Australia is moving through one of the largest wealth transfers in its history, and the May 2026 Federal Budget has changed several of the rules families need to plan around.
The Productivity Commission found around $1.5 trillion moved between generations from 2002 to 2018, with about 90% of that in inheritances. RSM Australia estimates $3.5 trillion to $5.4 trillion will pass from baby boomers to younger generations over the next two to three decades.
For many high-net-worth families, that number sits behind a real, live question. How do you protect the wealth you’ve built, use it well now, and pass it on in a way that benefits your family for more than one generation?
Precision Wealth Management is a Brisbane-based financial advice practice that helps high-net-worth families plan for intergenerational wealth transfer, including trust structures, capital gains tax and superannuation death benefits, in light of the changes announced in the May 2026 Federal Budget.
Trying to work out what the Federal Budget’s trust and CGT changes mean for your family? Get clarity from Precision Wealth Management’s financial advisers. Contact us today for transparent guidance tailored to your situation.
What does intergenerational equity mean for family wealth planning?
Intergenerational equity is the question of whether Australia’s tax, superannuation, housing and inheritance settings treat different generations fairly over their lifetimes.
The e61 Institute argues the debate is more complicated than one generation winning at another’s expense. Many of the issues are really about lifecycle timing, asset-price windfalls, and how inheritances and gifts flow within a generation, not just between them.
For families, the practical version is simpler. How do you transfer wealth in a way that’s fair, tax-aware, well governed, and lines up with what the family actually values?
That covers the legal documents. It also covers who controls the assets, when the next generation takes on responsibility, how the family communicates, and how business interests are handled.
Why the wealth transfer matters for your family
Australia doesn’t currently have an inheritance tax or estate duty. That doesn’t make wealth transfer tax-free or risk-free. Capital gains tax can apply in some situations, superannuation death benefits can be taxed when paid to adult children, and family wealth can be exposed to relationship breakdowns, creditor claims or poor decision-making if the structure isn’t well planned.
The Productivity Commission found inheritances usually arrive when recipients are around age 50, while gifts tend to go to younger people, often in their early 20s. That timing matters. Wealth often arrives well after the years when children potentially needed the most help with education, housing or starting a family.
The scale of the transfer is also growing. The Productivity Commission projects inheritances passed to the next generation could increase nearly fourfold between 2020 and 2050, driven by rising wealth among older Australians, an ageing population and falling fertility rates. In practical terms, wealth is likely to move in larger amounts, to fewer beneficiaries, through more complex structures.
What changed in the May 2026 Federal Budget?
The Budget included four changes that matter most for family wealth planning.
Capital gains tax reform
As at the ATO’s 29 June 2026 update, the CGT and negative gearing reforms announced on 12 May 2026 are now law and apply from 1 July 2027. From that date, the 50% CGT discount for individuals, trusts and partnerships will be replaced with cost base indexation and a 30% minimum tax rate on capital gains. The changes only apply to gains arising after 1 July 2027, and investors in new builds can choose between the 50% discount and the new arrangements.
For families holding investment portfolios, commercial property, business interests or long-held assets, this makes record keeping, valuation history and disposal timing more important than ever.
Negative gearing changes
From 1 July 2027, negative gearing for residential property investments will be limited to new builds. Existing arrangements remain unchanged for properties held before Budget night. Investors who buy established housing after Budget night can still deduct losses against residential property income, but not against wages or other income, and unused losses can be carried forward.
The proposed 30% minimum tax on discretionary trusts
The Government has announced a 30% minimum tax on discretionary trusts from 1 July 2028, though this measure is not yet law. Under the proposal, the tax is paid at trustee level, and non-corporate beneficiaries can claim a non-refundable credit for tax already paid by the trustee. The stated aim is to reduce income-splitting outcomes, where trusts distribute income to beneficiaries on lower marginal tax rates. Treasury analysis found families with discretionary trusts had average tax rates around four percentage points lower than comparable families without trusts in 2022–23.
The testamentary trust backdown
This is the part most relevant to estate planning. The original proposal appeared to capture testamentary discretionary trusts from 1 July 2028, subject to limited carve-outs, which understandably worried families using wills for genuine estate planning.
The Government has since changed positions. It’s now proposed that income from all types of testamentary trusts will be exempt from the 30% minimum tax regime, within certain parameters, provided the trust is used for genuine testamentary purposes and the income comes from deceased estate assets. This is still subject to final legislation, so the wording of your will should be reviewed once the rules are settled.
What is a discretionary trust?
A discretionary trust, often called a family trust, is a structure where the trustee decides which beneficiaries receive income or capital, how much they receive, and when, within the terms set out in the trust deed.
Families commonly use discretionary trusts for a mix of these purposes.
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- Asset protection
- Business or investment ownership
- Income distribution flexibility
- Succession planning
- Control over how family assets are managed
The proposed 30% minimum tax doesn’t remove that role. It does reduce the tax benefit of distributing income to beneficiaries on lower tax rates, which is why it’s worth checking whether your trust is still doing the job you set it up for.
What is a testamentary trust?
A testamentary trust is a trust set up under a will that comes into effect after death, generally used to manage inherited assets for children, grandchildren or other beneficiaries.
