Estate planning can not only save your loved ones taxes, it can also stop your family fighting over your estate.

I was recently speaking to some clients I am taking through our 6 month financial freedom program. To give you some background, they are both in their mid-50s; still working in well-paid jobs; their house is paid off; they have more than $1 million in savings; and they both have enough super to give them a very comfortable retirement when they turn 60. They both plan on working, albeit with less hours, until they retire at 60.

They both have two adult children from previous marriages. One of their wishes is to ensure each of their children are taken care of in the event of their death.

Here are four of the options we discussed:

Invest in shares in their own name and let their Wills distribute the proceeds

They could invest in shares in their own name and leave them to each of the children in their Will. The benefit of this is nothing is locked in (ie you can change who gets what) and you can invest in low cost passive index funds.

The downside is you have to pay tax on any investment earnings, and there is also the potential for people to contest the Will.

Invest in a property jointly with each child

With their current savings, they would need to borrow against each of the properties to be able to do this with all four children.

Assuming they were mortgaged, they would probably be negatively geared. On their death, the property would not be included in their Will, but instead would automatically transfer to the joint owner without capital gains tax needing to be paid.

However, to do this for four children would mean taking on considerable debts. There might also come a time before they die when one of the children wants to sell their house to realise the capital gains.

Contribute to the children’s superannuation

Another alternative is to make a contribution to each of their children’s superannuation. This will ensure each of their children have a comfortable retirement, but doesn’t open the funds to being wasted while they are younger. In addition, it is relatively tax effective as the future investment earnings will only be taxed at 15%.

The downside is the children won’t be able to access the money until they are 60 (unless the government changes the rules again!). Also once you do this you can’t change your mind.

Invest in investment bonds

Investment bonds is where the investment is held by a company on your behalf. All earnings are taxed at company tax rates and do not get added to your personal tax. Ownership can be done jointly, which means that on your death the investment can automatically transfer to the joint owner without capital gains tax implications.

The disadvantage of investment bonds is they generally have high fees. In addition, you lose many of the tax benefits if you withdraw the investment in under 10 years.


As you can see, there are a range of options available to you when looking at distributing your assets. This is especially important in blended families where the parents want to ensure their own children are taken care of. Each option has its own pros and cons and the most suitable option will vary from family to family.

About the Author
Phil Harvey is an independent financial adviser. In 2017 Phil set up his company Construct Wealth to help clients best manage their finances so they focus on what is important to them. He is a founding member of the Profession of Independent Financial Advisers and a tax financial adviser, registered with the Tax Practitioners Board.

General Advice Warning
This advice contains general information. It may not be suitable to you because it does not consider your personal circumstances. Phil Harvey and Construct Wealth are authorised representatives of Independent Financial Advisers Australia (AFSL 464629)