How to protect family wealth – and relationships
Contents
Beyond the wealth transfer
With Australia facing the ‘Great Wealth Transfer’ – where an estimated $5.4 trillion will pass between generations by 2050 – one of the misconceptions is to talk about this major movement of assets in simple transaction terms.
One generation has built the wealth. The next generation receives it. The lawyers prepare the documents, the accountant works through the tax implications and the investments are transferred.
Job done. But is it?
For families with significant wealth, a successful transition is about much more than keeping the money intact and protected. It’s about making sure the family is equipped to manage, enjoy and build on what has been created – while preserving the relationships, values and sense of purpose that made the wealth possible in the first place.
And that doesn’t mean that it should be all ‘happy families’ without any friction.
In fact, some friction can be a very good thing.
Frictionless isn't the goal
It’s tempting to think that a successful wealth transition is one where everyone agrees, nobody argues and the founders or business owners can hand over control without a difficult conversation.
But families aren’t businesses. They’re made up of different people, personalities, generations, experiences and expectations.
Disagreement, renegotiation and even conflict can be signs that a family is genuinely engaging with the transition rather than deferring to those who founded the business, or choosing to avoid discussions altogether.
The goal isn’t to eliminate friction. It’s to create a family that knows how to handle it constructively.
That might mean a daughter questioning an investment decision her parents have always made. A sibling wanting to take the family business in a new direction. Or the next generation having a very different view about how much wealth should be invested, spent or donated.
While these discussions around the table (at home or in the boardroom) can be uncomfortable, they can equally be inspiring – and incredibly valuable. What’s most important is that they are held in the first place.
The latest thinking with the “great wealth transfer” is increasingly moving beyond the idea of treating an event like an inheritance as a single moment in time. The focus is shifting towards governance, stewardship, succession and preparing the next generation to become active participants in their family’s wealth story.
The real question is not the transactional aspect of how to transfer the wealth. It’s how to help the family make the most of what has been created.
Start with the why, not the how
Before talking about trusts, companies, investment portfolios or wills, it’s worth having a much more fundamental conversation.
What is the purpose of the wealth?
For some families, it’s about security – giving children and grandchildren opportunities that weren’t available to previous generations.
For others, it’s about entrepreneurship and continuing a family business.
It might be about education, helping family members pursue opportunities, supporting the next generation to build their own businesses, or creating a philanthropic legacy.
And sometimes it’s purely about creating the freedom to live a good life, which is central to our philosophy at Tribeca.
When we set goals with our clients, we have them approach it through the lens of the 5 Ls:
Live – What does life look like, now and in ten years time?
Love – How will you nurture your important relationships and add value to them?
Learn – What are your passions or things you’d like to try in life?
Laugh – What are the things that make you happy?
Legacy – What do you want to contribute to society or those around you?
If the family collective can work together on this bigger picture view, the focus moves to a more holistic perspective of how the wealth can be used to enable all five aspects – not just legacy which is typically where the emphasis lands in succession planning.
Having these conversations early can make the more technical decisions much easier. It’s hard to agree on the right structure if you haven’t agreed on what you’re trying to achieve.
Governance, not just structuring
When families think about wealth transfer, it’s typical to concentrate on the structures first.
Who owns what? What sits in the trust? How should the estate be divided? What are the tax implications?
These questions matter. But they only address part of the challenge.
Good estate planning determines what happens to the wealth. Good family governance helps determine how the family makes decisions about it.
That distinction becomes particularly important as wealth moves between generations.
A family constitution, for example, can provide a shared framework for how the family wants to approach its wealth, business and responsibilities. Regular family meetings or a family council can create a forum for discussing important decisions before they become points of conflict.
These don’t need to be overly formal or bureaucratic. They can simply provide a clear and agreed way for family members to have a voice, understand their responsibilities and work through differences.
And that’s where communication becomes so important.
Governance isn’t about creating rules that prevent disagreement. It’s about creating a safe and structured way to have the disagreement.
