Thinking of spending your inheritance in advance? Stop right there

It is only natural to plan for money you might inherit, but to start spending it or borrowing against it is another issue altogether.

As much as $3.5 trillion from wills and superannuation will transfer to the next generation.

We are on the cusp of the biggest handover of wealth in the history of the nation. A wall of money estimated to be $3.5 trillion, from both wills and super, is about to transfer to the next generation.

In Australia, we don‘t have an inheritance tax (though we do have an effective tax of 17 per cent on money inherited through superannuation).

With everyone living longer and the age of inheritance moving ever higher, the issue of “impatience” is building. Some investors are not just anticipating future income but are actively mortgaging their inheritance – and that’s a very bad idea.

Our guest in the podcast today is a former chartered accountant with Deloitte; and we all know the accountant’s golden rule: “Always anticipate losses, never anticipate gains”.

Needless to say, the same mantra should apply to all those expecting an inheritance. But that does not mean there is nothing to do but twiddle your thumbs. In fact, there are a number of steps you should be taking now.

Who is the guest?

Jacqui Clarke of Maxima Private

Why her?

She is an adviser to rich-list families and author of “How to stop worrying about money”.

What are the topics

• The rules of inheritance for all generations

• How to lower the tax due on super inheritance

• Ozempic’s health and investment outcomes

• Super statistics for women

Question of the week

Regular listener Marge asks: “How does investing in a bond fund ETF differ from investing in bonds themselves?

Does the fact that ETFs are traded daily mean the price of the bond ETF change as rates change?

Does that variation defeat the purpose of bond investing as a defensive asset?”

Questions always welcome to the podcast, via [e-mail]•

Originally published as Thinking of spending your inheritance in advance? Stop right there