Over 80 per cent of baby boomers believe their children are not equipped to handle an inheritance, according to national accounting and advisory practice William Buck.
In the past decade baby boomers wealth has risen significantly with larger nest eggs accumulating for their children as a direct result of the increasing value of super funds, rising property prices over the past couple of decades and the growing value of good businesses.
Fausto Pastro, Director at William Buck said, “In our experience over 80 per cent of William Buck’s baby boomer clients advise us that they don’t believe their children are equipped to handle their inheritance. In their opinion they simply don’t have the resources or expertise to manage millions of dollars’ worth of assets which include shares, property, super and businesses.
“Their parents learnt the value of money through hard work and were given the ‘tough love’ treatment by their parents. The baby boomer generation simply learnt how to manage and save money through the school of hard knocks, the good and the bad and accumulated wealth from that point forward.”
He added, “On the other hand, their children have grown up in privileged surroundings with parents providing all of the trimmings for them with limited financial education and opportunities to manage wealth.”
In the past decade William Buck has witnessed a spike in requests from baby boomer clients to establish testamentary trusts to assist their children manage their asset pool after they pass away.
Fausto continued, “Testamentary trusts help mitigate against poor financial and lifestyle decisions, provide the foundation for a tax effective structure and are an excellent vehicle for managing estates. The legal framework which is set ensures all beneficiaries know exactly where they stand and are less inclined to dissipate the wealth.
“Wealth brings responsibilities and needs to be managed accordingly. As the saying goes one generation creates, one builds and one spends. Maintaining and acquiring wealth requires smart decision and experience.”
“Baby boomers need to face up to their own mortality and start discussions early with advisors to discuss how they would like their assets managed upon death. Advisors need to get their hands dirty and ask the difficult questions surrounding death. The first question to ask is if you had passed away yesterday how would you like your estate managed?” he added.
Source: William Buck
