Avoid fam­ily fall­ing out

NT News - Real Estate - - Market Place - AN­THONY KEANE

AN IN­HER­I­TANCE is of­ten a wel­come wind­fall in a time of sad­ness, but par­ents who fail to ex­plain their plans to their adult chil­dren risk fam­ily fights and a fi­nan­cial fall-out.

As av­er­age in­her­i­tance sizes surge amid Aus­tralia’s ris­ing wealth, an un­ex­pected pay­out can be harm­ful, and es­tate plan­ning specialists say it’s wise to talk about them early.

Wil­liam Buck’s di­rec­tor of wealth ad­vi­sory, Adrian Frins­dorf, said Aus­tralian fam­i­lies were not great com­mu­ni­ca­tors about money, and this of­ten left adult chil­dren un­pre­pared to deal with a size­able in­her­i­tance.

“For all good in­ten­tions, some par­ents do not want to re­veal the full ex­tent of their wealth to their chil­dren as they grow up,” he said, adding that many didn’t want to spoil their off­spring or breed ex­pec­ta­tion.

Mr Frins­dorf said when he started ad­vis­ing 23 years ago, a $1 mil­lion in­her­i­tance was seen as large but to­day pay­outs above $3 mil­lion were not un­com­mon – and com­plex for many adult chil­dren. “Fam­ily trusts, busi­ness loans and ben­e­fi­ciary en­ti­tle­ments can be hard for any un­pre­pared fam­ily mem­ber to get their head around,” he said.

Su­per­an­nu­a­tion can cause con­fu­sion among sur­viv­ing fam­ily mem­bers be­cause there are dif­fer­ent tax treat­ments for dif­fer­ent ben­e­fi­cia­ries, while self-man­aged su­per funds may need to be wound up.

Aus­tralian Unity Trustees wills and es­tates spe­cial­ist Anna Hacker said un­ex­pected in­her­i­tances could re­sult in so­cial security im­pacts, and could also af­fect ex­ist­ing is­sues – such as bank­ruptcy – among ben­e­fi­cia­ries.

“Ad­di­tion­ally, there is noth­ing like in­equal­ity be­tween sib­lings to cre­ate is­sues in fam­ily dy­nam­ics, which may al­ready be strained,” she said.

Par­ents who dis­cussed po­ten­tial in­her­i­tance is­sues with their chil­dren early could min­imise fu­ture prob­lems in­clud­ing le­gal bat­tles, Ms Hacker said.

“If po­ten­tial ben­e­fi­cia­ries are aware of what is go­ing to hap­pen, they may not have to deal with those sur­prises at a time of intense grief,” Ms Hacker said.

She said that a grow­ing num­ber of par­ents were de­liv­er­ing early in­her­i­tances through loans rather than gifts, to en­sure sib­lings were treated equally.

Older par­ents should share their in­her­i­tance plans with their chil­dren

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