The Intergenerational Wealth Transfer in Australia

Intergenerational Wealth Transfer in Australia & What It Means for You and Your Family

Quick Summary

The Intergenerational Wealth Transfer in Australia is causing the largest transfer of wealth in Australian history, but statistics show 70% of transferred family wealth is lost by the second generation. This article explores the reasons why and strategies to prevent this loss.

Table Of Contents

• Who Is Benefiting
• The Hard Truth Is Most Wealth Doesn’t Survive
• Common Reasons Families Lose Wealth
• The Inequality Gap & Why This Matters For Everyone
• The Bank Of Mum & Dad Evolving Landscape
• Effective Strategies For Managing Wealth Transfer
• Final Thoughts
• Frequently Asked Questions (FAQ)

Australia is undergoing the largest intergenerational wealth transfer in its history. Over the next 20 years, at least $3.5 trillion will change hands as Baby Boomers pass their wealth to Generation X, Millennials, and eventually Generation Z. Some estimates even push this figure to over $5.4 trillion, given rising property values and superannuation balances.

This massive transfer is more than just numbers on a page. It represents a once in a generation opportunity, but also a risk. Without careful planning, wealth that took decades to build can disappear in a single generation.

The question being asked is will that wealth be preserved and grown by the next generations, or will it be lost within a few short years? History shows that without the right planning and strategies, most inheritances don’t last beyond the second generation.

Who Is Benefiting

Generation X

Gen X (those born between 1965 and 1980) are already stepping into the driver’s seat. They’re inheriting from their parents while still working, running businesses, and often helping their own kids. On average, their household wealth now sits around $1.31 million, putting them ahead of many Baby Boomers in property and share ownership.

Millennials and Gen Z

Millennials (1981–1996) will receive the bulk of the transfer, but they’re facing a different landscape. Buying a home today is far harder than it was for their parents. In Sydney, the median house price as of April 2025 is now over $1.47 million. That’s why so many rely on the “Bank of Mum & Dad” to get a deposit together.

Gen Z will likely benefit too, but they may inherit later in life, when housing and investment markets look very different.

Women

Another key shift is that women are set to inherit more wealth than men. Why, because women generally live longer and often inherit from partners first. We were unable to find any specific estimates for Australia, but female-controlled assets are now projected to nearly double to $34 trillion by 2030. That will reshape investment decisions, with more focus on financial security, ethical investing, and long-term stability.

The Hard Truth Is Most Wealth Doesn’t Survive

Even with trillions in play, preserving generational wealth is notoriously challenging and the majority of family wealth doesn’t last.

• 70% of transferred family wealth is lost by the second generation
• 90% lose it by the third generation
• Only 5% grow or maintain wealth beyond three generations

Common Reasons Families Lose Wealth

The statistics show that historically, intergenerational wealth rarely extends to the second generation and below are the main causes.

No Clear Estate Plan

Without an up-to-date Will or succession plan, families are left navigating complicated legal processes. Assets can get tied up in probate, disputes can drag on for years, and the estate may not be divided the way you intended. Trusts and other structures, when in place, give clarity and protection.

Poor Financial Literacy

It’s one thing to inherit money, but another to know how to manage it. Without the right knowledge, beneficiaries often make poor investment choices, overspend, or simply don’t understand the tax implications of what they’ve received. Education is critical to turning a windfall into a legacy.

Family Conflict

Unfortunately, money can divide families just as easily as it can support them. Disagreements about “who gets what” often lead to legal battles, strained relationships, and wealth being eaten away by court costs. Open conversations and clear instructions can prevent unnecessary disputes.

Lack Of Governance

When there are no agreed “rules” about how wealth is managed or shared, decisions become ad hoc and inconsistent. Families that thrive across generations often have governance structures—like family charters or councils—that set values and expectations around how assets are used.

Over-reliance On Property

Property has been a cornerstone of Australian wealth, but relying too heavily on one asset type can be risky. Property markets move in cycles, and maintenance costs, land tax, or downturns can erode value. Diversifying into shares, superannuation, and other investments helps spread risk and preserve wealth.

The Inequality Gap & Why This Matters For Everyone

Wealth transfer isn’t evenly spread. In wealthier suburbs like Rose Bay and Vaucluse, the average inheritance is nearly $3.75 million. Meanwhile, in many outer suburbs, kids might inherit less than half a million.

That’s part of why Australia has one of the highest wealth inequality scores in the OECD. Even as overall wealth grows, it’s concentrating in fewer hands.

This means wealth transfers are reshaping property affordability. In Australia, parental support (“Bank of Mum & Dad”) is now the 10th largest lender, with average gifts exceeding $33,000 – $52,000 (depending on region), for first home buyers. For families who can’t provide that, the property ladder becomes much harder to climb.

The Bank of Mum & Dad Evolving Landscape

For decades, parents have helped children into property, but this is changing:

• 59% of under-30s now receive financial assistance from parents to buy homes, compared to just 3% in 2010.
• Yet 70% of Baby Boomers say they won’t sacrifice lifestyle to fund kids, and 80% won’t downsize to help.
• Instead, many prefer to transfer wealth after death, via inheritance.

This tension highlights the need for structured financial planning, involving equity-release, gifting strategies, or trust structures that balance parents’ retirement security with children’s needs.

Effective Strategies For Managing Wealth Transfer

If you’re serious about making sure wealth passes smoothly and lasts. there are some key strategies to consider:

Start Early With Estate Planning

Don’t wait until it’s too late. A clear, up-to-date Will is essential. Testamentary trusts can add tax advantages and protect assets. Superannuation nominations should be binding and regularly reviewed.

Get Everyone Talking

A lot of family wealth disappears because people don’t talk about it. Family meetings, sometimes facilitated by an adviser, can help align expectations and reduce disputes later.

Protect & Diversify Assets

Property is valuable, but it shouldn’t be the only thing. Balancing with shares, bonds, superannuation, and other investments helps spread risk.

Educate The Next Generation

It’s one thing to inherit money—it’s another to know how to manage it. Teaching kids and grandkids about investing, budgeting, and wealth management can make all the difference.

Bring In Professional Support

Independent financial planners, accountants, and solicitors can help families put robust structures in place. An objective third party also takes emotion out of tough conversations.

Final Thoughts

Australia’s $3.5 to $5.4 trillion intergenerational wealth transfer is already underway. Whether you’re preparing to pass on assets or receive them, the right planning can make the difference between a fragile windfall and a lasting legacy.

If you’d like to explore this further, reach out to the team at Manly Financial Services. We specialise in guiding families through this journey, offering tailored Intergenerational Wealth Services combining structured planning, family governance, and expert advice across a range of interrelated areas, to ensure wealth endures, not just for one generation, but for many to come.

 

Frequently Asked Questions (FAQ)

 

Important Disclaimer: The information provided in this article is general in nature and does not constitute financial advice. Please consult with a qualified financial advisor to discuss your individual circumstances before making any decisions.

References:

 

• Productivity Commission: Wealth Transfers and Their Economic Effects (2021)
• NAB: “The great Australian wealth transfer” (estimate of $3.5 trillion)
• The Australian: Generational Wealth Distribution
• Morningstar: The Growth of Women and Wealth
• Australian Bureau Of Statistics: Household Income and Wealth, Australia
• News.com.au: Boomers Cautious About Financially Supporting Their Children
• Grant Thornton: Preparing the next generation for Australia’s largest wealth transition
• McKinsey: The new face of wealth: The rise of the female investor
• AFR: 7 revealing charts about wealth in Australia