Less than half of seniors have a detailed plan for their children's inheritance

The current inheritance pledge from Australian seniors to children and grandchildren is nearly $3.7 trillion – but some seniors are resentful.

 

Australian attitudes towards inheritance could be shifting according to a new study, released by the Australian Seniors Insurance Agency.

 

Research reveals that less than half of Australians aged over 50 currently have a detailed plan for leaving an inheritance for their children.

 

The Australian Seniors Series: Inheritance Insights report is the tenth instalment of The Australian Seniors Series – an ongoing national study investigating the shifting attitudes and concerns affecting Australia’s over 50s. This chapter examines both the intentions Australian seniors have towards inheritance they will leave after dying and their attitudes towards retirement.

 

Less than half of seniors (47.9%) have a detailed inheritance plan for their children, with 45.0% having a vague plan and one-in-ten (10.1%) having no plan at all. In addition to this, over a quarter of seniors (28.3%) do not currently have a will which sets out how their estate is to be distributed upon dying.

 

Whilst the overwhelming majority of seniors (85.0%) are likely to leave an inheritance for their children, only 65.1 per cent feel they have a responsibility to provide for their children’s future, according to the research. Moreover, one-in-five seniors (20.9%) believe it is not important to leave an inheritance for their children.

 

Chief Marketing Officer and Australian Seniors Insurance Agency spokesperson Simon Hovell said, “Aussie seniors are earmarking significant amounts of money as inheritance for their children but clearly attitudes towards this age-old tradition are shifting.

 

“Whilst our research shows that the majority of seniors do intend to leave an inheritance for their children, significant percentages of those people we surveyed see their responsibility to do so diminishing compared to their parents’ generation.

 

“There are also obvious frustrations from seniors towards the expectations of children and grandchildren when it comes to inheritance, with almost a quarter of those surveyed believing their children and grandchildren expect too much from them in this regard.

 

“This expectation means many have to tread carefully around what is often a very personal matter that can unfortunately breed resentment with nearly three-in-ten feeling this way,” Mr Hovell added.

 

The research also shines a light on the vast majority (88.9%) of seniors who say they would not feel guilty about spending money that could go towards an inheritance for their children, despite the fact one-in-five (21.2%) think their children and/or grandchildren will come to rely financially on this inheritance upon their passing.

 

Rachel Lane, Principal of Aged Care Gurus, said: “The leaving of an inheritance can be an extremely sensitive topic for many Australian seniors with key considerations often being the legacy that they are leaving and the impact on family dynamics.

 

“Planning for an inheritance is extremely important and can help ensure that the right assets are given to the right people at the right time, while at the same time factoring in things that can come as a nasty surprise, like tax.

 

“It’s certainly worth mentioning that good estate planning isn’t ‘set and forget’; it should be reviewed regularly given financial circumstances are likely to change over time. It is also worth noting that not all of a person’s assets necessarily form part of an estate; insurance policies, superannuation, jointly owned assets as well as those held in companies and trusts often fall outside the bounds of a will.

 

“Good estate planning is not necessarily about making sure that your will deals with all of your assets, it is about making sure that all of your assets are distributed in accordance with your wishes.

 

“It's very interesting to see the potential generational shift this research is showing through the percentage of seniors who believe they will leave less than their parents. Increasing longevity no doubt plays a role in this and people are factoring in the need to plan and pay for a longer, and possibly more exciting, retirement than their parents had,” Ms Lane said.

 

According to the survey, close to one-in-five seniors (17.8%) have concerns that the issue of their estate could cause arguments between family members upon their dying, particularly when it comes to property (38.0%) and money (32.6%).

 

Among those seniors who have concerns that family members would argue over their estate, seven-in-ten (70.4%) worry the conflict would negatively impact family relationships.

 

Perhaps in an effort to address this, three-in-ten seniors (30.3%) believe labelling items that they want to leave to specific family members may help prevent arguments over their estate.

 

Interestingly, 10.1 per cent of seniors plan to leave at least some portion of their estate to their pets and of these, nearly a quarter (23.1%) say their children have no knowledge of this.

 

“Our research shows that Aussie seniors are a very giving group of people and the majority intend to leave an inheritance if they are able, but also that some have concerns over their children’s potential reliance on this once they are gone.

 

“Early conversations between family members on the subject of inheritance may go some way to allay these fears.” Mr Hovell concluded.

 

Further findings from the research:

  • • More than one-in-three (35.9%) of seniors say they are not on track to achieve or have not achieved their ‘ideal’ retirement.
  • • Seniors rank ‘good health’ as the top aspect of an ‘ideal’ retirement, with an average ranking score of 9.8 out of 10, followed by ‘financial freedom’ (6.5) and ‘staying mentally active’ (5.6).
  • • Among seniors who are not fully retired, close to seven in 10 (69.1%) say they are sometimes anxious about what retirement would hold for them.
  • • Among employed seniors who are likely to leave an inheritance for their children and/or grandchildren, nearly a third (30.3%) are holding off on retirement for as long as possible in order to build a larger inheritance pool.
  • • More than one-in-five (21.0%) seniors have ‘downsized’ to a smaller property in the last five to 10 years, while a similar proportion (23.3%) plan to do so in the next five to 10 years.
  • • Over a third (36.5%) of respondents believe seniors are less likely to leave an inheritance for the younger generations compared to their parents.

 

You can view the full findings of the report at https://www.seniors.com.au/news-insights/inheritance-retirement-survey and download the report from https://www.seniors.com.au/seniors/media/documents/inheritance-insights-data-report.pdf

 

11 May 2018.