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Your guide to inheritance

Your guide to inheritance

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Inheritance

Your inheritance is personal. Advice should be too.

By 2025, around $1 trillion will pass to the next generation of Australians – and $3.5 trillion by 2035.1 If you’re expecting to receive an inheritance in the next few years, especially one of a million dollars or more, it can be a life-changing opportunity. It’s also one of life’s major financial decisions, bringing new challenges and complexity as your lifestyle and wealth management goals change.

Alternatively, you may be preparing to transfer your assets and are considering when and how best to pass them on – safely and sustainably. Whatever your situation and goals for your family wealth, we’ve prepared a range of important information to help you understand what’s involved.

If you prefer to talk to an adviser about your estate and inheritance needs, call us on 1800 631 381.

Help me with my inheritance

Managing an inheritance in Australia

Given the complexities of managing an inheritance, we wanted to find out what Australian beneficiaries are doing with the money they receive. We surveyed 3,000 people as part of our “What do you care about?” project.2

The most popular way to use an inheritance was to invest it – preferred by 30% of respondents, followed by paying of the mortgage (28%), then sharing it with family at 19%. Rounding out the top six was buying a car, putting it in a term deposit and going on a holiday.

Using these insights and our experience, we have addressed six financial questions you may need to consider when receiving an inheritance of a million dollars or more.

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Six ways to use your inheritance

Navigating wills and the estate administration process.

Passing wealth to the next generation comes with risk. In fact, over 70% of inter-generational wealth transfers fail2. Regrettably this means significant family wealth is often squandered within a generation or two. Putting in place a plan that helps your family understand and prepare for the challenges of managing significant family wealth is vital. When you do, you can be confident that your family will be among the three out of ten families who transfer wealth successfully.

Help me with my inheritance
More advice on family estate planning

Planning inter-generational wealth

People often say there are two things you should never talk about: politics and religion. But when we talked to 3,000 Australians, we found another — legacy. Only 36% of people have discussed their parents’ will and legacy with them3.

It’s remarkable that so many of us are so close to our children, but never talk to them about what we would like to happen to the wealth we’ve spent a lifetime building up.

For most of us, inheriting is the single biggest injection of cash or capital we will ever receive. But 1 in 53 of us are expecting to inherit without really being certain we will. For something which can make such a massive difference to our lives — it’s a lot to take on trust.

Who discusses inheritance?

According to our study3, while any family might talk about their legacy, there are some that are more likely to. Families who are close to each other, families that describe their relationship as loving and caring, are 5% more likely to discuss legacy. Happy, close families are also 10% more likely to:

  • Receive an inheritance
  • Be grateful for what they receive

While it’s unsurprising that close families are more likely to have difficult conversations, there are other factors which make a discussion about inheritance more likely. We’re not sure why, but women are 12% more likely to talk to their parents about their will (42% vs 30%)3.

Perhaps they are closer to their parents, or better communicators, or more comfortable talking about difficult subjects?

Age is also a factor. By the time children reach their teens, around one quarter3 of parents have discussed their inheritance with them. This percentage increases gradually until children are in their 40s and 50s. But if you haven’t discussed it by then, chances are you never will.

Learn more about how putting together the right plans and structures can look after your loved ones after you've gone. 

Just as everyone is different, so are their reactions to inheriting. While people are most likely to feel grateful, they might also experience a whole range of other emotions including happiness, surprise, relief or disappointment.

While 76% of people are likely to feel grateful for their inheritance, this rises to 86% if you describe your family as happy or close3.

Size also matters, but maybe not in the way you might think.

35% of people feel happy about their inheritance and this rises to 52% if they inherit what they describe as a ‘large’ amount.3 Also, the larger the inheritance, the more likely you are to feel excited and relieved.

