You’ve spent a lifetime building your wealth. What happens to it when you’re gone?

Imagine this. You’ve spent decades building a comfortable life. There’s the family home, superannuation, investments and savings. You’ve helped the kids where you can and always assumed that one day, whatever is left will pass simply to the people you love.

Then something happens to you.

Your will was written 15 years ago, before grandchildren arrived and family circumstances changed. Your super beneficiary arrangements haven’t been reviewed in years. And while everyone thought they knew what you wanted, it turns out they remembered those conversations a little differently.

Suddenly, a lifetime of careful financial decisions has become a series of difficult decisions for someone else to make.

It might sound dramatic, but inheritance disputes are a very real issue for Australian families. Research from the University of Sydney found that inheritance disputes as a proportion of civil cases in New South Wales alone have nearly tripled since 2005. The research also found that Australians inherited more than $120 billion in 2018, with inheritances projected to grow four-fold by 2050.

The question isn’t simply how much wealth we will pass on. It’s how well prepared we are to pass it on.

“My family knows what I want” isn’t an estate plan

Most people don’t expect their family to argue over an inheritance. We assume everyone gets along, the kids will work it out or our wishes are obvious.

But money, grief and changing family circumstances can complicate things. New relationships, blended families, children who have received different levels of financial support or decisions around the family home can all make an estate less straightforward than it first appears.

According to State Trustees Victoria, 53% of Australians don’t have a valid will. Without one, you are considered to have died ‘intestate’, which means your estate is distributed according to the relevant intestacy laws rather than the wishes you may have had in mind.

A valid will allows you to formally document those wishes, appoint an executor and provide greater clarity for the people you leave behind.

A will is important, but it isn’t the whole plan

One of the reasons estate planning belongs in the broader financial planning conversation is that your will doesn’t necessarily control everything you own.

Superannuation, for example, doesn’t automatically form part of your estate. As Moneysmart explains, it’s important to nominate who you want your super and any life insurance held through super to go to when you die.

Depending on your super fund and the type of nomination you have, a binding beneficiary nomination may expire after three years, while some can be non-lapsing. Either way, it’s important to review your nomination regularly and whenever your circumstances change to make sure it still reflects your wishes.

Jointly owned property, trusts, companies and other financial structures can have their own considerations too. It’s why your will shouldn’t be viewed in isolation. Your estate planning, superannuation, insurance and broader financial arrangements should work together and, importantly, keep pace with your life. Marriage, separation, children, grandchildren, property purchases or significant changes in wealth can all be good reasons to revisit whether the arrangements you have in place still reflect what you want.

The conversation matters too

A considered estate plan can provide clarity around what happens to your wealth, but there is another part of the process that can be just as valuable – talking about it! 

That doesn’t necessarily mean telling your family exactly what they may inherit. It can simply mean helping them understand your intentions and where appropriate, preparing the next generation to make informed decisions when the time comes.

It’s something our Director and Financial Advisor Dylan Pargiter-Green has seen regularly. Speaking with Equity Mates about inheritance and managing a lump sum, Dylan said “The more challenging thing for us is getting in front of those people before it happens.” An inheritance can arrive at an emotional time and bring with it some significant financial decisions. Starting conversations earlier can give families an opportunity to build financial understanding and confidence before those decisions need to be made.

After all, successfully passing on wealth isn’t only about what you leave behind. It’s also about how well prepared the next generation is to receive it.

Your financial plan shouldn’t end with you

Estate planning is ultimately another part of looking after the wealth you’ve worked hard to build.

Your financial advisor can’t replace the legal advice required to prepare a will, but they can help you understand how your assets, superannuation, insurance and financial structures fit together and work alongside your solicitor and other professional advisers.

Because a good financial plan shouldn’t only consider how you build and enjoy your wealth. It should also consider what happens to it next.

When did you last review your will and estate planning arrangements?

If your circumstances have changed, or it has simply been a while, speak with your advisor about where estate planning fits within your broader financial plan.

This information is general in nature and does not consider your personal circumstances. Estate planning involves legal and financial considerations. You should seek appropriate legal and financial advice for your individual situation.