Four flashpoints in the great transfer of wealth – and how to avoid them

With the first Baby Boomers now into their 80s, estimates put the value of the wealth that is set to change hands over the next 20 years at somewhere between $5 – $6 trillion^#. 

About 70% of Australians expect to leave an inheritance – and this figure is even higher among retirees, at 81%.

Despite that, only 38% of Australians have made a will. This means many of those who expect to leave an inheritance currently have no control over how it would be distributed if something unexpected happens. 

This is despite the fact that many retirees nominate ensuring their wishes are followed as a key concern.

Without a valid will, an estate may be distributed according to local legislation, which may not reflect your wishes or the expectations of family members, causing delays and potential disputes.

A legally binding will is the foundation of estate planning, and the best way to leave an inheritance to your kids, or to ensure your money goes wherever you want it to. 

It’s important not only to make a will, but to ensure it’s valid and kept up-to-date. 

It should reflect your current assets, relationships, and wishes. And if you’ve experienced a major life change since you last made a will, it’s worth reviewing your plans.

Consider speaking to an estate planning lawyer or your financial adviser. 

For those aged over 60, or Age Pension recipients, the Public Trustee may be able to prepare a will free of charge.

Australians who have a will are generally prepared to leave cash, the family home and any vehicles to their chosen beneficiaries.

But investments and investment properties are much more likely to be left out of their will altogether, our research shows.

This may indicate that many investors plan to enjoy the fruits of their labour and investments while they’re still alive. 

But investment assets – such as shares, managed funds, or property – often represent a significant portion of wealth. Failing to include them as part of your estate management plan can lead to missed opportunities, potential tax issues and even conflict down the track. 

Ensure all your investments and assets are included in your estate management plan – even if you’re planning to spend them in retirement. 

Consider how each asset is held and whether it passes through your will or via superannuation nominations, and ensure you have nominated a beneficiary.

It’s worth getting financial advice on the implications of inheriting these assets for family members as well. 

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The amount of money younger Australians expect to inherit differs considerably from that of older Australians, marking a generational turning point. 

In previous decades, inheritance was often viewed as uncertain or modest. But as housing costs rise, it’s becoming central to the future plans of younger generations. 

Those aged between 50 and 64 – which is when most Australians receive inheritances – only expect to inherit about $288,000.

The research also shows most Australians expecting an inheritance don’t know the details of their potential benefactor's financial situation or strategy.

This disconnect may lead to financial decisions that are based on unrealistic expectations.

Consider talking openly with family members about financial goals, values, and plans to align expectations and reduce misunderstandings down the track.

Encourage younger generations to engage with a financial adviser early to ensure a realistic approach to future inheritances, as well as making their own financial plans for the future. 

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A large percentage of Australians avoid conversations about money, inheritance and provisions for the future, it seems. About 60% of Australians say they don’t know much about their potential benefactor’s financial situation or strategy, our research shows.

While that figure drops to 40% among the wealthy, those aged over 60 and retirees, it’s still relatively high.

Most are comfortable talking to their partner about finance (81%), but women are less likely to be comfortable managing their finances if their partner passes away. In fact, 33% of women say they wouldn’t change anything if their partner died.

This lack of communication can leave spouses and children unprepared to manage or inherit wealth – and may also result in missed chances to improve their financial situation.

Share key details about your financial strategy, adviser relationships, and estate plans with your spouse and adult children. Consider joint meetings with your financial adviser to ensure everyone is informed and aligned.

Whether you're building wealth, spending it, or preparing to pass it on, addressing these four flashpoints can help ensure a smoother transfer of wealth between generations, safeguarding your wishes, and protecting and empowering your loved ones.