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CPD: Intergenerational wealth – When the responsibility transfers before the money

There are two intergenerational transfers: the wealth itself and the responsibility for managing it.

Picture this: an Enduring Power of Attorney (EPOA) has sat in a filing cabinet for years. Then a sudden health event means an adult daughter is called on to act as her mother’s attorney. The legal authority is all in order, but underneath it remains a mystery the daughter must now solve. Where are the investments held? How does the family trust operate? Which arrangements are meant to sit outside the estate?

Nobody has been deliberately careless. Indeed, the mother always planned for someone else to take over. She just didn’t plan for the administrative complexity sitting underneath that decision, or what her daughter would actually need to know.

Wealth-transfer planning tends to concentrate on what happens after death: the will, beneficiary nominations and the tax treatment of the eventual transfer. Less attention goes to the point at which someone else starts managing the client’s affairs while they are still alive. And yet this increasingly common scenario is arguably more disruptive.

In reality, there are two intergenerational transfers: the wealth itself and the responsibility for managing it. Responsibility may pass long before the money does.

This article examines why more families are likely to face this earlier handover and what advisers can do to prepare the person taking responsibility. It also considers how simplifying wealth transfer structures, including through an investment bond where appropriate, may make a financial plan easier for someone else to administer.

A growing readiness gap?

Australia’s ageing population – and the associated increase in the prevalence of dementia – will make the early transfer of financial responsibility an increasingly common part of family life.

The 2026 Intergenerational Report projects that the number of Australians aged 65 and over will almost double over the next 40 years[1]. The number aged 85 and over, the age group most likely to need assistance managing their affairs, is expected to triple over the same period. At the same time, the number of Australians living with dementia is expected to more than double, from 446,500 in 2026 to over 1 million by 2065[2].

Financial enduring powers of attorney remain relatively uncommon across the adult population, with one survey[3] finding that 9% of Australian adults currently held one. However, their prevalence rises substantially with age, with separate research[4] finding the proportion of people with an active EPOA increased from 33% among those aged 65 to 69, to 48% among those aged 75 to 79 and 61% among those aged 85 and over.

The decision to establish an EPOA is also sometimes prompted by a change in circumstances. Among those surveyed who had established a financial EPOA, 26% did so after a professional suggested it, while 19% acted after a medical issue arose[5].

Combined with Australia’s ageing population, these findings suggest that more families will face a transfer of financial responsibility while the older generation is still alive. Yet having the legal authority in place does not necessarily prepare someone to exercise it. Only one-quarter of people actively serving as appointed decision-makers said they had understood their responsibilities very well when they began[6].

An EPOA identifies who may act, but it does not tell that person where the assets are held or why particular structures were chosen. Nor does it explain what must be done to keep those arrangements operating.

Generation Life’s research – Funding a Dignified Retirement – reveals a similar gap in family preparation. Although 65% of affluent and high-net-worth Australians intended to involve their children in discussions with their financial adviser, most advisers surveyed reported that fewer than 10% of clients actually did[7].

The result may be a transfer that is legally valid but practically unprepared. As more family members assume financial responsibility for ageing parents, the adviser’s role is evolving beyond ensuring the appropriate legal documents are in place. Increasingly that role extends to making a wealth transfer plan intelligible to someone other than the client and asking whether its administrative complexity still serves a worthwhile purpose.

Administrative complexity is a planning risk

Administrative simplicity is not merely a matter of convenience. It affects the ability of a financial plan to continue operating when the person who designed and managed it is no longer able to do so.

Complex structures often have a valid purpose. A trust or company may provide asset protection or tax advantages or governance benefits. But the question is whether those benefits continue to justify the associated workload for whoever eventually manages that structure.

For a discretionary trust, much of the administrative work recurs each year. Where the trust has income and beneficiaries are to be assessed on it, the trustee generally needs to make and document valid distribution resolutions by 30 June, or earlier if the deed requires. The trustee must also attend to the trust’s tax return and report the beneficiaries’ respective shares of income.

Tax administration is only part of the responsibility.

A successor trustee must understand the deed, including the class of beneficiaries, the scope of the trustee’s discretion and any default provisions that apply when a decision is not made. A change of trustee or of the directors controlling a corporate trustee may require formal appointments and consequential changes to asset records. The EPOA may give an attorney authority to act for the client, but it does not by itself explain or complete those trust-governance steps.

Complexity is already affecting some clients’ ability to manage their wealth. Generation Life’s Navigating Uncertainty Report found that 23% of high-net-worth Australians said that financial management was becoming too complicated, and this was a barrier to achieving their wealth goals. Among those using an adviser, 20% said they had sought advice because they could no longer manage their own assets or financial affairs[8].

A family trust that worked well while the client was actively making every decision may look very different to an adult child stepping in during a health crisis. The attorney may need professional help simply to continue the existing arrangements.

The test is therefore forward-looking: does a structure still serve a purpose sufficient to justify its administrative burden, and could someone other than the client understand and operate it under pressure? Complexity that depends on knowledge held only in the client’s head creates a planning risk of its own.

Simplifying the plan without dismantling it

Simplification does not require every trust to be wound up or an entire estate reorganised.

A trust may remain appropriate where asset protection or continuing trustee control is central to the client’s purpose. But if the objective is simply to earmark a defined amount for one recipient and determine when it will be received, an arrangement requiring annual tax administration and continuing trustee decisions may be more elaborate than necessary.

Consideration should thus be given to whether a more self-contained structure could achieve that narrower objective — and the comparison between structures should broaden from purely financial factors to include the amount of work created for others.

An investment bond is one option that may warrant consideration where the intended transfer is clearly defined and continuing trustee control is not required.

