Discussions about inheritance are necessary, but not being had often enough

As it stands, while advised Australians feel confident in their retirement, many are not having the necessary conversation with their advisers or families regarding what happens to those savings once they are passed on.

“Our recent survey found that while most families want their wealth to support future generations, only 17 per cent of clients strongly agree they’ve adequately educated their beneficiaries on managing inherited wealth,” said Apt Wealth CEO Andrew Dunbar.

“Many are unsure how to ensure their wishes are honoured and their wealth is preserved. Inheritance is about values, family harmony and long-term security.”

While priorities will vary from client to client, a common theme founder and managing principal at White Rabbit Advisory Nicola Beswick has found when discussing inheritance with clients is fear of potential emotional difficulty.

“Avoidance comes from uncertainty and fear. It’s common to see clients face fear of death and not doing what they wanted to,” Beswick told ifa.

“It should be a conversation that all advisers are having, and the advisers I speak with regularly are discussing this with clients. It’s not an easy conversation as sometimes clients don’t want to face their own mortality.”

Roger Perrett, partner and financial adviser at FreshWater Wealth, expanded on this, highlighting that family relationships can also impact these conversations.

“Where there is reluctance, it can be due to relationship concerns with the potential beneficiaries or simply they do not know who to gift their estate to,” he said.

For Dunbar, including estate planning as part of the overall strategy is an effective way to ensure these conversations are had, placing the initiative in the adviser’s hands.

“Advisers should approach estate planning as part of their holistic values-based, family-focused conversation, not just a legal or financial transaction.”

He added: “Best practice is to start early, ideally during regular review meetings or after major life events.”

According to Beswick, understanding a client’s goals is also key: “Advisers should aim to have a thorough understanding of all their clients’ goals – even the ones that they may not have fully considered yet. It’s best to frame these topics around gaining confidence and control.

“Ask clients how they’d like their wealth to support their family in the future, and their response will form a natural discussion. Always remember to listen with empathy and support.”

She also emphasised the point of empathy: “The fear of approaching the subject of mortality is very emotionally draining. This is where the values of empathy and understanding really come into play for advisers, combining them with objectivity. The best outcomes come from listening.”

Dunbar explained that discussions about inheritance can be a good opportunity to introduce the next generation to advice.

“Ideally, next generations are introduced to the money values and family wealth story progressively over time,” he told ifa.

“They may begin to be involved in philanthropy, understanding mum and dad’s money values, investment choices, later retirement living and health preferences and more.”

Ultimately, however, Perrett advised that while children’s values can help inform a legacy, involving extended family can become complicated, and the adviser’s duty is primarily with their client.

“Generally, the whole family is not involved with estate planning discussions. Usually, the discussions are simply with the client or the couple,” he said.