It is projected that $4.9 trillion will transfer from Baby Boomers and their parents to the next generations by 2034. Research indicates that inheritance processes often fail due to a lack of family communication and trust, as well as inadequate preparation of inheritors.

Estate planners and financial advisers recommend that parents ask their adult children six key questions when preparing a will to ensure a smooth transition of wealth.

What would you do with inherited money or assets? Asking this straightforward question without prior notice can reveal a child’s financial values, literacy, and long-term goals. Understanding these goals can show whether the child prioritises spending, saving, investing, or charity, and can indicate their maturity in handling significant financial decisions.

Would you want your inheritance protected in case of a divorce? With over 50,000 divorces in Australia annually, protecting a child’s inheritance from their spouse is prudent. A lawyer can draft a will with a testamentary trust to help avoid the inheritance forming part of a property settlement in a divorce.

Would you like to inherit a family legacy asset, such as a farm or holiday home? This question helps gauge whether beneficiaries can financially and emotionally handle and enjoy a family legacy asset. Considering how multiple beneficiaries might manage such an asset, ensuring they have a genuine interest and practical plan for its use.

Would you like financial coaching? Assessing a child’s financial literacy and emotional intelligence is crucial. Without proper guidance, a significant inheritance can cause more harm than good. Time restrictions and connections to trusted advisers can be beneficial for younger children with limited financial knowledge.

Do you understand my values and choices? Communicating deeper motives and values behind financial choices is essential. This provides an opportunity for parents to share what’s important to them and create mutual understanding, allowing children to make informed decisions about the inheritance.

What would you like to see happen with the family wealth over the next 50 years? This question encourages children to express their long-term vision for the family wealth. A lack of communication or shared decision-making often leads to loss of wealth by the second or third generation. Listening to children’s ideas can help ensure they value their role as trustees and custodians of the family wealth, not just receivers and spenders.

By addressing these questions, parents can better prepare their children for inheriting and managing wealth, fostering a legacy that benefits future generations.

It is estimated that close to 50% of all Wills in Australia are contested in court. With 75% of those, contested by immediately family, highlighting the importance of these conversations and having a solid plan with your Financial Adviser and Solicitor. Testamentary Trust provisions dramatically decrease the chances of a Will being contested in court, saving your family; time, stress and money.

If you believe you need assistance with your Estate Plan, do not hesitate in contacting Cadre Capital Partners for any assistance required.