Yahoo Finance Major inheritance change as older Aussies stop leaving their money to kids: 'Disillusioned'
Safewill Legal has noticed a big rise in the number of grandparents skipping a generation when carving up their assets.
Two major reasons are being blamed for an emerging trend in the inheritance realm in Australia, divorce and young people not being able to get by alone. Typically, a person will gift their child or closest next of kin with money, property and other assets in the event of their death.
But an increasing number of older Aussies have decided to skip a generation and give an inheritance to their grandchild or grandchildren instead. Isabelle Marcarian, principal solicitor at Safewill Legal, told Yahoo Finance these people see it as a better investment.
"You've got grandparents around 60, 70 and 80, they've got kids in their 40s, 50s and 60s, and that first generation, those children are already quite secure," she explained.
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Safewill Legal has seen a tripling in the proportion of wills including grandchildren as beneficiaries over the last five years, while the number of wills completely bypassing children and going straight to grandchildren has skyrocketed 225 per cent.
The share of inheritance going to grandchildren has jumped from 5 per cent to 12 per cent over the same time period.
Marcarian said the skipping of a generation might come because the older Aussie has already provided their children with money and they're now looking out for the family members in their 20s and 30s who have become "disillusioned" with the property market or their future.
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She added that the cost-of-living crisis has likely fuelled this trend, along with rising home prices and rent costs.
Thankfully though, this decision usually doesn't come at the cost of raging family arguments.
"A lot of the time, it's done with the consent of the child, or the child understands that their own child is benefiting, and they've kind of all decided together, because parents love their children," Marcarian said.
But there's another bleak reason behind this move
"Grandparents are worried about their children potentially going through divorces," Marcarian told Yahoo Finance.
"They're worried about the wealth going sideways, and so they're like, 'Well, I can keep it in the family or the bloodline for longer if I just skip that child's generation and go straight down to the grandkids'."
This is what caused Aussie resident Isabel Almendrades to name her grandchildren as the sole beneficiaries of her will.
"Marriage doesn't guarantee permanency. I don't want my estate to go to a stranger and for my grandkids to miss out," she said.
Isabel's daughter, Vanessa, isn't bothered by the decision.
"We've discussed this for years; my position is clear: it's her money and assets. I would never try to stop her from doing what she wants with them," she said.
"She built her wealth and worked hard on her own. When she had grandchildren, it was like she got a second wind.
"They bring so much joy and energy into her life. The grandkids give her their time, effort, and love, and she wants to return it to them. I understand her decision, even if it means I'm not included in the will."
Aussies 'relying' on inheritance
Millions of Australians are waiting on an inheritance as Baby Boomers are poised to provide the largest intergenerational wealth transfer in our history.
The Productivity Commission predicts roughly $3.5 trillion (yes, with a T) will be handed down to generations below Boomers when they die.
Recent research from Finder found a third of Australians are expecting to get an inheritance, some hoping to get their hands on some cash before their loved ones pass away.
There's 10 per cent who think they will get theirs within the next 10 years, while another 13 per cent believe it will be up to 20 years before they get a chunk of change.
How much do they think they will be getting?
Up to $50,000 (15 per cent)
50,000 and $100,000 (20 per cent)
More than $100,000 (28 per cent)
That's still two thirds of Australians who don't think they will get anything.
Many said it was as they were not on good terms with family, or that they wouldn't have anything left to pass on.
But there's another trend that could stop the wealth transfer — the Spending the Kids' Inheritance (SKI) movement.
Single mum Trudy Wertheim told Yahoo Finance she's using her money to enjoy the end of her life and has told her children they should not be expecting to inherit a large sum of cash.
"There are generations coming through that just don't expect to work. They expect to inherit or be given or bought a family home by their parents," Wertheim said.
Leanne and Leon Ryland are in the same boat, noting scrimped and saved during their working years and want to live the high life while they've got time.
They've spent more than $120,000 on epic around the world trips.
"We've done all the right things by investing in property, boosting up our super making sure that was healthy, going without a lot of things," she said on SBS Insight.
“We’re not going be able to spend all this money so let’s do it because in another 10 years we won’t be climbing the Great Wall of China. We won’t be going up Machu Picchu."
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