Inheritances evolve beyond adult children: beware of family fights

As trillions of dollars of assets begin transferring from baby boomers, money and law specialists warn parents to be careful.

Family disagreements can extend beyond the grave. Picture: iStock

Leaving all your wealth in a will to your children is no longer the go-to strategy for an increasing number of older Australians.

As the nation’s $6 trillion baby boomer wealth transfer accelerates, lawyers and financial advisers say inheritances are evolving, with grandchildren and charities among the ­winners.

They say blended families and higher divorce rates have created complex issues, and with over-60s holding a majority of the nation’s household wealth those will intensify, although adult children remain the biggest beneficiaries.

Providence Wealth Advisory Group director Thyra Wilton said she was seeing “early signs of more families considering philanthropy” and using their estates to leave legacies to more than just their own children.

“We see many grandparents, especially in family businesses, are taking the time to prepare and train their own children and grandchildren well in advance of inheriting a large amount of money or assets,” she said.

Some parents skip a generation and directly target grandkids, wealth specialists say, while lifetime disputes between parents and children can extend beyond the grave.

Providence Wealth Advisory’s Thyra Wilton says the issues are complex. Picture: Supplied

“This is a very complex issue which requires very careful planning and advice, especially given children can challenge a will in the courts if they believe they have been unfairly provided for,” Ms Wilton said.

Armstrong Contested Wills and Estates managing associate James Daly said all jurisdictions had family provision legislation for spouses, de facto spouse and children to apply for more.

“Claims regarding the validity of a person’s will or the interpretation of a deceased person’s will are not uncommon,” he said.

Mr Daly said legacies to grandchildren were once around $10,000, but today were increasingly enough for a house deposit.

“When considering the needs of grandchildren, particularly those who are yet to purchase a home, it is important that the needs of the children are not ignored,” he said.

“If such considerations are not properly balanced, litigation often ensues.”

Mr Daly said he had seen money going to carers, neighbours and even trusts to care for pets. “Charities are always a popular option,” he said.

William Buck Wealth Advisory partner Adrian Frinsdorf said retirees’ wealth had risen significantly in recent years and he was seeing inheritances increasingly directed to pay for grandchildren’s schooling, tertiary education and houses.

“Given the larger pools of wealth available to be passed down, the extended family also often comes into consideration, with nieces and nephews included among the beneficiaries,” he said.

“Inheritances do not always follow blood lines. We have worked with clients who have been keen to leave significant amounts of money to organisations or community groups. Some people may also have valuable collections of art or other artefacts they wish to leave specifically to public galleries or museums.”

Mr Frinsdorf said people could minimise the risk of a contested will by communicating openly with their family during their lifetime and seeking specialist legal and financial advice early.

Tiyce and Lawyers Family Law Specialists principal Michael Tiyce said he had seen growth in litigation where surviving children made claims against a second spouse.

He said people wanting to minimise money going to a family member, such as a child, had options such as gifting property during their lifetime.