For families with a business, there is another important distinction: ownership, governance and management don’t have to belong to the same person.
A family member might own shares in the business without working in it. Another might have a seat on the board without being involved in the day-to-day management. And the best person to run the business may be someone outside the family altogether.
The three roles require different capabilities.
Ownership is about having an economic interest in the business.
Governance is about oversight, direction and accountability.
Management is about running the business day to day.
Separating these roles can take some of the emotion out of succession. It means a sibling doesn’t have to become CEO due to them being an owner, or feel excluded from the family business because they aren’t interested in running it.
Ultimately, governance gives families something that a legal structure can’t: a way of working together.
The trust deed, will or company structure can provide the framework for the wealth. But family governance helps determine how decisions are made, how disagreements are handled and how different generations can participate.
And perhaps most importantly, it gives families a place to have the conversations that shouldn’t wait until someone passes away, retires or a business needs to be sold.
Transferring wealth – and wisdom – to the next generation
It’s one thing to prepare the next generation to receive wealth. It’s another to prepare them to manage it.
Financial literacy matters, but it’s only one part of the picture. The next generation also needs the confidence, judgement, resilience and sense of responsibility to make good decisions with what they’ve been given.
That doesn’t mean every child needs to work in the family business or follow the same path as their parents. It means giving them opportunities to develop capability and a sense of earned contribution.
Research from J.P. Morgan highlights differences between generations in attitudes towards risk, flexibility and the purpose of wealth. Younger generations can be more inclined to see wealth as a way to live their values and create opportunities, while older generations may place greater emphasis on discipline, security and preserving what has been built.
As the next generation may not see wealth, work or responsibility in quite the same way as the generation before them, discussing these differences openly may result in opening up opportunities, rather than closing them off:
How much risk are we comfortable taking?
What should wealth enable for the next generation?
How much should we preserve, and how much should we enjoy or give away?
What does financial independence actually mean to each of us?
These conversations can also help challenge one of the enduring myths about family wealth: the idea that wealth inevitably disappears by the third generation.
The old “shirtsleeves to shirtsleeves in three generations” saying is often quoted, but it oversimplifies what actually happens to family wealth. Wealth doesn’t disappear just because children inherit it. The more important question to pose is whether successive generations develop the capability and mindset to steward it well.
That means preparing people for responsibility, not only preparing them for an inheritance.
It might involve financial education, but also exposure to the family business, experience making decisions, working outside the family enterprise, involvement in philanthropy or gradually taking on greater responsibility for family investments.
It also means accepting that the next generation may do things differently.
A successful transition doesn’t require the next generation to become a carbon copy of the generation that built the wealth. In fact, expecting them to do so can create its own tension.
The aim is to give them enough understanding of where the wealth came from, enough capability to manage it, and enough freedom to determine what comes next.
It’s not passing on the same worldview. It’s passing on the capability to make good decisions.
Communication is often the biggest investment
Wealth can create complexity. But it’s often the things that aren’t said that create the real problems:
A founder assuming their children want to run the business.
Children assuming they will eventually take control.
A sibling believing another sibling is being favoured.
Unspoken expectations, assumptions about who will inherit what, and different ideas about fairness can have a disastrous impact if not brought to the surface. These things can sit quietly beneath the surface for years. Then a triggering event – retirement, illness, a death, a business sale or an inheritance – suddenly and awkwardly brings them into the open.
The need for honest and open communication is critical, particularly as different generations can have genuinely different attitudes towards risk, spending, investing, philanthropy and what wealth is ultimately for. A founder might place a high value on preserving capital and building a business, while their children may see the wealth as an opportunity to create greater freedom, pursue different interests or make a social impact.
Neither perspective is necessarily right or wrong.
The danger is assuming that everyone shares the same values and thoughts because they’re part of the same family.
Starting these conversations earlier gives families the chance to work through issues and differing viewpoints while everyone has the time, energy and choice.
