If you’re planning to leave wealth to your children or grandchildren, preparing them to manage that wealth can be just as important as building it.

Building Financial Confidence

  • Financial knowledge develops over time through education, experience and involvement.
  • Consider including adult children in appropriate financial discussions, such as how investments and superannuation work and why certain financial decisions are made.
  • Giving them some practical experience can also help build confidence and responsibility before they receive an inheritance.

Gifting or Loaning Money

  • If you want to help your children financially, you may choose to provide the money as a gift or a loan.
  • Gifting can provide immediate support, but unequal gifts between children may sometimes cause family tension.
  • A loan can encourage financial responsibility and may be documented with clear repayment terms.
  • There can be tax, Centrelink and legal implications, so it’s important to get professional advice before deciding.

Preparing Your Family Beyond Money

  • Managing inherited wealth isn’t just about financial knowledge. Your children may also need to understand your family’s values and what you want the wealth to achieve.
  • Regular family discussions can help establish expectations and encourage responsible decision-making.
  • Involving children in charitable giving can also help develop an understanding that wealth can benefit others, not just themselves.

Gradually Passing on Responsibility

  • Rather than transferring responsibility all at once, you can involve your children gradually.
  • This could mean including them in investment decisions before allowing them to take greater responsibility for managing assets.
  • Your strategy should also be reviewed as family circumstances change.

In summary, preparing the next generation can include:

  1. Building their financial knowledge.
  2. Involving them in financial decisions.
  3. Carefully considering gifts and loans.
  4. Discussing your family’s values and expectations.
  5. Gradually increasing their financial responsibility.

A successful legacy isn’t only about how much wealth you leave behind, but how prepared your family is to manage it.

Want to prepare your family for the future?

We’re here to help. Talk to us about creating a wealth transfer strategy that works for you and your family.

Important Notice:

The information contained in this article is general in nature only and does not take into account your personal objectives, financial situation or needs. You should consider whether the information is appropriate for your circumstances before acting on it and seek advice from a qualified professional.

Personal financial advice can only be provided after considering your individual circumstances and providing the appropriate disclosure documentation. VJC Wealth accepts no liability to any party for any loss arising from reliance on this information unless it has been provided as part of a formal advice engagement.