Clever ways to transfer your wealth... and live to see the results

Passing on the fruits of your labour before you pass away can be deeply rewarding, and an investment bond is an easy, tax-friendly and cost-effective way to make it happen

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Chances are you've heard about 'the great intergenerational wealth transfer. It's all about the $3.5 trillion in wealth that the baby boomers will pass on through inheritances over the next 30 years.

An inheritance is always welcome. But for many, in our ageing society, the money won't arrive while they are saving for a home or raising a young family. The Grattan Institute found the vast majority of inheritances go to people in their 50s and 60s, by which time our biggest financial challenges tend to be behind us.

That's driving a new trend, one that is seeing Australians transfer part of their wealth today, while they are still very much alive.

It can be a win-win option. You help out a loved one when they need the money most - either to buy a first home, raise a family or pay for their own children's education. And as Grant Hackett, CEO of investment bond issuer Generation Life, Money's 2024 Best of the Best winner of the Tax Aware Investing award, points out, the giver enjoys "a tremendous sense of satisfaction, and is able to see what a difference wealth transfer is making to the recipient's life".

Valuable tax benefits

As rewarding as this type of wealth transfer can be, it is worth considering how you go about it.

Gifting money is not always the answer as it can impact age pension entitlements. In addition, you want to be sure the money you hand over is used wisely, or at least for the purpose you intended.

Investment bonds are a simple solution that lets you tick all these boxes.