Secure Your Legacy: How to Pass on Your Managed Investment Funds to Your Family

Introduction- Passing on your managed investment funds

Securing the future of your family can be quite the head-scratcher. When looking into the endless options to maximise the potential of your assets, you might feel unsure which one will grant the support your loved ones need and deserve.

Seamlessly passing on your legacy can sound like quite a challenge, but it doesn’t have to be. Whilst you can only diversify your investments so much if you are on your own, pooling resources with other investors can be a game-changer.

A “registered managed investment scheme,” also known as managed investment funds, involves a collective of shareholders pooling their resources and entrusting a manager to make well-informed investment choices on their behalf.

This approach offers an organised and effective means to safeguard and expand your wealth while simplifying the process of passing it on to future generations.

If you are wondering how to invest in managed funds, look no further. In this article, we will guide you through all the steps you should take to get started.

Understanding Managed Investment Funds

The term “managed investment fund” is sometimes used interchangeably with “mutual funds”. Whilst the two share many commonalities, they differ in their pricing structure.

Managed funds typically use a “unit pricing” method, where the fund’s assets are divided into units, and the price is determined at the end of the trading day based on the fund’s net asset value (NAV).

On the other hand, mutual funds use a “forward pricing” system, where the price is set at the end of the trading day based on the fund’s NAV plus any applicable fees.

At its very core, a managed fund consists of pooling resources. By merging a small part of their resources, shareholders can broaden their investment possibilities. The resulting fund, managed by a professional agent or team, is often invested in diversified assets such as bonds, shares, and properties.

Ultimately, it is up to the group to decide what to put their joint effort towards. Some might prefer to hedge their bets and invest in something more stable, such as bonds and cash investments, whereas others might bet on more unpredictable assets, such as shares.

Types of Managed Investment Funds

Managed investment funds come in various options catering to different investor preferences and risks. Among the most popular, we find:

  • Active Funds: These are usually managed by experts who actively select assets with the goal of outperforming the market.

  • Passive Funds (Index Funds): These are a type of mutual fund or exchange-traded fund that aims to mimic the returns of a fixed market index.

  • Unlisted Funds: Unlisted funds are not treated publicly and invest in diverse assets like cash, bonds, real estate, or stocks – often with longer investment horizons.

Benefits of Managed Investment Funds

There are many benefits to relying on management investment funds. Among these, we find the following three:

Professional Management:  Managed funds are under the guidance of proficient fund managers with a trained eye for investment opportunities – increasing your chance of success.

Diversification:  By spreading investments across various assets, you virtually amplify the potential for suitable investments while limiting the risks. This approach prevents you from putting all your eggs into a single asset or stock.

Accessibility: Managed funds allow individuals to participate in the investment market with reduced amounts of capital, granting them access to more extensive portfolios expertly managed by professionals.

How to Pass on Your Managed Investment Funds to Your Family

Looking after your family with managed investment funds.

Like every other asset, managed investment funds should be passed on to your family. Family trust benefits include wealth transfer, asset protection and preservation, as well as tax minimisation.

This process involves a few essential steps:

Designate a Beneficiary

Designating a beneficiary consists of specifying who will be the receiver of the proceedings of your investment funds upon your passing.

Inform your investment provider or fund manager of your decision and periodically review your records to keep them up to speed with any change of heart or circumstance.

Create or Update Your Will and Estate Plan

Your managed investment funds should be clearly included in your will. The legal document must also clearly state how you intend to distribute your assets when the time comes. Get in touch with a solicitor or legal professional qualified to provide you with only the best estate planning advice.

Once written, the terms and beneficiaries of the will can be reviewed and updated on a per-need basis – this includes your investment funds and all other assets.

An experienced professional can not only help you clearly outline these important decisions, but they will also make sure they comply with Australian laws and regulations, ensuring their validity.

Appoint an Executor

An executor is the appointed person in a will responsible for carrying out your wishes and implementing the correct distribution of your assets, including your managed investment funds.

Make sure you assign this critical task to a trustworthy and responsible individual. Discuss the details and responsibilities with your designated person and confirm their consent.

Once you are sure you are on the same page, clearly spell out the duties of your executor in your will, along with their contact information.

Consider a Testamentary Trust

As you surely have heard, there are many benefits to implementing a family trust. You might, however, not be as familiar with testamentary trusts.

A testamentary trust is a trust created within your will that becomes active upon your passing. Many see it as an effective way to manage and distribute their assets – such as management investment funds – all the while providing other perks like potential tax advantages and asset protection.

To set up a testamentary trust, you will need to contact an experienced professional who specialises in estate planning. If a testamentary trust is suitable to your situation, a draft can be created outlining the terms and beneficiaries.

You should also appoint a trustee to manage the trust and distribute assets following its terms. For the document to be binding, it must comply with Australian trust and tax laws.

Seek Professional Investment Advice

Different investments have different structures and tax implications, which require widely different documentation.

No matter the nature of your assets, the best thing you can do to ensure they are safely passed onto your family is to rely on the help of qualified experts.

If you are looking for investment & financial advice in Bald Hills, look no further. Our team at Lifelong Wealth is here to help you strategise the best course of action to grant your family the financial security they deserve.

Get in touch today to schedule a consultation.

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