Leaving or receiving an inheritance can lead to family tension and divide. Insight looks at how to transfer wealth without damaging family relationships. Watch Tuesday, May 24 at 8:30pm on SBS or On Demand .
*Karen, 28, said her perspective on life has changed after receiving news of her inheritance.
Her mother passed away, leaving her family home in Malaysia to Karen and her sister and cousin. After the house has been sold and proceeds split, Karen expects to receive around $300,000.
“I was raised to work hard and not rely on anyone else,” Karen told Insight.
“Now to know you’re going to receive something you never thought you would at this age, it hasn’t made me think differently about working hard but it’s made me feel like while grieving I can spend money on counselling, on my healing, on getting through this which is a privilege I don’t think a lot of people have.”
According to The Grattan’s Institute’s 2019 report on inheritance, the most common age bracket to receive an inheritance from your parents is 55-59. The wealthiest 20 per cent of Australians get 38 per cent of the inheritance money; the poorest 20 per cent get only 8 per cent.
Karen said it’s the first time, to her knowledge, that her family has provided a her with financial safety net.
“It’s like the privilege of choice. I’m still going to work, I like working, but if I change my mind, I have choices that maybe other people don’t,” she said.
Intergenerational wealth and poverty is a big thing in Australia and there’s definitely kids who will get better access to education and stuff like that because of family inheritances they’ve received.
The Productivity Commission research released in December 2021 showed the Baby Boomer generation will pass on an estimated $224 billion each year in inheritances by 2050 as record housing and superannuation wealth is transferred to fewer heirs than in the past.
According to the research, in the past two decades absolute wealth inequality has increased as a result of these wealth transfers as the majority of wealth has stayed and circulated within rich families. Ultimately the Productivity Report found there will be no meaningful change to wealth inequality in the projected decades, with inheritances reinforcing the current economic conditions.
Declan pictured with his mother.
“Intergenerational wealth and poverty is a big thing in Australia and there’s definitely kids who will get better access to education and stuff like that because of family inheritances they’ve received,” Declan told Insight.
“I don’t have a problem with passing on wealth to your kids, I don’t think that’s inherently bad.
“I do have concerns around how it does create a class system and it’s one that favours those who have wealth to obtain more wealth at the expense of others.”
Declan said that not being able to rely on any future wealth transfers has affected his educational choices.
“I’ve chosen to do a Bachelor of Commerce with a major in International Business. It’s not necessarily what I would like to do but if I spent 20 years in that industry and worked my way up, I could manage to build a safety net to give to my mum, my sister and my family, and maybe kids in the future,’’ Declan said.
“I have always enjoyed writing and reading and literature and considered doing a degree in creative writing or philosophy which I am passionate about, but I don’t see that as a field where I can create a reliable income.”
Karen said recieving an inheritance has given her the time to focus on what really matters.
“I quit my job,” she said.
“I just wanted to take a break and look after myself and spend some time with my dad, who's alone now.
“I just didn't want to go to work and act like I was okay and I didn't feel the pressure to do that.”
