Ownership of family wealth

Ownership of family wealthAuthor: John Raymond LeskeWhich structure is best?Family wealthFor our clients, there are predominantly four ways they hold their personal wealth. They are: 1. Directly, either as an individual or jointly; 2. In a private investment company; 3. Through their family trust; and / or 4. Via a self managed or public superannuation fund.Which structure is best? It depends. But given our emphasis on focusing on the things you can control, the structure choice is one that needs serious consideration. There are a number of often competing factors to take into account, with taxation, asset protection and succession / estate planning usually most prominent. This article considers some of the issues.After-tax, super looks the winner …Superannuation is, generally, the most tax advantageous structure. To obtain a feel for this, we examined how much an initial $450,000[1] investment would grow over a 15 year period, assuming a 4% p.a. fully franked dividend, 6% p.a. growth and 3% p.a. inflation, for each ownership structure.After tax and inflation, the superannuation end period value is almost 38% more than had the investment been owned by an individual! The individual’s investment would have had to grow by 8.6% p.a., rather than 6%, to achieve the same end value.Given the analysis, why wouldn’t you put everything into super? For a start, because it is so tax effective there are some fairly severe restrictions on how much can be accumulated in this environment.And for anybody born since 30 June 1964, they cannot get their hands on their super until after age 60.

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25.03.2010