Seven steps for managing inheritance

It’s estimated that the average Australian could receive $320,000 in inheritance¹ in the next 15 years. This $3.5 trillion wealth transfer between one generation to the next is being dubbed ‘the economic tsunami’, and it highlights the enormous impact inheritance will have both to the country’s economy as well as people’s day-to-day lives. 

I recently commissioned research to delve deeper into the topic of inheritance. It found that 74% of Australians believe you should be having conversations with family members about inheritance before the person passes away, but only half actually have. The main reason behind why people haven’t, even though they want to, is because they aren’t sure about how to approach the  touchy subject. They keep putting it off because they aren’t sure about the response they will receive.

Interestingly, the data also highlighted that almost half of respondents (48%) believed having these conversations before it’s too late will lead to less conflict amongst beneficiaries after their loved one’s passing, which is a key driver behind why so many people think it’s important. An overwhelming majority (74%) believe it’s up to the person leaving the inheritance to instigate the conversation when and if they choose to do it. 

Personally, I was very fortunate in the fact that growing up my parents openly talked about money, and it wasn’t a taboo topic. Since I can remember they told us three children that when they passed things would be split evenly, and how they wanted to spend their final years, and I definitely believe that clarity and understanding made it easier when my dad passed away. Unfortunately, I hear so many stories about parents not speaking to their loved ones about this before it’s too late, and that puts enormous strain on families.’

Having these conversations can be tough, but there are a few steps you can follow that help make it easier. This isn’t a one-size-fits-all process, but it’s definitely one that I believe can help people planning on leaving money and assets to their family start having with their loved ones.

1. Schedule a catch up

Plan a get-together with all of the loved ones that will be impacted and put it in their diary. Whether it’s a lunch or a zoom call, think about what type of catch up is most in line with your family values. It’s important to make sure no one is left out, so if someone is interstate or overseas, best to make it a virtual catch up. Furthermore, look at including any advisors in these meetings.

2. Set the ground rules

Make sure you tell everyone ahead of time what this event is about, and why you want to do it. If you catch people off-guard on the day emotions are heightened, so it’s vital to give people time to process what they are about to hear.

3. Stick to the agenda

Really think through what you all want to say, and don’t stray from this. In the moment is can be easy to change your words to protect or shelter loves ones.

4. Talk about legacy

Talking about mortality can be very confronting, so it’s a good idea to talk about what legacy they want to leave and how they want to be remembered. You should ask them what they stand for and what they want to leave for the next generation, so everyone is aligned on how the inheritance should be spent and distributed.

5. Discuss philanthropy

Is this important to them? Do they want some of the inheritance donated to a worthy cause or a foundation? You can also look into charitable remainder trusts, but it’s important to note that they are irrevocable.

6. Encourage questions, but not until you’ve finished

Once you’ve said everything you wanted to, open the floor to everyone else. It’s natural for people to have reactions, but it’s also normal if people are still processing and don’t know what to say.

7. Set up another meeting

This is perhaps the most important step. Everyone will need time to digest the information, and a few weeks or months later get everyone together to talk through more specific details. Getting everyone on the same page is crucial in avoiding conflicts down the track, and it gives people the chance to come to terms with choices while they the opportunity to ask questions. 

*Vanessa Stoykov has over two decades of experience in the wealth creation space and is a finance and money expert.  Founder and Chief Executive of Evolution Media Group, Stoykov is also the author of the book The Breakfast Club for 40-Somethings.

1 Research was conducted and analysed by The Digital Edge Research Company. The data is based on analysis of over 1,000 Australians responses in February 2022. The ages used for this study were 18 – 62+ years old, and consisted of a mix of both male and female respondents.