The Challenge of Passing Down Wealth Across Generations
This month, I had the privilege of speaking with Daniel Elias, Senior Vice President at Morgan Stanley Wealth Management, about a looming financial challenge facing Australians.
Wealthy Baby Boomers have inadvertently created a $3.5 trillion issue as the intergenerational passing down of family-owned businesses and estates faces increasing obstacles from divorce, remarriage, and blended families.
Each year, developed nations are witnessing the growing impacts of divorce, second marriages, stepchildren, and complex family structures on wealth retention. These dynamics create difficulties in building and preserving familial wealth, leading to significant financial shifts across generations.
The Shocking Reality of Lost Wealth
One of the most astounding revelations from our discussion and my own research was a statistic from just last year, 2024: an estimated 70% of families lose inherited wealth by the next generation, and 90% by the third generation.
Daniel urges families to “bring in” their children into traditionally “very taboo” conversations surrounding financial literacy, especially when considering that as of 2018, financial disputes account for over 65% of all matters in Family Court – a sad yet daunting statistic.
With such a significant amount of wealth being passed down – and subsequently lost – the big question arises: Where is it all going?
The Property Market as a Wealth Magnet
A large portion of this transferred wealth is being absorbed into property values – fortunate news for those of us in the property industry! However, this trend has significant implications for wealth disparity and housing affordability in Australia. This issue is only being compounded when considering the Sydney Morning Herald findings – that in 2025 alone, inheritance and gifts will amount to over A$120 billion – a figure which has doubled since 2002 – and expected to quadruple within the next 25 years to nearly A$500 billion
Generational wealth transfer is exacerbating economic divides. Families with substantial assets can pass down property and financial resources, reinforcing homeownership among certain groups. This creates a stark distinction between those who inherit property and those struggling to enter the market for the first time. For first-time buyers without familial financial support, the challenge of entering the property market continues to grow, as rising demand drives prices ever higher.
Opportunities Amidst Challenges
While this trend presents challenges for housing affordability, it also creates opportunities. Generational wealth transfer can enhance economic stability for recipients, providing a financial safety net and fostering upward mobility within families.
For younger generations inheriting property or financial assets, this presents an opportunity to invest in property earlier, either as owner-occupiers or investors. With strategic guidance, they can secure long-term financial stability by leveraging capital gains in a strong housing market. This transfer of wealth into property helps mitigate some financial stress caused by rising home prices, while also ensuring continued investment in the real estate sector.
The Astounding Wealth being Inherited by Sydney’s Youth
According to RealEstate.com, Sydney suburbs like Rose Bay and Vaucluse are projected to see average inheritances nearing A$3.75 million. These transfers present opportunities for policymakers to consider
inheritance taxation or other fiscal measures to address wealth disparities.
However, the increased purchasing power of younger generations is also stimulating property market activity and housing-related industries, including construction and buyers agencies. A probable shift
toward younger, less experienced property investors is on the horizon, creating exciting opportunities for
buyers agents like myself.
Final Thoughts
The “Bank of Mum and Dad” is now the fifth-largest lender in Australia, contributing an estimated A$34 billion to homebuyers in 2022. This underscores Daniel’s words of warning to “keep the family together” as wealth transfer is reshaping family dynamics in Australia – in some cases strengthening familial bonds but in others – tensions arise, particularly where siblings feel inequities in the distribution of resources or responsibilities for elder care.
While intergenerational wealth transfer is contributing to wealth disparity and housing affordability concerns, it also opens doors for those who can leverage their inherited assets wisely. For younger generations looking to navigate Sydney’s competitive property market, strategic investing and informed decision-making will be key to ensuring their wealth is preserved and grown, rather than lost like so many before them.
As this wealth transfer unfolds, one thing is clear: the property market will remain at the center of Australia’s economic landscape, and those who understand its movements will be best positioned for success.
The Challenge of
Passing Down
Wealth Across
Generations
This month, I had the privilege of speaking with Daniel Elias, Senior Vice President at Morgan Stanley Wealth Management, about a looming financial challenge facing Australians.
Wealthy Baby Boomers have inadvertently created a $3.5 trillion issue as the intergenerational passing down of family-owned businesses and estates faces increasing obstacles from divorce, remarriage, and blended families.
Each year, developed nations are witnessing the growing impacts of divorce, second marriages, stepchildren, and complex family structures on wealth retention. These dynamics create difficulties in building and preserving familial wealth, leading to significant financial shifts across generations.
The Shocking
Reality of Lost
Wealth
One of the most astounding revelations from our discussion and my own research was a statistic from just last year, 2024: an estimated 70% of families lose inherited wealth by the next generation, and 90% by the third generation.
Daniel urges families to “bring in” their children into traditionally “very taboo” conversations surrounding financial literacy, especially when considering that as of 2018, financial disputes account for over 65% of all matters in Family Court – a sad yet daunting statistic.
With such a significant amount of wealth being passed down – and subsequently lost – the big question arises: Where is it all going?
The Property
Market as a Wealth
Magnet
A large portion of this transferred wealth is being absorbed into property values – fortunate news for those of us in the property industry! However, this trend has significant implications for wealth disparity and housing affordability in Australia. This issue is only being compounded when considering the Sydney Morning Herald findings – that in 2025 alone, inheritance and gifts will amount to over A$120 billion – a figure which has doubled since 2002 – and expected to quadruple within the next 25 years to nearly A$500 billion
Generational wealth transfer is exacerbating economic divides. Families with substantial assets can pass down property and financial resources, reinforcing homeownership among certain groups. This creates a stark distinction between those who inherit property and those struggling to enter the market for the first time. For first-time buyers without familial financial support, the challenge of entering the property market continues to grow, as rising demand drives prices ever higher.
Opportunities
Amidst Challenges
While this trend presents challenges for housing affordability, it also creates opportunities. Generational wealth transfer can enhance economic stability for recipients, providing a financial safety net and fostering upward mobility within families.
For younger generations inheriting property or financial assets, this presents an opportunity to invest in property earlier, either as owner-occupiers or investors. With strategic guidance, they can secure long-term financial stability by leveraging capital gains in a strong housing market. This transfer of wealth into property helps mitigate some financial stress caused by rising home prices, while also ensuring continued investment in the real estate sector.
The Astounding Wealth being Inherited by Sydney’s Youth
According to RealEstate.com, Sydney suburbs like Rose Bay and Vaucluse are projected to see average inheritances nearing A$3.75 million. These transfers present opportunities for policymakers to consider
inheritance taxation or other fiscal measures to address wealth disparities.
However, the increased purchasing power of younger generations is also stimulating property market activity and housing-related industries, including construction and buyers agencies. A probable shift
toward younger, less experienced property investors is on the horizon, creating exciting opportunities for
buyers agents like myself.
Final Thoughts
The “Bank of Mum and Dad” is now the fifth-largest lender in Australia, contributing an estimated A$34 billion to homebuyers in 2022. This underscores Daniel’s words of warning to “keep the family together” as wealth transfer is reshaping family dynamics in Australia – in some cases strengthening familial bonds but in others – tensions arise, particularly where siblings feel inequities in the distribution of resources or responsibilities for elder care.
While intergenerational wealth transfer is contributing to wealth disparity and housing affordability concerns, it also opens doors for those who can leverage their inherited assets wisely. For younger generations looking to navigate Sydney’s competitive property market, strategic investing and informed decision-making will be key to ensuring their wealth is preserved and grown, rather than lost like so many before them.
As this wealth transfer unfolds, one thing is clear: the property market will remain at the center of Australia’s economic landscape, and those who understand its movements will be best positioned for success.