However, interestingly, the larger your inheritance the less likely you are to feel grateful. 78% of people feel grateful for a self-described ‘small’ inheritance and 75% for an ‘average’ inheritance, but this drops to 69% when a ‘large’ inheritance is at stake.3 Also, while the overall percentages are quite low, people who inherit a ‘large’ amount are around twice as likely to feel ambivalent or underwhelmed than those who receive a small amount.

The benefits of breaking your silence

Admittedly, talking about what happens after you die is uncomfortable, but it’s also important. And really, while it isn’t an easy conversation to start, talking about your legacy, will, or estate plan should be a conversation about love. A conversation about who and what is important to you.

As part of this conversation, you may consider introducing your children to your financial adviser. It can be valuable to involve your children in your estate plans as this can lead to greater certainty and comfort on a subject which is usually clouded by doubt, worry and angst. When parents discuss their intentions with their children, suddenly the percentage of people who think they will inherit jumps from 53% to 80%.3 That’s a lot more people that can plan their future with greater confidence.

There’s also another, perhaps unexpected, side effect of discussing your legacy with your children. It makes them more likely to seek advice and make or update a will themselves. While only 36% of Australians have discussed their will with their parents, this jumps to 55% for people who have a will of their own. A 20% difference3.

Learn more about how putting together the right plans and structures can look after your loved ones after you've gone. 

It’s easy to imagine the ways an inheritance will make your life easier. What’s a little harder is being ready to receive an inheritance, from understanding the financial structures involved to how long the estate administration process can take.

It’s also important to recognise that, while an inheritance gives you opportunities, it can also be disruptive to family relationships and the family as a whole.

Perpetual can help you prepare and plan for your inheritance so when the time comes, you can avoid making potentially regrettable decisions – and instead have the peace of mind that long-term financial security provides.

When will I receive my inheritance?

In complex situations it may take up to a year or more for an estate to be administered. Here is a summary of what’s involved to help you understand where you and/or the estate executor may be in the process.

1. Confirm assets and liabilities: Verify the assets and liabilities of the estate for a statement to the Supreme Court as part of the application for Probate.

2. Apply for the probate: Court confirms will validity. Publishes statutory notice for all parties and creditors to lodge a claim against estate.

3. Calculate tax implications: Prepare and lodge tax returns for the deceased estate until it's fully administered.

4. Collect and realise assets: Probate is granted, and assets are prepared for distribution under the terms of the will.

5. Pay legacies and bequests: Cash legacies and items gifted under the will are distributed.

6. Distribute the estate: The remainder of the estate is distributed, and each beneficiary receives detailed financial statements.

Learn more about how putting together the right plans and structures can look after your loved ones after you've gone. 

What should you consider when inheriting wealth?

Receiving an inheritance can change your lifestyle today, as well as your long-term goals. With so much at stake it’s important to have the financial skills to manage it.

 

It’s something we, at Perpetual Private, care deeply about and to help spread the word we partnered with the BBC to share four important stories on different emotional and financial considerations of inheriting wealth.

 

These articles were first published as advertisement features on bbc.com and were created by BBC StoryWorks, GNL’s commercial content team, on behalf of Perpetual.

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Four important stories about inheritance

View all
grief-couple-log-746-419.png Financial Advice

Psychology of loss

by Perpetual Private Insights
Financial Advice

Tax implications when receiving an inheritance

by Perpetual Private Insights
Financial Advice

Making the most of an inheritance

by Perpetual Private Insights
Financial Advice

Managing an inherited wealth transfer from a spouse

by Perpetual Private Insights

Learn more about inheriting wealth

Capital gains tax on inheritance Giving forever 3 tax tips for inheriting property Understanding estate administration Investing an inheritance in super Keeping philanthropy in the family The A-Z of inheritance

Meet the team

Andrew Parker.jpg
Andrew Parker
Partner, Private Clients SA
08 8418 5611
Contact me
Tony-Mastromanno2.jpg
Tony Mastromanno
Partner, Private Clients VIC
0439 451 641
Contact me
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Carolyn O'Reilly
Partner, VIC
03 8628 0403
Contact me
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Roxanne Gorman
Partner, NSW
0408 371 519
Contact me
Richard-Mclelland.jpg
Richard McClelland
Partner
+612 9229 9340
Contact me
Daniel-Gallacher.jpg
Daniel Gallacher
Associate Partner
0466 334 280
Contact me
Andrew Parker
Andrew Parker.jpg

Andrew Parker

Partner, Private Clients SA
Phone 08 8418 5611
Bio

Andrew is the Partner of SA’s Not For Profit division.

