The short answer: once modelling shows someone has more than they're ever likely to spend, the planning question changes from "how do I grow this?" to "what do I want this to achieve?" There are four main things to plan: giving to family while you're alive, the tax your beneficiaries will pay on what they inherit, whether your Will and any testamentary trusts still fit your family, and whether some of the money could support causes you care about. The starting point is always confirming the surplus is real, so generosity never comes at the cost of the giver's own security.
This comes from our podcast episode on Legacy Planning. You can listen below:
For most of our working lives, the questions are about accumulation.
How much should I put into super? How should I invest? Can I afford to retire? Will my money last?
But for some people, particularly those who have built significant wealth, the numbers eventually become pretty clear. They're going to have more money than they'll ever spend.
At that point, a plan built only around growing wealth is answering yesterday's question.
Can you have too much money in retirement?
Yes. Some retirees, particularly those who have saved and invested well for decades, are on track to leave far more than they'll ever spend.
But "we have a lot" and "we have more than we need" aren't the same thing. Only the numbers tell you which one is true.
There's no single figure that counts as enough. It depends on how much someone spends, how long they live, what other income they have, and how their investments perform along the way. I've written about working that out in how much can I spend in retirement without running out of money?
The modelling matters even more once giving is on the table. People are living longer, aged care costs are hard to predict, and a gift generally can't be taken back if health or markets turn.
So the starting point is a projection: how much you'll spend, for how long, and how your plan holds up under a range of market conditions. Guidance clients will know this is something we revisit at each annual Progress Meeting.
Only once that shows there's genuinely surplus capital does giving become a sensible part of the strategy.
1. Giving while you're alive: what is a living inheritance?
A living inheritance is money or assets given to children or grandchildren while you're still alive, rather than left to them in your Will.
There's an old expression I quite like: give with a warm hand rather than a cold one.
The practical case is about timing. A gift to a child while they're raising a family and paying off a mortgage can be hugely impactful. The same amount inherited at 65 may be nice to receive, but it's probably much less transformational.
There are selfish reasons too. Help a child buy a home, fund a grandchild's education or pay for a family holiday, and you get to see your wealth put to use. You get to share in the joy it brings.
I was talking with some friends recently about the prospect of becoming grandparents. To improve their odds, they planned to let their son and daughter-in-law know that if they needed a bigger house to make room for a family, they were willing to help with an early inheritance. Easing some financial pressure at that stage of life might just make the decision a little easier.
A living inheritance does come with its own rules, particularly for anyone receiving or likely to apply for the Age Pension. I've covered those, along with gift vs loan and when help can backfire, in should you give your children their inheritance early?
2. The tax your beneficiaries will pay
Is there inheritance tax in Australia?
No. Australia doesn't have an inheritance tax or estate tax.
That doesn't mean inheritances are tax-free in practice. Two taxes often do a similar job: capital gains tax on inherited assets, and tax on superannuation paid to adult children. Both can be planned for.
Do you pay capital gains tax on inherited shares in Australia?
Generally not when you inherit them. But the tax hasn't gone away. It's usually paid later, when the shares are sold.
Take a share portfolio bought many years ago for $100,000 that's now worth $500,000.
If those shares are simply inherited, there generally isn't a capital gains tax bill just because the owner has died. Instead, for assets bought on or after 20 September 1985, the beneficiary generally takes on the deceased person's original cost base.
So the $400,000 gain carries on. When the beneficiaries eventually sell, they will generally pay the tax on it. That often happens while they're working, when their own tax rate is at its highest.
How can capital gains tax on inherited shares be reduced?
With some planning, often by realising part of the gain during the original owner's lifetime, rather than handing all of it on.
Once retired, many people have relatively low taxable income, because much of their income comes from a superannuation pension. Pension payments are generally tax-free from age 60.
That can make retirement a useful window to progressively realise capital gains. One way is selling some shares and gifting the proceeds. Another is selling and reinvesting, which effectively resets the cost base higher for the future.
This needs to be considered alongside the capital gains tax changes starting 1 July 2027. The 50% CGT discount is being replaced, for gains that accrue from that date, by indexation and a minimum 30% tax rate on real capital gains. Gains that accrued before 1 July 2027 remain under the existing arrangements.
For someone holding shares or property with large embedded gains, that changes the arithmetic of when to realise them, and of who ends up paying. Legacy planning and CGT planning increasingly need to be looked at together. I've explained the changes in more detail in should you sell before the capital gains tax changes on 1 July 2027?
Do children pay tax on a super inheritance?
Often, yes, if they're adults.
Under tax law, an adult child is generally a "non-dependant" unless they were financially dependent on the parent. A non-dependant generally pays tax on the taxable component of a super death benefit: up to 15% plus the Medicare levy, or up to 30% plus the Medicare levy on any untaxed element.
On a large balance, that can be a significant amount that families often don't see coming. I've explained how it works, and the ways it can be reduced, in will your children pay tax on your super when you die?
Tax outcomes depend heavily on individual circumstances. This is one to work through with a registered tax agent before anything is sold, transferred or withdrawn.