Case study: Margo’s planned transfer

Generation Life’s Estate Planning Guide references the example of Margo, aged 81, who wants to provide $100,000 for her 16-year-old grandson but is concerned he is too young to manage an unrestricted lump sum[9].

Margo establishes a $100,000 investment bond with a future transfer arrangement under which ownership passes to her grandson when she dies. At that point, a regular income stream of $1,500 a month begins and continues until the funds are depleted. Because the transfer occurs under the bond’s terms rather than through Margo’s will, the investment does not form part of her estate for distribution.

The example illustrates simplification at both ends of the handover.

While Margo is alive, the bond remains a single investment held in her name. If an attorney later manages her affairs, they would need to locate the bond, establish their authority with the provider and understand its purpose. After Margo’s death, the transfer and payment instructions are already built into the arrangement. The bond does not need to be distributed through her estate or transferred into a testamentary trust for a trustee to administer.

The attorney would still need to understand that the grandson is an intended future recipient – not the present owner of the money – and that Margo may need to draw on the bond for her own care or living costs, which would reduce the eventual amount transferred. Recording the purpose of the investment and the provider’s requirements makes that distinction clear.

Where investment bonds may simplify the handover

The tax treatment of the bond adds a further layer of simplification while Margo is still alive: earnings within it generally don’t need to appear in the owner’s personal tax return, and switching between investment options inside the bond generally doesn’t trigger a personal capital gains tax event. For someone managing another person’s affairs, these features mean two less tax questions to potentially resolve.

An investment bond may also allow the owner to nominate a beneficiary, a feature that operates differently from Margo’s future transfer arrangement. Rather than ownership of the continuing bond passing to the recipient, the bond proceeds are paid directly to the nominated beneficiary on death. This can simplify the transfer because the proceeds do not need to be collected and distributed by the executor as part of the estate administration.

Of course, none of this makes a bond a universal substitute for other structures.

A trust can hold a broader range of assets, including property and business interests, and lets a trustee exercise ongoing discretion over distributions as family circumstances change over years or decades, something a bond’s future transfer or beneficiary nomination features aren’t designed to do. And the suitability of a bond will still depend on the client’s tax position, investment preferences, fees and liquidity needs. The ten-year withdrawal rule and the 125% contribution rule also need to be considered. Early access can change the tax outcome and reduce the amount eventually available to the intended recipient.

Making the legal authority usable – a practical guide

Once the structure of the plan has been reviewed, the next task is to connect the legal authority with the information required to use it.

While advisers cannot provide legal advice about whether an EPOA is valid or how it should be drafted, they are well placed to identify the practical gaps that sit beneath it – cases where the authority exists but the person holding it lacks what they need to act on it – and to coordinate with the client’s solicitor where the gap is a legal one.

A financial handover review could address four areas:

Family involvement can begin before an EPOA is activated. An adult child might attend an advice meeting while the parent continues making their own decisions. This does not authorise the child to issue instructions, but it can make a later transition less abrupt without the client surrendering control.

The plan should also recognise that an attorney’s authority generally ends at death, when responsibility for administering estate assets passes to the executor. The same family member may hold both roles, but the source of their authority changes. A clear record of which assets form part of the estate can reduce confusion at that point.

A handover review can form part of the regular advice process rather than waiting until entry into aged care or loss of capacity appears imminent. It should be revisited whenever there are changes in the client’s health or family circumstances, or in the nominated attorney’s ability and willingness to act in that role.

Conclusion – building a plan someone else can operate

Wealth-transfer planning cannot begin and end with what happens after death. As Australia’s population ages, more clients are likely to reach a point at which someone else must manage their financial affairs. Responsibility will increasingly change hands long before the wealth itself does.

An EPOA provides the legal authority for that transition, but it does not give the attorney the information needed to act, nor make a complex financial plan easier to operate. Advisers can help close that gap by preparing the future decision-maker and documenting how important arrangements work. They can also test whether the administration attached to each structure remains justified by the client’s objectives.

Simplification does not require every trust to be dismantled. A trust may remain appropriate where continuing control or trustee discretion is important. For a defined transfer, however, an investment bond may reduce the reporting required during the client’s lifetime and allow ownership or proceeds to pass outside the estate under instructions established in advance.

The practical test is whether the plan could continue to operate if the client could no longer manage it tomorrow. Addressing that question before a health event occurs can make the transfer of responsibility less disruptive and the eventual transfer of wealth more likely to work as intended.

 

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References:
[1] https://treasury.gov.au/publication/2026-intergenerational-report
[2] https://www.dementia.org.au/about-dementia/dementia-facts-and-figures
[3] https://humanrights.gov.au/__data/assets/file/0031/47299/Empowering_futures_report_2024_final.pdf
[4] https://aifs.gov.au/sites/default/files/publication-documents/2021_national_elder_abuse_prevalence_study_final_report_0.pdf
[5] https://humanrights.gov.au/__data/assets/file/0031/47299/Empowering_futures_report_2024_final.pdf
[6] Ibid.
[7] https://www.investmentmagazine.com.au/wp-content/uploads/2026/08/Generation-Life-and-CoreData-Reimagining-Legacy.pdf
[8]https://generationlife-endpoint.azureedge.net/live/attachments/cmmsvqf0h0qzn0qmowczkh0cu-gl-navigatinguncertaintyreportadviser-final.pdf
[9] Generation Life, Estate Planning Guide, 2025.
[10]https://media.fsadvice.com.au/prod/media/library/FS_Advice/FS_Advice_2025/FS_Advice_Will_ethics_be_the_death_of_you-0001.pdf

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