Financial planning and families

  • Finance is very much a family matter.
  • Communicate your financial wishes, plans and knowledge to family members.
  • Try to avoid financial misunderstandings, even if they may be inevitable.

It probably doesn't make sense getting your family involved in the nuts and bolts of the financial planning process. However, helping them understand the wider benefits of financial planning is one of the best things you can do.

Educating your family about all things financial

Hopefully, your adviser may have helped you get into some good financial habits, which can be passed on to your children or other family members at any age.

It's great to educate children about money and the importance of saving for the future, meeting goals and understanding investment risks.

If you need to set a budget in order to achieve your financial goals, it's going to be easier when everyone is on the same page. Best-case scenario is that your kids will hopefully understand why you didn't buy them those extra toys for their birthday.


If you give your children pocket money, encourage them to save for something they really want instead of things that may only give fleeting enjoyment. Further, buying your children things at the drop of a hat or to keep the peace makes it harder for them to appreciate the value of money.

You and your spouse may have different attitudes to money. For instance, one member of a couple may see credit cards as a means of freedom and instant gratification, while the other may see them as a debt trap which increasingly snares them over time. Or what one member sees as thrifty and sensible may be seen as stingy and mean by another.


Avoiding talking about financial differences with your partner can lead to resentment, particularly for the main breadwinner. Sometimes, you may have to have difficult conversations to bring any monetary issues into the open. Pick the right time and place to do so and don't put it on the backburner.

Aged care

It's a well-established fact that people are living longer. While this has its positives, it also brings concerns, such as:

  • avoiding being a burden on your family
  • having your money eroded by retirement living costs, particularly if you want to leave some funds to your children
  • finding aged care accommodation options that best suit your needs and resources
  • living away from your spouse due to age- or illness-related conditions
  • means tested care fees
  • the aged care assessment process
  • entering into an agreement with an aged care home
  • tax and social security impacts, particularly in relation to homeowner versus non-homeowner status.

A financial adviser should be across the issues in the preceding list. If you are going down the DIY path, the federal government's My Aged Care website ( is a good resource.

A granny flat sounded good at first, but ...

A granny flat agreement or interest can be surprisingly flexible and does not always mean having to build a separate residence to accommodate an elderly family member. However, they come with a range of Centrelink asset conditions (particularly around asset deprivation) that may impact on Age Pension entitlements. They can also affect estate planning and lead to family problems (at worst, legal) if things are no longer harmonious.

Estate planning

Estate planning is another important reason for getting the family involved in the financial planning process. If you want to distribute your estate between your children and grandchildren, it's helpful to discuss why you divided your estate in a particular way regarding the beneficiaries. That way, if there's an objection you can explain the reasons.

A financial adviser can give you information on the various elements of estate planning and may be able to recommend a solicitor to help you with the process.

The importance of a Will

A Will is a way of making sure your assets are distributed as you want them to be after you have passed away. The person who makes a Will is known as the "testator". Many people never get around to making a Will or assume that a less formal document, such as a letter or note, will be just as effective.

However, if you die without having made a Will (that is, "intestate"), then your estate will be managed by the public trustee in your state or territory (at a substantial cost) and it may be a long time before your assets find their way to the beneficiaries or, worse still, your wishes may not be fulfilled in terms of intended beneficiaries.

Making a Will is not necessarily difficult, and a solicitor can help you do this for as little as a few hundred dollars if your Will is relatively straightforward.

As part of the Will-making process, you will need to appoint an executor, who is essentially a person to take on the administration and distribution of your estate after you've gone.

When happy families aren't so happy

While Wills are primarily a robust estate planning solution, there are times when they can be challenged. For instance, if you make a substantial gift to a charity, your family may be able to make a family provision claim under the relevant state and territory legislation.

Testamentary trusts

A Will enables you to create what is known as a "testamentary trust" to hold and distribute your assets after death. You can choose an executor or trustee to distribute your assets in accordance with your wishes or give them the power to use their discretion. Assets can remain within the trust for up to 80 years and can be managed in accordance with the trust provisions in your Will.

Before proceeding down a testamentary trust pathway, it is recommended that you seek financial and/or legal advice.


Testamentary trusts can help address concerns and fears about dying while your children are relatively young, or if you have a disabled child and are worried about their welfare after you've gone. This is particularly relevant, given that nowadays it is common for people to have children later in life.

Family trusts

Like superannuation, a family trust is a non-estate asset. The trust deed will determine how the trust's assets are to be distributed.

What if I can no longer make decisions or fend for myself?

You may have heard the term "enduring power of attorney" or EPA. An EPA is a legal document that enables you to appoint someone to look after your affairs and financial matters. The main point of an EPA is that it is "enduring" and continues to operate even if you no longer have the mental capacity to make decisions after signing the EPA.

This contrasts with a power of attorney (POA), which can be issued to a trusted family member to make decisions on your behalf in situations such as an extended overseas holiday. However, it is no longer valid if you lose decision-making capacity or die. EPAs and POAs are limited to providing direction on assets and finances as opposed to medical and lifestyle matters.

There is also enduring guardianship, where you can appoint an enduring guardian to make important lifestyle or medical decisions in situations when you are no longer able to do so.

What happens to my superannuation?

Essentially, superannuation is not an asset that can be distributed as per your Will. Instead, the superannuation fund trustee carries this out in accordance with either a binding death benefit nomination (BDBN) or non-binding nomination.

A BDBN is a legal document where you nominate a dependant or dependants, for example, a spouse, child, or person financially dependent on you to receive your superannuation savings once you have passed away. A BDBN requires you to renew or confirm your nominations every three years.

Note: Some superannuation funds now offer the option of a non-lapsing BDBN.

In the case of a BDBN, the trustee doesn't have any say or discretion in deciding who receives your superannuation.

A non-binding nomination gives the trustee discretion to distribute your post-death superannuation, taking into consideration the situation of any beneficiaries at the time.

Elder abuse

It's a sad fact of life that some children may have inheritance impatience, and pressure or bully their parents to give them money or hand over control of their financial affairs. Financial advisers are obligated to report suspected elder abuse and are often in a position where they will see red flags, such as out-of-character behaviour or being accompanied by a controlling family member to meetings. If this applies to your situation, speak to your financial adviser or the police.

Business succession planning

Financial planning and business succession planning are often intertwined. If you own a family business, it pays to get the next generation involved in the financial planning process, particularly if you are looking for some assurance that your legacy will continue.

If the next generation isn't into the family business

Ideally, you may want a family member to take over the family business when you retire or pass away. However, your intentions might not resonate with the next generation, as they may not share your motivations and drive, or they may want to do something else work-wise.

This may be a sign to think about getting your business ready for sale, which is a major consideration in the financial planning process.

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