December 13, 2022

Financial Planning for successful family wealth transfer

Financial Planning Wealth Transfer Resources Unearthed

Creating, or indeed maintaining a family’s financial legacy, takes planning and financial insight that enables the ‘now’ beneficiaries to enjoy the lifestyle wealth it can bring, while ensuring those who follow in future can benefit too. And importantly, when it comes their turn, they can pay that family wealth forward and so forth, in perpetuity.

A financial windfall in the form of an inheritance or financial gift can be life changing – for better or worse.

Coming into family money can clear mortgages and bring enhanced lifestyle benefits, however mishandling large amounts of cash can mean it quickly vanishes down a black hole of spending, poor investment decisions and sometimes resulting in even greater levels of debt.

Family wealth transfer arrangements will be different for each family, however in my experience there are three matters common for all who aim to make the most of their wealth situation.

1: Clogs to Clogs – The value of financial knowledge and advice

It’s a saying that is also known as ‘shirtsleeves to shirtsleeves in three generations’ and it gives reference to family wealth made by the first generation, maintained by the second and then, consumed by the third.

Unfortunately, recent research estimates 70% of families lose their wealth by the second generation and 90% lose it by the third. [2]

Managing money is a learned skill, and even then, innate complexity and the time-consuming nature of wealth circumstances usually requires professional advice and support.

However, no amount of knowledge will maintain family money if there is little or no sense of financial responsibility or respect for the legacy created by forebears.

Involving your children or beneficiaries (who may include nieces, nephews or Godchildren) in the fundamentals of financial education from any early age is important.

This is because the newer generations often don’t understand the risk and reward decisions made by the preceding generation that created and sustained the family’s wealth, and it’s that lack of insight, understanding and experience that usually contributes to the destruction of wealth.

Sharing your wealth experiences, wealth values and the network of professionals who support your financial decision making can also create an appreciation of family money and help prepare your beneficiaries become the stewards of your family wealth.

2: Be prepared and wealth aware
It’s common for very high earners to be very high spenders with considerable financial commitments.

Accidental death, serious illness and debilitating health conditions all too often in the prime of their life can impact their wealth position and that of the family which relies upon them.

Being wealth aware includes proactively managing your Executive Share Scheme (ESS) to meet vesting and tax obligations.

Plummeting company share prices which may be slow to recover can severely affect your day-to-day cashflow and if the loss of income and share value corresponds with paying a significant tax bill, you could find yourself in financial distress that can adversely affect your lifestyle.

Sound financial planning should always factor-in worst case scenarios and build-in financial protection measures which may include personal insurances and contingencies such as access to emergency funding, the impacts of tax and investment diversity that can alleviate some of the financial suffering that can result from having all your financial eggs in your employer’s (ESS) basket.

3: Understand your wealth beneficiaries

Families comprise a range of different characters and this can create challenges that relate to both fairness and actions required to protect family wealth.

Financially immature or gullible family members, those who may have shaky relationships, gambling problems, substance addiction or who may be unable to independently manage their financial affairs due to disability or because they may be an infant or child under 18 years, must all be considered when transferring family wealth.

It can be stressful.

However, emotional decisions rarely solve challenging situations, and they can favour one situation at the expense of another, creating other issues particularly in regard to fairness.

Family wealth succession discussions facilitated by a financial advice professional who is well informed of your circumstances and capable of logically explaining often complex financial strategies and the intended outcomes, can often steer sensitive family discussions to understood and agreed outcomes.

Next steps…

Do all you can to protect yourself, your ability to earn and diligently manage your family money day-to-day.

Put plans in place for when you’re no longer able to make decisions due to incapacity or your death.

Don’t skimp on advice. Qualified financial planning with specialist knowledge in the complex matters specific to mining and resources such as ESS is essential, especially when it’s delivered in collaboration with specialist tax advice, including international tax, and legal counsel.

(We’ll cover the legal matters you need to consider in our next article.)

To learn more about preparing for intergenerational wealth transfer and creating or maintaining your family wealth, please contact Brett Cribb on +61 (0) 7 3007 2000 or email

To learn more about Brett, visit this link.

Resources Unearthed is a solutions hub that provides integrated financial, legal, property, accounting, tax and business advisory services for executives, professionals and business owners in the mining and resources sectors.

Stratus Financial Group and its advisers are Authorised Representatives of Fortnum Private Wealth ABN 54 139 889 535 AFSL 357306. This advice is general and does not take into account your objectives, financial situation or needs. You should not act on it without first obtaining professional financial advice specific to your circumstances.

*Please note: For advice and services relating to this matter that are not offered under the Fortnum Private Wealth AFSL, in accordance with our collaborative advice model, when required, such matters are referred to appropriately qualified professionals.

Further reading:
Money matters that need to be discussed with your next gen adults

Three questions about money that can get your parents talking

Living financial Legacies: Giving to X and Y Gen with a warm hand



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