With over 32 years experience, Andrew specialises in advice to large complex organisations, family offices, not-for-profit clients and philanthropic trusts. He has a deep understanding of the unique needs and strategic objectives of not-for-profit organisations and helps his clients implement best practice investment policies. Andrew also connects clients to other parts of the Perpetual business, including Philanthropic services.

Prior to joining Perpetual, Andrew held senior adviser roles within commercial and private banking based in Adelaide for the last 9 years. Andrew has also held senior manager roles in institutional banking at JPMorgan Chase, Deutsche Bank and Royal Bank of Scotland in Tokyo, Singapore, London, New York and Sydney over a period of 20 years.

Andrew has a Bachelor of Business (Finance), Advanced Diploma of Financial Planning, is an accredited Self- Managed Super Fund adviser (SMSFA) and speaks several languages.

Tony Mastromanno
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Tony Mastromanno

Partner, Private Clients VIC
Phone 0439 451 641
Bio

Tony is the Associate Partner of VIC’s High Net Worth division.

Tony provides sophisticated financial advice to Perpetual’s private clients. He has extensive experience in investment management, retirement planning, superannuation, taxation, estate planning and recommending appropriate strategic structures.

Tony enjoys working closely with clients to develop highly effective investment strategies and structures which help to ensure that their financial goals are achieved.

Tony has a Diploma in Financial Planning – Financial Planning Association of Australia, 2003. He joined the financial services industry in 1993 and has been with Perpetual since 2002. His previous roles and experience in financial services include Financial Adviser and Client Relationship Manager with AMP and the Commonwealth Bank.

Carolyn O'Reilly
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Carolyn O'Reilly

Partner, VIC
Phone 03 8628 0403
Bio

Carolyn has over 25 years of wealth management and financial markets experience.

As a Partner within Perpetual Private Carolyn specialises in providing complex strategic and investment advice to high net worth individuals and families. She also specialises in providing financial advice to women and is passionate about improving female financial literacy, enabling women to make financial decisions which promotes security, stability and financial freedom.

Prior to joining Perpetual Private in 2009 Carolyn held roles at Macquarie Private Bank and JP Morgan Chase.

Carolyn has a Bachelor of Economics, Graduate Diploma in Applied Finance, Diploma of Financial Planning and is also a CFP member of the FPA and has completed all FASEA requirements.

Carolyn is also a board member of The Beautiful Bunch, a social enterprise which provides training and employment opportunities for young refugee women.

Roxanne Gorman
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Roxanne Gorman

Partner, NSW
Phone 0408 371 519
Bio

Roxanne is an experienced and highly qualified wealth management professional having held various leadership and adviser roles within Private Banking and Private Client segments over the past 20 years.

As a Partner within Perpetual Private Clients Roxanne leads teams of Senior Financial Advisers and Associate Advisors across NSW and the ACT - providing exceptional service and holistic advice to retail and wholesale clients.

Roxanne also manages a select number of high net worth client relationships ensuring objectives are consistently met. Roxanne works with clients to bring clarity, direction and discipline to their financial and investment  affairs.

As a leader and financial adviser Roxanne is focussed on developing strong client relationships with a particular interest in Family Wealth taking into account investment strategies and market conditions. 

Roxanne has a Bachelor of Arts (Economics), Master of Financial Planning and a MBA. Roxanne is also a CFP member of the FPA and has completed all FASEA requirements.

