.

How to Plan Your Estate the Smart Way

Presented by Zee Zhang
Estate planning isn’t just paperwork – it’s a powerful way to ensure that your hard-earned wealth smoothly transfers to those you love, without unnecessary stress or tax bills. In our recent webinar, “Family Wealth Transfer & Navigating Estate Planning Issues,” we unpacked a simple yet powerful way to approach your wealth: the Four Buckets Framework.

Why Early Planning Matters

Families often underestimate how critical early planning is until it’s too late. Here are three big reasons why acting sooner rather than later is essential:

  • Avoiding unexpected tax bills: Without proper planning, your family could face substantial taxes – especially on assets like superannuation passed to adult children.
  • Managing family complexity: Blended families, adult children with their own families, or family members living overseas – each scenario brings unique challenges.
  • Protecting opportunities: Tax advantages available now (like small-business concessions) might disappear once assets are sold or transferred without prior structuring.

The Four Buckets of Family Wealth

We introduced attendees to our easy-to-follow “Four Buckets” model:

  • Bucket 1: Directed Assets (Super & Insurance)
    Assets here don’t automatically form part of your estate; your nomination decides the beneficiary—and the tax outcome.
  • Bucket 2: Automatic Transition (Joint Assets)
    Assets like jointly-held property transition automatically upon death, but timing and valuation are crucial to avoid unintended tax consequences.
  • Bucket 3: Assets Outside the Estate (Trusts & Companies)
    Control is key here. Without clear succession planning, these structures can create family conflict and unexpected taxes.
  • Bucket 4: Estate Assets (Dealt with by Your Will)
    These assets rely directly on your will—clarity and structure here protect beneficiaries from disputes and unnecessary tax.

Essential Family Governance Tools

Beyond buckets, successful family wealth transfers also rely on good governance. We recommend four foundational tools:

  • Family Charter: Clearly documents your family’s values and wealth vision.
  • Decision Rules: Provides guidance on making significant decisions to prevent conflict.
  • Annual Family Meetings: Keeps everyone aligned and informed.
  • Education Resources: Equips family members with financial literacy to manage wealth responsibly.

Building Your “A-Team”

Effective estate planning involves collaboration between:

  • Accountants (structure and tax modelling)
  • Lawyers (document drafting and legal protection)
  • Wealth advisors (investment and asset protection strategies)

Your Action Checklist

Start with these practical steps today:

  • Map your assets clearly into the Four Buckets.
  • Keep an updated record of asset values, cost bases, and insurances.
  • Draft a preliminary family charter to outline your family’s values and intentions.
  • Schedule a complimentary consultation with our team to align your structure and goals.

Estate planning is not just about the money – it’s about preserving family harmony and ensuring your legacy goes exactly where you intend. Act early, and you won’t just be planning your estate; you’ll be safeguarding your family’s future.

For any questions about this topic, please contact Zee Zhang on (07) 3002 4800 or email zzhang@mgisq.com.au.

Book your complimentary 1-hour structuring review today with Zee and gain clarity on your family’s financial future.

Protecting Family Wealth

Presented by Jaxon King

As the landscape of superannuation and tax legislation evolves, so too must our strategies for protecting and transferring wealth. With the introduction of Division 296 into Australian tax law, many high-net-worth individuals are now facing a new challenge: how to manage the growing tax burden on their superannuation balances – particularly when planning for future generations.

This article will explore the implications of Division 296, outline key strategies to mitigate its impact – such as investment bonds and superannuation recontribution strategies – and provide guidance on how to turn complexity into opportunity for your family legacy.

Understanding Division 296: What It Means for High Super Balances

Division 296, part of the Treasury Laws Amendment (Better Targeted Superannuation Concessions) Act 2023, introduces an additional 15% tax on earnings attributable to superannuation balances exceeding $3 million, effective from 1 July 2025.

This tax is applied to “earnings” on the portion of your total super balance that exceeds $3 million, regardless of whether the earnings are realised or unrealised.

Key Points:

  • Applies to individuals, not specific super accounts (SMSF, retail, etc.).
  • Affects accumulation phase and retirement phase accounts.
  • Calculated based on growth in your total super balance, adjusted for withdrawals and contributions.

Who Will It Affect?

