Christmas brings forward the topic of gifting and Australians are wealthy people. According to the Credit Suisse World Wealth Report we have the highest median wealth per adult of any country in the world.
The Report says there are 2,177,000 US dollar millionaires in Australia. Financial advisers know there are many people who are financially comfortable, even if not rich. So we have the means to give.
These people can afford to be generous during their lifetimes and in their wills. It is extremely important to make a will and update it regularly. A solicitor can ensure it is done properly. There are many potential pitfalls that can create serious complications.
Some older people believe they can’t afford to be generous. Others think they must retain their capital in case they need it. No-one should give so much away that their own welfare is compromised, but nor should they underestimate what they can afford to give.
If the well-off live a long life their children will be past the age at which they can benefit from use of the capital. Beneficiaries can make best use of funds when in their 30’s, 40’s or 50’s.
One of my clients received an inheritance from his father at age 76. His father had passed on at 102. There is pleasure to be enjoyed from witnessing the difference giving some of the inheritance early can make to beneficiaries who can use it constructively.
Obviously gifts to family members should be considered first, to children and grandchildren. Gifts should be for worthwhile purposes though, not to be wasted. Education is an excellent use, buying a home, or starting or expanding a business.
Charitable giving should also be considered. Many Australians who are comfortably off do not appear to me to support charities as much as they could. People tend to give $20 or $100 perhaps. Why not $1,000 or $5,000, or more if it’s a cause they believe in?
It helps to maintain a clear understanding of our net worth and income so we can better judge what we can afford to give.
Charities operate in many different fields: medical research, sick children, disabled people, wildlife and conservation, animal welfare, religious groups, music and the arts, museums and historical societies, to name a few.
People who are financially comfortable should consider which areas they are most interested in, study those charities, and choose a couple of favourites. Gifting to them during the donor’s life and in their will makes sense.
Be generous this Christmas. Give more than the usual small gift. Surprise someone with something more substantial that will improve their life.