3. Your Will and testamentary trusts
How often should you update your Will in Australia?
There's no fixed rule. A common guide is to review it every few years, and after any major life event: a marriage, separation, a death in the family, a new grandchild, or a big change in financial position.
Giving during your lifetime doesn't replace a good estate plan. Quite the opposite.
A surprisingly common problem is a Will that hasn't kept pace with the family's financial circumstances.
A Will written at 45 may not be appropriate at 75. By then the children are adults, there may be grandchildren, and the financial position can be completely different.
What is a testamentary trust, and is it a good idea?
A testamentary trust is a trust created by a Will. Rather than assets passing directly to a beneficiary, they're held in a trust that's set up when the estate is administered.
It can be a good idea for the right family. People generally set one up for three reasons.
Protection. A testamentary trust can provide asset protection and more control over how inherited wealth is managed. That's particularly valuable where there are concerns about relationship breakdown, financially inexperienced beneficiaries, vulnerable family members, or simply very large amounts of money.
Tax on income for children. Under current rules, income from assets that came from a deceased estate can qualify as "excepted income" for beneficiaries under 18. That means it's taxed at ordinary adult rates, rather than the much higher rates that normally apply to unearned income received by children.
Flexibility. The trustee can generally decide each year how income is distributed among beneficiaries.
The main disadvantages are cost and complexity. A Will with a testamentary trust usually costs more to prepare, and the trust then needs its own tax returns, records and a trustee willing to run it, sometimes for decades. For a modest estate or a straightforward family, that may be more structure than is needed. Whether one suits a particular family is a question for an estate planning lawyer, working alongside a financial planner.
Are testamentary trusts affected by the trust tax changes?
They're intended to be largely exempt.
Trusts have been in the news a lot this year, with the government tightening the rules considerably. From 1 July 2028, the government proposes a minimum 30% tax on the taxable income of discretionary trusts.
Genuine testamentary trusts are intended to be exempt, provided conditions are met. As described in the draft legislation, these broadly cover how the trust arose (under a Will, intestacy or court order in a deceased estate), where the income comes from (estate assets, or what they're reinvested into), and, for trusts created from 1 July 2028, who receives the income.
The legislation was still in draft as at October 2026, so the detail may change.
So testamentary trusts certainly haven't become redundant. For the right family, they may become even more valuable.
4. Giving to causes you care about
What is the best way to leave money to charity?
There isn't a single best way. The main options are a gift in your Will, donations during your lifetime, or, for larger amounts, a structured giving vehicle such as a private ancillary fund.
Legacy planning doesn't have to be solely about family.
Take someone leaving an estate of, say, $5 million. Leaving $100,000 or $200,000 to a cause they care deeply about doesn't materially change what their children receive. It could make an enormous difference to the organisation receiving it.
And again, giving doesn't have to wait.
Some retirees set up a structured giving program during retirement. That means seeing the impact of their donations. And where donations go to deductible gift recipients (DGRs), there may be a tax deduction during their lifetime.
Tax and giving can also work together. A large donation may be particularly useful in a year when a substantial capital gain has been realised, which links back to the CGT planning above.
What is a private ancillary fund?
A private ancillary fund is a charitable trust set up and controlled by an individual or family. It's a bit like a self-managed super fund, but for charitable giving rather than retirement income.
The family donates to the fund, the fund invests, and it distributes to charities over time. It must distribute at least 5% of the market value of its net assets each year. They're generally suited to people with particularly significant wealth who plan to give over many years.
What is the money for?
Ultimately, legacy planning isn't really about tax. Tax is just one of the considerations.
The bigger question is simple: what is the money for?
After 40 years of accumulating wealth, the final chapter of a financial plan doesn't have to be simply accumulating more.
Maybe some of it can help your children when they actually need it.
Maybe it can fund your grandchildren's education.
Maybe it can support a charity or community organisation that matters to you.
And perhaps some of it should stay invested, protected by a well-designed estate plan, and eventually pass to the next generation.
For wealthier retirees, these decisions deserve as much thought as the investment portfolio itself. Because once you know you have enough, the objective changes.
The challenge is no longer just to build wealth. It's to use it well.
A few questions worth sitting with:
Do you know, from modelling rather than gut feel, whether you have more than you'll need?
If you could help your children now, when would it make the biggest difference to them?
How much tax will your beneficiaries pay on your shares, property and super, and when?
When did you last review your Will, and has your family or financial position changed since?
Is there a cause you'd like to support, and would you rather see the impact yourself?
Thinking about retirement?
You've worked hard to build your wealth. Now it's time to make sure you have a plan for what comes next.
At Guidance Financial Services, we help Australians approaching retirement understand how much they'll need, what they can comfortably afford to spend, and how to make informed decisions about the wealth they've built.
Paul Benson is a Certified Financial Planner at Guidance Financial Services in Melbourne, helping Australians plan for retirement and build wealth. He hosts the Financial Autonomy podcast.
This article is for educational purposes only and does not take into account your individual circumstances. If you would like tailored advice, we can help you work through the numbers properly.