High-income professionals, business owners, and self-funded retirees who have built significant retirement savings are the most exposed. While the legislation targets a relatively small cohort now, indexation is not applied to the $3 million cap, meaning more Australians will fall under its scope in time.

The Broader Issue: Taxable Components and Inheritance

Even without Division 296, many Australians with large superannuation balances face another tax trap: the taxable component of their super may be subject to up to 17% tax when passed to non-dependent beneficiaries (e.g. adult children)

Why It Matters:

  • Super is not “tax-free” upon death unless left to a tax-dependent (e.g. spouse or child under 18).
  • A $2 million taxable component could result in $340,000 tax to your adult children (17% tax).

So, how do we manage these risks while preserving your legacy?

Strategy 1: Recontribution Strategy – Reduce the Taxable Component

A recontribution strategy involves withdrawing money from your superannuation and recontributing it back as a non-concessional contribution. This effectively converts the taxable component into tax-free, reducing the potential death benefits tax payable by non-dependent beneficiaries.

Benefits:

  • Reduces the taxable portion of your super.
  • Minimises tax leakage to the ATO upon death.
  • Can be executed strategically over multiple financial years.

How It Works:

  • Withdraw part of your super (typically after age 60, tax-free).
  • Re-contribute the same amount (within contribution caps) as a non-concessional contribution.
  • The recontributed funds are classified as tax-free within your super balance.

Contribution Limits to Watch:
Non-concessional cap: $120,000 per year, or $360,000 over 3 years under the bring-forward rule.
Must be under age 75 and meet the total super balance test (less than $1.9 million to make non-concessional contributions).

Strategy 2: Investment Bonds – A Tax-Effective Vehicle Outside Super

Investment bonds are a powerful, often overlooked, tool for building and transferring wealth outside the superannuation system – making them an excellent complement to Division 296 planning.

Key Features:

  • Tax paid at 30% inside the bond—no personal tax reporting if held for 10+ years.
  • After 10 years, proceeds are tax-free when withdrawn.
  • No contribution caps like superannuation, and no age restrictions.
  • Ownership can be structured to pass to beneficiaries tax-effectively.

Ideal Uses:

Strategic Benefits:

  • Keeps assets outside the Division 296 net.
  • Avoids superannuation death benefits tax.
  • Adds asset-class diversification and estate planning flexibility.

Going Beyond the Numbers: Family Governance and Communication

While tax and investment strategies are crucial, the real risk to generational wealth is not legislative—it’s relational.
More than 70% of wealth transfers fail by the second generation, not because of poor tax planning, but due to lack of communication and family alignment.

Start with These Steps:

  1. Have open conversations with adult children about your estate intentions.
  2. Build a family governance framework—just like you would for a business.
  3. Schedule regular family meetings to discuss values, not just money.
  4. Involve professionals in a collaborative team approach—your lawyer, accountant, and adviser working in concert.

The Cost of Doing Nothing

  • Avoiding these conversations and strategies can lead to:
  • Hundreds of thousands in avoidable tax.
  • Prolonged estate disputes.
  • Irreparable family conflict.

You’ve spent decades building your wealth. The final, and perhaps most important step, is ensuring it serves your family – not just financially, but relationally – for generations to come.

Next Steps: Let’s Tailor a Plan for You

Every family is unique, and so is every wealth transfer plan.

For any questions about this topic, please contact Jaxon King on 07 3778 6800 or email JKing@scionprivatewealth.com.au

You can also book a Complimentary Strategy Session with Jaxon
He is currently offering a limited number of 30-minute one-on-one calls to:

  • Review your superannuation structure
  • Assess your exposure to Division 296
  • Explore tailored mitigation strategies (like recontributions or investment bonds)
  • Guide you through the family conversation

Estate Planning

Presented by Michael Klatt

Approximately 50% of the Australian population does not have a valid Will. This seems to be a result of complacency, largely, but also, in some circumstances, testators find it difficult to decide on how to distribute their estate following their death. This is particularly the case where the testator is a member of a blended family.

Estate planning is more than just making a Will. It is also important to have an Enduring Power of Attorney by which a person can authorise an attorney to act in relation to their financial affairs and personal (including health) matters. This document terminates on the person’s death.