Richard McClelland
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Richard McClelland

Partner
Phone +612 9229 9340
Bio

Richard McClelland helps High Net Worth individuals and families secure their financial future.

Supported by Perpetual’s broad range of services, Richard helps his clients build, protect and transfer their wealth to the next generation.

Richard’s strengths lie in his ability to obtain a deep understanding of his client’s circumstances, take into consideration their goals; and then develop and monitor a plan to align the two.

Richard is the definition of a holistic Financial Adviser. He has more than 15 years’ experience; has achieved a Masters in Financial Planning, and is a Certified Financial Planner (CFP®).

  • His area of specialties encompass:
  • Financial Planning
  • Superannuation (Inc. SMSF and SAF)
  • Wealth protection and asset structuring
  • Investment, asset allocation and portfolio construction
  • General estate planning
  • Charitable planning and philanthropy

When not working Richard enjoys spending time with his family including his Canadian wife and two sons on Sydney’s Northern Beaches. Richard enjoys keeping active via a range of outdoor activities including surfing, mountain biking, running and anything snow related.

Daniel Gallacher
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Daniel Gallacher

Associate Partner
Phone 0466 334 280
Bio

Daniel is an Associate Partner at Perpetual's Perth office and his role is to provide Financial Advice to clients and Manage the Perth Adviser team.

He started his career in financial services at Westpac Bank in 2008, within their business banking segment, before commencing as a Financial Adviser in 2010.

Daniel has now been with Perpetual for nearly a decade and provides Advice and guidance to high net worth clients and their families.

He provides tailored advice in investment management, retirement planning, superannuation, taxation, estate planning and strategic structures.

Daniel also has extensive and ongoing day to day experience providing investment advice and guidance to Not for Profit Organizations and First Nations Communities.
This involves understanding and tailoring portfolios and strategies so these organisations can best achieve their community missions.

Daniel holds a Graduate and Advanced Diploma of Financial planning and certificates in Self-Managed Super Funds, Margin Lending and Gearing and Certificate in Finance and Mortgage Broking.

Daniel is a proud Father of two children. He loves this role the most and he feels it helps him be the best Adviser he can be to his clients.

Perpetual’s board range of services and experts allow Daniel to provide comprehensive solutions to his clients and support the Perth team of Advisers.

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Contact our team today


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1. Seer Data estimated of intergenerational wealth transfer, derived from 2016 ABS data
2. Williams and Preisser, Philanthropy Heirs & Values, 2005
3. Lembit, G., (2019) ‘What do you care about’, Perpetual Client Insights and Analytics, released 26 September 2019

 

 

Perpetual Private advice and services are provided by Perpetual Trustee Company Limited (PTCo) ABN 42 000 001 007, AFSL 236643. This webpage contains general information only and is not intended to provide you with financial advice or take into account your objectives, financial situation or needs. You should consider, with a financial or other adviser, whether the information is suitable for your circumstances. To the extent permitted by law, no liability is accepted for any loss or damage as a result of any reliance on this information. Perpetual Private advice and services are provided by Perpetual Trustee Company Limited (PTCo) ABN 42 000 001 007, AFSL 236643. This information was prepared by PTCo. To view the Perpetual Group's Financial Services Guide, please click here. The information is believed to be accurate at the time of compilation and is provided in good faith. This information, including any assumptions and conclusions is not intended to be a comprehensive statement of relevant practice or law that is often complex and can change. This article may contain information contributed by third parties. PTCo do not warrant the accuracy or completeness of any information contributed by a third party. Any views expressed in this article are opinions of the author at the time of writing and do not constitute a recommendation to act. No company in the Perpetual Group (Perpetual Limited ABN 86 000 431 827 and its subsidiaries) guarantees the performance of any fund or the return of an investor’s capital. Past performance is not indicative of future performance.

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