Massive $3.5 trillion wealth transfer going to grandchildren first

A contentious new trend in will writing that skips a generation has the potential to cause family infighting befitting an episode of Succession.

A growing number of older Australians are leaving their children out of their wills and bequeathing their money and property to their grandchildren, a report by estate planners Safewill has found.

The number of wills naming grandchildren has tripled in the past five years, with one in 10 now including them as key beneficiaries.

While the share of the will left to grandchildren has increased from less than five per cent to more than 12 per cent overall, the number of wills bypassing their parents altogether has risen by 225 per cent in the past five years, the report found.

Safewell’s Principal Solicitor, Isabelle Marcarian, says grandparents can see that while their children are mostly set up by middle age, their grandchildren are facing a tough economic climate.

“We’re seeing these grandparents are saying: ‘I’ve set up my kids, they’re fine, they’ve got a house,” Ms Marcarian, a specialist estate planning lawyer told AAP.

“’But now I’m looking at my grandkids and they’re facing a property market that they cannot afford’.

“An inheritance of $100,000, $200,000, $300,000 would really help them with a home deposit.”

With $3.5 trillion in assets due to be passed on by baby boomers over the next 20 years, many older Australians are concluding that passing their wealth - be it in cash, shares, property, or crypto currency - to their grandchildren will have the bigger immediate “impact”.

Safewill says over the past four years, the number of wills incorporating cryptocurrency and other digital assets has surged by 2400 per cent - although it is mostly younger Australians leading that trend and those that do are 28 per cent less likely to include real estate.

But boomers may also be making a conscious bid to keep their money in the family, Ms Marcarian says.

“A generation down from grandparents, we’ve got 40-, 50-, maybe 60-year-old children and it’s the time of life where the data shows they might be going through a relationship breakdown,” she explains.

“They’re quite cognisant that if there is a relationship breakdown, any inheritance might go in part to the ex partner.

“They’re saying ‘you know what, given that risk, we might skip a generation, go straight down to the grandchildren and keep the funds in the family for another generation longer’.”

Beyond expressing their wishes in their will, the only control the grandparents will have after their death is determining the age at which the inheritance will be passed to the grandchildren, who must be at least 18.

But once the money is gifted, it is difficult to stipulate what happens to it, or trying to “rule from the beyond the grave”, Ms Marcarian says.

“You don’t know what the situation is going to be in 15 years,” she says.

“If you try and create a really restrictive structure that they can only use the money for a house deposit, but at that time it’s really important to them to start a business or the crypto currency market is amazing or the housing market is terrible and they shouldn’t be getting into it, what you’ve done is been too restrictive of situations that you don’t understand yet.”

Ms Marcarian recommends anyone creating a will of this nature to do so with full disclosure and “everyone on the same page”, but adds most families endorse the grandparents’ decisions.

“The kids say to their own parents: ‘mum, don’t worry about it, just leave it to the grandkids, they’ll need it more than us’,” she says.

But if there is any family dispute or level of estrangement, even the most considered and conscientiously laid-out plans can be contested.

In Australian estate planning law, children have an in-built right to challenge a will if they’re not happy with the outcome, she says.

“There is no will that can be drafted in a way that can’t be challenged.”