One important tax feature is that income from a testamentary trust can be treated as excepted income for minors when it’s generated from property of the deceased estate, meaning minors may be taxed at adult marginal rates on that income. The ATO is clear that this treatment doesn’t extend to income from assets acquired by or transferred to the trust on or after 1 July 2019 that are unrelated to the deceased estate.
That’s why drafting and ongoing administration matters. A testamentary trust can be a strong estate planning tool, but only if it’s structured and managed correctly.
What this means for high-net-worth families
Tax reform doesn’t remove the need for family wealth structures. It changes the questions worth asking.
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- Families with discretionary trusts should check whether the trust is still being used for genuine asset protection, control, business or succession reasons, rather than mainly for income splitting.
- Families with testamentary trusts in their wills should treat the recent backdown as welcome news, then still review the wording once the final legislation is settled.
- Families with large unrealised capital gains need a clear picture of what’s held personally, in super, in trusts and in companies, which gains accrued before and after 1 July 2027, and whether valuations and cost base records are solid.
The goal isn’t chasing the lowest tax outcome in isolation. It’s making sure your structure still matches your family’s need for control, flexibility, asset protection and cost, alongside tax.
Strategies worth reviewing now
This is general information, and the right approach depends on your family’s circumstances. These are the areas high-net-worth families are typically reviewing at the moment.
Estate planning documents
Modern estate plan usually includes a will, testamentary trust provisions where appropriate, enduring powers of attorney, superannuation death benefit nominations, and a clear plan for who controls entities like companies and trusts. Family trusts and investment companies aren’t automatically controlled by a will, so your estate plan needs to line up with the underlying structure.
Superannuation death benefit planning
Super doesn’t automatically form part of your estate. Death benefits can be taxed when paid to adult children who aren’t tax dependents, and recontribution strategies are often used to increase the tax-free component where appropriate. This is an area where financial advice, tax advice and estate planning advice need to work together.
Reviewing existing trusts
For discretionary trusts, it’s worth reviewing the trust deed, appointor provisions, trustee structure, beneficiary classes, distribution history, asset ownership, and whether the trust’s original purpose still holds up under the proposed 30% minimum tax.
Family governance
The legal structure is only part of the plan. Families also need a way to make decisions, prepare the next generation, manage expectations and reduce the risk of disputes.
Investment structure and risk management
A high-net-worth wealth plan may involve a mix of family investment trusts, SMSFs and investment companies, but the right structure depends on tax, legal, asset protection and family objectives working together. Where an investment sits can affect tax outcomes, estate planning, asset protection and flexibility.
Communication with beneficiaries
Poor communication can undo otherwise sound planning. Where families want wealth to last for multiple generations, the next generation usually needs financial education, staged responsibilities and clarity about the family’s intentions.
Ready to review how your family’s wealth is structured, protected and set to pass on? Book a conversation with Precision Wealth Management and get a clear, tailored plan for your situation.
Your path to well-planned intergenerational wealth
Intergenerational wealth planning matters more now because more wealth is changing hands, the assets involved are more complex, and the tax rules are shifting underneath it.
The May 2026 Budget has sharpened all three points. CGT reform is legislated from 1 July 2027. The proposed 30% minimum tax on discretionary trusts is still not law and remains subject to final detail. The Government’s shift on testamentary trusts is a welcome development for families using wills for genuine estate planning, but it doesn’t remove the need for a proper review.
For high-net-worth families, the right response isn’t panic. It’s a structured review of what you own, who controls it, how it’s taxed, how it will pass on, and whether the next generation is ready to receive it.
At Precision Wealth Management, we provide transparent, fee-for-service advice built around your family’s goals, not a one-size-fits-all tax strategy. If your family has significant assets, existing trusts, large super balances or estate planning documents that haven’t been reviewed recently, now’s a sensible time to start the conversation.
Frequently Asked Questions
Intergenerational equity looks at whether Australia’s tax, superannuation, housing and inheritance settings treat generations fairly over their lifetimes. For families, the practical question is different. It’s how wealth built by one generation can be protected, used well, and passed on to the next without unnecessary tax leakage, family conflict or loss of control.
No, Australia does not currently have an inheritance tax or estate duty. However, wealth transfer isn’t automatically tax-free. Capital gains tax can apply in some situations, superannuation death benefits can be taxed when paid to adult children who aren’t tax dependants, and family wealth can be exposed to relationship breakdowns or creditor claims without proper planning.
The Government has proposed a 30% minimum tax on discretionary trusts from 1 July 2028, though this isn’t yet law. Under the proposal, the tax is paid at trustee level, and non-corporate beneficiaries can claim a non-refundable credit for tax the trustee has already paid. The aim is to reduce the tax advantage of distributing trust income to beneficiaries on lower marginal tax rates.
The Government has walked back its original position. It’s now proposed that income from all types of testamentary trusts will be exempt from the 30% minimum tax regime, within certain parameters, provided the trust is used for genuine testamentary purposes and the income comes from deceased estate assets. This is still subject to final legislation, so the wording of your will should be reviewed once the rules are settled.
From 1 July 2027, the 50% CGT discount for individuals, trusts and partnerships will be replaced with cost base indexation and a 30% minimum tax rate on capital gains. The change only applies to gains arising after that date, so families holding investment property, business interests or long-held assets should review their valuations, cost base records and disposal timing now.
