Preparing a financial legacy for the next generation is one of the most important, and often most neglected responsibilities families face.
While the topic is frequently associated with extreme wealth, the reality is that succession and estate planning matter just as much for everyday Australian families, particularly given the generational dynamics we are living through today.
We now have multiple generations coexisting and interacting financially: the Depression-born Builders, followed by Baby Boomers, Generation X, Millennials, Gen Z and now Generation Alpha.
This represents one of the widest generational divides the world has ever seen, with each cohort shaped by very different economic, social and technological conditions. These differences influence how people think about money, risk, work and legacy, and they make intergenerational planning more complex than ever.
For those clients at the upper end of that spectrum, the reality is that estate and succession planning is not a theoretical exercise. It is very real, very practical, and often very urgent.
Over the next 10 to 20 years, it is estimated that around $3 trillion will change hands between generations in Australia. Yet history suggests that wealth transfer does not typically go well.
Research consistently shows that around 70 per cent of families lose their wealth by the second generation, and close to 90 per cent by the third. These outcomes are rarely caused by poor investment returns alone. More often, they stem from a lack of planning, communication and preparation.
One of the biggest issues is that our financial planning horizon tends to stop at retirement. Much of the focus is on questions like, ‘when can I stop working’, and ‘will my super be enough’?
What happens after that, particularly how wealth is transferred, managed and preserved, often receives far less attention.
Compounding the problem is Australia’s culture of financial secrecy. Many families simply don’t talk openly about money. Only around a third of parents discuss financial matters with their children, and even when conversations do occur, they are not always supported by clear structures or actions. Alarmingly, around half of Australians still don’t have a will or estate plan in place.
This lack of preparedness cuts across generations. Many older Australians are underprepared, but so too are their children. Financial literacy remains low, largely through no fault of individuals themselves. It remains puzzling that basic financial education is not taught systematically in schools or early university years, given how central money management is to long-term wellbeing.
Having grown up with the internet and mobile technology, younger generations are also more likely to seek answers online rather than from parents or professional advisers. While technology has an important role to play, it cannot replace thoughtful, values-based conversations about money, responsibility and legacy.
The key takeaway is simple: families need to talk. Sit down and have open, structured conversations about money, expectations and the future.
Some families benefit from thinking of this as a “family board” approach – a forum to share views on money management, succession planning and even philanthropic goals. The first time these topics arise should not be at the reading of a will.
Done well, this process can educate, inspire and prepare the next generation to manage wealth responsibly.
The earlier these conversations begin, the better the outcomes are likely to be. Succession planning isn’t just about preserving assets. It’s about preserving relationships, values and opportunity. Let’s not leave it too late to start that journey.
Brendan Bate (ASIC No. 1272327) and HLB Wealth Pty Ltd (ASIC No. 428645) are Authorised Representatives of Paragem Pty Ltd (“Paragem”), ABN 16 108 571 875, AFSL No. 297276.
Disclaimer: The information contained in this article has been provided as general advice only. The contents have been prepared without taking account of your personal objectives, financial situation or needs. Before you make any decision regarding any information, strategies or products mentioned in this article, you should consult your financial adviser to consider whether that is appropriate having regard to your personal objectives, financial situation and needs. Please note that any audit, taxation and accounting services are provided by HLB Mann Judd and are not within the authority of Paragem’s AFSL No. 297276.