In the next twenty years or so, $600 billion is due to move from the hands of the baby boomer generation to their chosen beneficiaries1. If some of this is your money, have you considered how you’ll leave your wealth behind?
According to neuroscientists, we’re waking up more and more to the benefits of giving. And while $600 billion as a lump sum is a lot by anyone’s standards, the realities are that not everyone will be able to afford―or choose―to be philanthropic.
What is philanthropy?
Philanthropy is the voluntary giving of money, goods or time to benefit a public good. It first began in Australia with the abolition of death taxes in the late 1970s. People had an incentive to establish charitable structures during their lifetime rather than giving assets via testamentary trusts to avoid tax.
People may choose to give according to a:
- Passion for a particular cause that may have touched their own family.
- Sense of obligation.
- Religious belief.
- Lack of heirs.
- The altruistic desire to help future generations.
It’s on the rise in Australia
The practises of some wealthy Australians are following the philanthropic trends in other countries.
In the United States and Europe, philanthropic giving is well-established. And in Australia, several recent acts of private and corporate generosity show that we are moving to a new level of engagement with giving.
Last year, Andrew Forrest who founded the Fortescue Metals group donated $65 million to the University of Western Australia. More recently billionaire health mogul, Paul Ramsay, left the bulk of his $3 billion estate to a charitable trust.
It can be easy to think of philanthropic giving something wealthy people do, but charitable giving is expected to become more and more a part of the overall financial planning of everyday Australians.
Giving vs receiving
Neuroscientists have found that giving is as pleasurable as receiving2. Studies show that the part of the brain activated during pleasurable experiences―like enjoying a delicious dessert or receiving money―are equally active when people give money to charity. And while giving to feel good can seem contradictory, it’s good to know it’s beneficial for everyone.
Consider how you’ll transfer your assets
Make sure that however you decide to pass on your wealth you have a valid estate plan and a valid will in place to provide certainty and security for your dependants and any other beneficiaries.
A financial planner working with a legal adviser can help ensure your plan:
- Specifies an appropriate executor who knows where your will is kept.
- Enables ownership and control of your assets to pass to the beneficiaries you’ve chosen.
- Allows your assets to change hands tax effectively.
- Protects your assets if a beneficiary becomes involved in a legal dispute such as a divorce.
- Considers the impact of any beneficiary who may be under 18.
- Specifies appropriate nominations for your superannuation and insurance.
- Takes into account any wishes you have to pass some of your wealth to help others.
- Is regularly reviewed.
If you’d like more information about giving or making plans to pass on your assets speak with a financial adviser.
2. Brain imaging study headed by neuroscientist Jordan Grafman from the National Institute of Health.