The hardest part of transferring wealth is not only transferring the assets. It’s preparing the people who will inherit responsibility for them.
Australia is in the midst of what has become known as the Great Wealth Transfer. In JBWere’s recent Great Wealth Transfer Myth report, I set out to challenge the familiar idea that significant family wealth rarely survives beyond three generations and to show that stewardship can be a much longer-term process.
Much of the focus is on the legal and financial mechanics of that transfer, including wills, trusts and tax structures. But far less attention is given to preparing current and future generations to steward that wealth.
There can be a misplaced assumption that if the paperwork is in order, the transition will largely take care of itself.
However, successful succession is not an event triggered by the passing of a loved one. It is a long-term process of preparing people to exercise stewardship, make good financial and non-financial decisions together and uphold a shared sense of purpose well into the future.
Governance starts where estate planning ends
Many people take comfort in knowing they have an up-to-date will, enduring powers of attorney and well-structured trusts. While these are critical foundations, they’re not succession plans.
Particularly in Australia, where significant wealth is held through family trusts and private entities, the key issue is often not simply who owns assets, but who controls them.
Questions such as who becomes the trustee, who makes decisions about investments and capital allocation, how disagreements are resolved, and what happens when different family members have different priorities, risk appetites or views about the future of the family’s wealth are often sidelined.
Through our work with families across generations, we have found that legal and tax structures are rarely the source of family breakdown.
More often, difficulties arise because expectations have never been discussed, responsibilities are unclear, or the next generation has not been properly engaged in the role they will eventually play. The challenge is often even greater for families that own operating businesses, where governance frameworks can help coordinate decision-making across multiple asset pools and generations.
Reducing the governance gap
Over the years, I have worked with many individuals who have devoted decades to building successful businesses, property portfolios and investment holdings. They have been disciplined, strategic and deeply involved in every major decision. Yet when I ask how often the family comes together to discuss the future of those assets, the answer is often "not very often".
When families hear the term governance, they often think about bureaucracy and unnecessary formality. In reality, governance is much simpler than that. It’s about creating a framework that helps families make decisions consistently over time.
For some families, that might mean a quarterly family meeting. For others, it could be a family council, an investment committee or regular discussions involving advisers and future decision-makers. The structure itself is less important than creating a consistent forum where family members can learn, contribute and understand how decisions are made.
Trusted advisers may help facilitate these discussions, particularly where expectations or responsibilities are unclear. Ultimately, however, the objective is to create a process that enables family members themselves to engage constructively and make informed decisions together.
For larger family enterprises, independent directors or chairs can help keep discussions constructive and focused on the long-term interests of the family. But governance is not reserved for the largest families or those with formal family offices. Any family seeking to preserve wealth across generations can benefit from clear communication, documented processes and regular conversations about purpose, priorities and stewardship.
Preparing the next generation
One of the most effective approaches is to involve younger family members early. They can sit in on meetings, observe discussions and begin to understand not only what assets the family owns, but why decisions are made in the way they are.
Over time, stewardship becomes something familiar rather than something daunting. When responsibility eventually transfers, family members understand the governance process, know who is responsible for what and have a clear appreciation of the family's values, priorities and long-term objectives.
Encouragingly, this involvement can challenge the perception that younger family members are less prepared or less engaged than those who came before them. In my experience, many are asking thoughtful questions about the purpose of wealth, the family's role in the community and the impact they want their capital to have.
Conversations around responsible investing, philanthropy and long-term legacy are frequently being driven by younger family members. Good governance creates space for those perspectives to be heard and allows families to evolve while remaining anchored to core values.
Structured philanthropy can in fact act as a springboard for family members to gain experience in financial and investment oversight, develop distribution policies and build an understanding of long-term stewardship and perpetuity.
In some cases, a philanthropic strategy may also enable family members to consider lifetime giving as well as the option to bequeath assets to a Family Foundation or Giving Fund as part of their estate planning. By growing philanthropic capital, families can demonstrate their ethos and foster a connection to community across generations.
Start with purpose
Another lesson I’ve observed is that governance works best when it is anchored by a clear sense of purpose.
Many families spend significant time discussing investment performance, but surprisingly little time discussing why they're keeping their wealth together in the first place.
Yet some of the most successful multi-generational families around the world continually return to that question.
The answers will be different for every family, but having those conversations creates alignment.
One way families can do this is to articulate the family’s shared values, family ethos and purpose of wealth in a succinct Family Legacy Statement. Having this clearly defined gives people a shared understanding of what they're working towards and provides a moral compass when difficult decisions inevitably arise.
As Australia moves through the largest intergenerational transfer of wealth in its history, there will be plenty of attention paid to estate planning, tax structures and legal arrangements. Those things matter. But we’ve observed that the families most likely to succeed across generations are the ones that devote just as much attention to communication, governance and preparing people for responsibility.
The families that navigate generational change most successfully are rarely those with the most sophisticated structures. More often, they are the families that have spent time investing in the people who make up the family, not just the assets.
Peter Roach is a Senior Consultant, Family Advisory at JBWere Ltd. JBWere ABN 68 137 978 360 AFSL No. 341162 is a wholly owned subsidiary of National Australia Bank Limited. This article is general information only and does not take into account your personal objectives, financial situation or needs. It does not constitute financial, legal or tax advice. You should consider the appropriateness of the information and seek professional advice tailored to your circumstances.