It is important to identify how assets are owned. Sometimes, assets are owned by an individual; other times, they are owned jointly with one or more other persons. Assets can also be owned by a company or trustee of a trust, including family trusts or units trusts. Assets can also be held by a superannuation fund, either a self-managed superannuation fund controlled by the members or a retail or industry fund controlled by the trustees of those retail or industry funds. It is not uncommon for clients to not fully appreciate where the assets sit.

Once assets and liabilities are identified, it is necessary to consider the personal circumstances of the testator; are they married or in a relationship, do they have children, are they in a blended family situation, are there any issues of estrangement with family members that need to be considered, do family members who are identified as potential beneficiaries get on?

It is necessary to consider who to appoint as an executor or executors of the Will. These should be responsible people, not merely people who would expect to be appointed as executors. Appointing the right people to act as executors is crucial in avoiding family disputes.

If multiple executors are being appointed, then they need to be able to work together. Sometimes, it is appropriate to appoint an independent executor, either a friend or a professional advisor, particularly where the testator may be in a blended family situation. In the event that executors are not able to work together, the likely scenario will be a beneficiary or executor making an application to the court for the removal of the executors and the appointment of an independent administrator, typically an independent lawyer.

Typically, if children are not treated equally in the division of a testator’s estate, a family dispute will arise. Sometimes, however, a testator may feel that one child should receive a larger portion of the estate and other children, particularly where the testator may have a family business and one child has contributed significantly in the improvement of the family business to that child’s detriment, particularly also where they have not been paid a commercial rate of salary for the effort provided. Careful planning is necessary when developing an estate plan in these circumstances. If it is possible to distribute non-family business assets to children not involved in the business, then that is typically the preferred course of action.

Communication with family members in relation to the testator’s estate plan is usually advisable. This may prevent family disputes after a testator’s death, but this is not always the case.

The advice to testators who are members of a blended family is generally that, if it is possible to leave an inheritance to the testator’s children of a previous relationship in circumstances where their new spouse is still living, then this assists with potentially avoiding a family dispute after the testator’s death. Again, this is not always the case. Sometimes, there are insufficient assets to provide for adult children of a previous relationship and the new spouse. Testators may well consider entering into a mutual Will deed with their spouse by which they promise to leave their estate a certain way in the event that their spouse pre-deceases them.

Generally, children co-owning assets that have been left to them by their parents does not work. Careful consideration needs to be had before a decision to leave assets to children to be co-owned is made. If, however, it is decided that children will co-own assets, particularly in the situation of a family business, then proper governance needs to be put in place. Family Charters, Family Constitutions, Shareholders Agreements, and Unitholders Agreements are all tools that can be used to assist with avoiding a family dispute in a co-ownership arrangement.

Some testators have control of a family trust. A family trust is typically a discretionary trust where no one beneficiary has an absolute entitlement to the assets held by the trustee of the trust. Careful consideration needs to be given to the succession of control of the trust and, to the extent that the testator is able, they should leave wishes as to how the trust assets should be administered.

Clients with any significant wealth are typically concerned about leaving an inheritance to their children and their children subsequently separating from their spouse, exposing the inherited assets to a family court property settlement. Accordingly, many testators decide to incorporate testamentary discretionary trusts in their Will. Instead of leaving the inheritance directly to the child, the inheritance is left to the child as trustee for a testamentary discretionary trust. The beneficiaries of that trust include the child as the primary beneficiary and then other discretionary beneficiaries, including the child’s children and other relatives. Sometimes, spouses of the child and other beneficiaries are included as beneficiaries but are limited to being income beneficiaries and not capital beneficiaries. Proper consideration of the terms of those testamentary discretionary trusts is important. There is no standard testamentary discretionary trust Will that will suit all testators.

It is important that clients have Enduring Powers of Attorney in place. These documents are not just for elderly clients. One never knows when they may have an accident and therefore not be able to manage their own finances and personal health matters. Again, proper consideration as to who to appoint as attorneys is imperative. These are not documents that can simply be printed off and completed by clients without professional guidance.
It is vital that clients surround themselves with competent advisers, including a lawyer, an accountant, and a financial planner and that all of these advisors are engaged to assist with the estate planning exercise.

For any questions about Wills and Estates, please contact Michael Klatt on (07) 3224 0370 or email mklatt@mullinslawyers.com.au