It also creates the opportunity to adapt the succession plan to reflect everyone’s input and expectations.
The founder has a transition to make too
While the focus of transferring wealth often centres on preparing the next generation, if a founder is giving up control this presents a whole set of different challenges.
For a founder, a business can be much more than an asset. It can be their identity, their purpose, their community and a huge part of their life’s story.
Letting go can therefore be extremely difficult. The challenge becomes less about the financial ramifications, and more about the emotional impact.
Who am I if I’m no longer running the business? Will the next generation make decisions differently? What happens to the traditions I’ve built? When is the right time to step back?
Research into family business succession highlights the importance of understanding both the incumbent and successor perspectives, including the identities and relationships that shape the transition.
This is another reason why succession works far better as a considered and inclusive process where the handover occurs over time rather than a single (and rushed) one-time event.
The founder might move from CEO to chair, then advisor, then shareholder. Or the next generation might gradually take on more responsibility, with clear measures of capability and accountability along the way.
A staged transition can give everyone time to adjust. And embrace the new change.
Passing on more than just wealth
A successful intergenerational wealth transfer isn’t necessarily one where every dollar ends up exactly where it was originally intended.
Life changes. Families change. Businesses change. People change their minds.
A good plan needs enough structure to provide clarity, but enough flexibility to evolve. Most importantly, the family needs to evolve with it.
That means having open, honest and regular conversations. Giving the next generation the opportunity to develop capability. Creating governance that supports decision-making. Separating ownership from management where appropriate. And giving the founding generation permission to let go gradually, rather than all at once.
The goal is to transfer far more than wealth. It’s to transfer the values, capability, relationships and sense of purpose that give that wealth meaning in the first place.
Because ultimately, successful wealth transfer isn’t about keeping the money intact. It’s about helping the family thrive with it.
The value of financial advice
There are conversations families can have themselves. And there are conversations where having someone independent around the table can make a meaningful difference.
A trusted advisor can provide perspective without having the same emotional history as the family.
They can ask the uncomfortable question. Challenge an assumption. Help translate between generations. Keep the conversation focused on the bigger picture.
And sometimes, simply create the space for everyone to be heard.
This is what we mean when we talk about having a seat at the family boardroom table. It’s not about being the person who has all the answers. It’s about helping the family ask better questions.
The technical work still matters – investment structures, tax, estate planning, business succession and asset protection all have their place.
But the most valuable advice (and support and guidance) happens well before any of those decisions are made.
How Tribeca can help
At Tribeca, we take a holistic approach to intergenerational wealth and succession.
We look beyond the numbers to understand what your wealth means to you, your family and the generations that follow. From estate planning and investment strategies to family conversations, governance and preparing the next generation, we can help bring the different pieces together.
It’s not about pushing the latest financial product. It’s offering a rounded and grounded plan, a sounding board and someone experienced enough to sit at the family boardroom table.
If you’re thinking about how to manage everything that comes with transferring your family’s wealth, we’re ready to get to work and start supporting you.
Links & sources:
Professional Planner – Moving beyond the myths of the great wealth transfer: professionalplanner.com.au
Deloitte Australia – Succession planning for family business deloitte.com
John Davis (Harvard Business School) – Three-Circle Model of the Family Business System: johndavis.com
PwC Australia – How family businesses can safely hand over to the next generation: pwc.com.au
Forbes – Dennis Jaffe, The ‘Shirtsleeves-To-Shirtsleeves’ Curse: How Family Wealth Can Survive It: forbes.com
The Williams Group – Our Story: thewilliamsgroup.org
J.P. Morgan – New research sheds light on the wealth dialogue between generations: jpmorgan.com
Frontiers in Psychology – Li, Wang & Cao, Identities of the incumbent and the successor in family business succession: frontiersin.org
PwC Australia – “Succession is a process, not an event” : pwc.com.au
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Next step is to arrange a call with with Rob or Rachael. You can do this by contacting our office on 1300 388 285 or emailing our team.