‘Money taboos’ causing confusion around inheritance planning

Confusion over the destiny of family wealth is currently being driven by “money taboos”, according to Netwealth.

A report from the wealth manager revealed that only around half (53%) of parents are planning to split their wealth equally among their children.

While two thirds of parents (66%) believe their children have a clear understanding of their plans, the research, based on a study among 2,000 people, also suggested that only 39% of young adults feel the same.

Netwealth found that less than a quarter of young adults (23%) have had open discussions with their parents about their respective plans for the future, while almost a third of young adults (30%) admitted that they have not taken any tangible steps to ensure their own family’s mutual financial security in the future.

The wealth manager said that the lack of openness means families are likely to lose out on the long-term benefits of family financial planning and put their wealth at risk.

A lack of communication between parents and their grown-up children could have an immediate impact, the report also stated, given two thirds (65%) of parents plan on making meaningful wealth transfers in instalments over several years rather than in one lump sum when they die.

“While there is no one-size-fits-all approach to family financial planning, open communication early on is an absolute priority,” commented Netwealth CEO, Charlotte Ransom. “There’s a tendency for parents to assume that their children are aware of their inheritance plans but our research shows that too often this isn’t the case.

“By breaking down the taboo of speaking about money, parents can provide helpful clarity for the future and enable everyone to make more informed financial decisions, both as individuals and as a family. This also allows disagreements or issues to be discussed and potentially resolved rather than leaving the next generation the task of tackling difficult decisions made by their parents.

“Ensuring finance is a topic discussed within the family unit can help educate and build confidence in the next generation. By having these transparent conversations, family members are empowered to make financial decisions that will stand them in good stead for the future.”

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