Why some rich parents won’t leave everything to their children
Suzy Rostkier, who spent her professional life at a large local bank, shares her estate between four charities, including Alfred Hospital, her two daughters and six grandchildren.
Rostkier says she has been “very open” with her children about the plans, including showing them her will and involving them in working with the charities that will be the beneficiaries.
“They understand my commitment to giving back to the less fortunate,” she said. “The kids say it’s my money, I earned it and it doesn’t matter if I don’t let them do everything.
Katherine Raskob, chief executive of Fundraising Institute Australia, a leading professional fundraising organization whose members raise around $ 12 billion annually, said income from will charitable giving is expected to double by 2040 to reach around $ 4 billion.
This week, over 100 Australian charities will be encouraging people to make a will and use it to leave a gift for their favorite charity.
It also involves putting in place safeguards to ensure that parents’ last wishes are not overturned by contentious children.
The courts will consider 15 issues when they consider the children’s claims that they did not receive enough from their parents’ estate. These range from the value of the deceased’s estate to whether the parent has already provided for their children during their lifetime.
“It is important to make sure that you leave [family] “Enough,” says Brian Hor, Special Advisor for Retirement and Estate Planning for Townsends Business & Business lawyers. “It can be very different from family to family. Since children are generally eligible to make a claim on their parents’ estate, there is really no way to guarantee that they won’t make a claim.
A recent academic analysis from the University of Victoria and the Australian Center for Health Law Research found that financially independent children are the most likely to challenge a will because of “need, greed or the law.” “. The report also found that claimants have a high probability of success through mediation or the courts.
Anna Hacker, National Estate Planning Manager at Australian Unity Trustees, says capping children’s inheritance is a growing trend among Australian parents who have generated wealth through their businesses.
“It’s usually the wealth of the first generation,” says Hacker. “Parents had to work hard for their money and want to make sure the kids share their work ethic.”
Will specialists and donors provide strategies on how parents can distribute their wealth around:
- Hor recommends a phased approach that allows children to access part of their inheritance when they reach a certain age. “This could include accessing a percentage of the inheritance after reaching 25 or 35,” he says. “In the meantime, trusted people are appointed to manage the overall legacy for the education, maintenance and benefit of the child.” This could include paying additional lump sums at important milestones, such as completing higher education, getting married, buying a home, or having their first child.
- Rostkier has involved his children and grandchildren who are quite old in his charitable work, such as Meals On Wheels and a soup kitchen. “I take my grandchildren to the Meals on Wheels delivery,” she says. “They mingle and discuss. They hate that they can’t come with me during the pandemic. “
- Hacker recommends discussing with beneficiaries what they are doing and why they are donating to charity and not giving them the entire estate. It may even involve professional help, counseling, or financial counseling to resolve underlying family issues.
Rostkier says that having her children help her with social work “puts them in a state of mind” that she inherited from her parents. Hor adds, “This can not only help discourage a challenge to the will after the parent leaves, but also get their child to participate with the goal of responsibly managing the family’s wealth and leaving a lasting legacy for them. future generations. “
Despite the risks, more than half of Australians do not have a will. Of those, about 40 percent have no idea what happens to their assets if they die intestate, according to lawyers for Maurice Blackburn.
These risks are compounded by “blended families” and a threefold increase in unmarried couples, according to the Australian Institute of Family Studies.
Disputes can also be extremely costly and take decades to resolve.
For example, three of the five children of late airline mogul Reg Ansett took nearly 30 years to earn more of his estate. Ansett gave most of his fortune to schools and charities, leaving only a fraction for his children in the belief that they should make their own way, as he had.
“There have been other cases involving deceased wealthy parents where the court refused to give the child plaintiff more than what was provided to him under the parents’ will because they had already received what the community might consider their parent ‘enough’ for their lifetime, ”Hor says.