Navigate Advisory in conversation with Dr Jeffrey Scott
Over the next decade, around $3.5 trillion will pass from one generation to the next. Most of it will move between parents and their children.
Most families haven’t had that conversation. Plenty haven’t written anything down. And when nobody has decided, the law decides for them.
Dr Jeffrey Scott has spent more than 30 years in financial services, and this is one of the subjects he knows best. He is Head of Advice Strategy at MetLife Australia, and much of his work looks at where families come unstuck when money moves from one generation to the next.
Why do families end up fighting over inheritance?
Conflict occurs when expectations don’t meet reality, and there is no more contentious space for that than money and inheritances.
The expectations are further apart than most families realise. Only 3% of Baby Boomers believe they should leave as much money as possible to their children. Meanwhile 10% of Gen Z believe they should be left as much as possible.
Baby Boomers are also the generation most likely to say they should prioritise enjoying money they worked hard for, at 53%, and the most likely to intend to spend every dollar, at 10%. Younger generations are far less likely to believe an inheritance should be spent at all. And 12% of retirees don’t plan on leaving an inheritance to anyone.
When those expectations aren’t met, the consequences involve lawyers and courts. The only winners in that situation are the lawyers, and most of the time it is the estate that funds the argument.
The most effective way to close the gap is to have meaningful conversations with everyone concerned.
What happens if I die without a will?
In New South Wales, the Succession Act 2006 decides for you.
Who inherits if there’s no will in NSW
| Your situation | What happens |
|---|---|
| Spouse only | Spouse receives everything |
| Spouse plus that spouse’s child | Spouse receives everything |
| Spouse plus a child who isn’t the spouse’s | Spouse receives personal effects, the statutory legacy and 50% of the remainder. The non-spouse child receives the other 50% |
| No spouse and no children | Parents inherit the entire estate |
| No spouse, children or parents | Brothers and sisters inherit |
| No spouse, children, parents or siblings | Grandparents inherit |
| None of the above | Aunts and uncles inherit |
| No surviving relatives at all | Revenue NSW inherits the entire estate |
The statutory legacy is $611,873.50 as at March 2026.
The Act also defines the terms. A spouse means married, or in a domestic partnership of two or more years, or in a registered relationship, or you have children together. A child means biological, adopted or surrogate.
Does my Will cover my superannuation?
Does my Will cover my superannuation?
No. Superannuation is not an estate asset. It only passes through your will if it’s directed there, or ends up there because no nomination was made.
What controls your super is your nomination:
- No nomination. Subject to the fund’s trust deed, it may be paid to your estate — or the trustee may pay someone who qualifies as a dependant under superannuation law, but who you never intended to receive it.
- Non-binding or preferred nomination. The trustee is guided by your wishes, but not bound by them.
- Binding nomination. The trustee is bound, if the nomination is valid. This is usually the better option — though not always, which is why it’s worth getting advice on your own situation.
If it is paid to your estate, the next question is whether there is a valid will.
Don’t set and forget a binding nomination. Things change.
What do marriage, divorce and separation do to those documents?
What changes your documents, and what doesn’t
| Marriage | Divorce | Separation or break up | |
|---|---|---|---|
| Binding death benefit nomination | Does not invalidate it. It remains valid as long as your beneficiaries still qualify as dependants under superannuation law | Does not invalidate it. An ex-spouse no longer qualifies as a dependant under superannuation law, but may still be a dependant for tax purposes | Does not invalidate it |
| Will | Invalidates your will, unless it was made in preparation for that marriage | Does not invalidate your will | Does not invalidate your will |
A binding nomination must be signed and dated by two adults who are not beneficiaries.
There is a related issue worth resolving, which is your relationship status. Get married, get divorced, or register your relationship. Don’t leave it to the superannuation trustee to determine what your relationships are. A spouse can include the person you want to divorce but haven’t yet, someone you are in a de facto relationship with but don’t intend to make permanent, a partner you have no intention of marrying, or a same sex partner your family and friends may not be aware of.
Isn’t this only a concern later in life?
No. Over 31,000 Australians who die each year are under the age of 65.
There is also the question of capacity, not just death. Approximately 15% of all Australians under 65, or one in seven, have a disability. Depending on age and gender, between 2.7% and 10.3% of Australians under 65 have a severe or profound disability.
That affects earning capacity. The labour force participation rate for people aged 15 to 64 with a disability was 60.5% in 2022, compared with 84.9% for people without a disability.
Does helping the kids now change what’s left later?
Yes, and there is a name for it: KIPPERS, or kids in parents’ pockets eroding retirement savings.
The Bank of Mum and Dad is potentially the only way many children can now enter the housing market. Adult children rely on their parents for financial support, and that erodes their parents’ savings.
The factors keeping young adults at home are well documented: unemployment, low wages, high costs of living, student debt, the cost of housing, parents paying their living expenses, later marriage, smaller families, and insecurity of employment.
The consequences fall on the parents:
- Retirement savings depleted, or funds intended for retirement diverted
- Retirement delayed
- Reduced quality of life and standard of living in retirement
A successful and financially viable retirement may well be blocked by children who need to stay under the parents’ roof.
What questions should families be asking?
These are the questions worth working through together.
About your parents and grandparents
- Do they look after any of your children, or provide any other support for you?
- What is their health like?
- Do they want to stay at home as they get older?
- How will you care or financially provide for them if they need nursing care?
- Is a sibling the primary carer?
- Do they have a will, and do your siblings share the same expectation about any potential inheritance?
About your spouse or partner
- Are you married or de facto?
- If you have an ex-spouse, are you still married or divorced?
- Do you have children from any prior relationships? Does your partner?
- What is the relationship between your children and their step-parent?
About you and your children
- Who would you like to receive your estate, and is there anyone you would specifically like to exclude?
- What is your relationship with your siblings like?
- Are any of your children in poor relationships?
- Are any of your children disabled?
- Are any of your children in financial trouble, or dealing with drug, alcohol or gambling problems?
- Are you looking after any of your children’s children?
- Are you financially supporting any of your children, and do any of them believe they are financially dependent?
Dr Jeffrey Scott is Head of Advice Strategy at MetLife Australia, with more than 30 years in financial services. He created the first terminal illness benefit for life insurance products in Australia. He has delivered over 2,000 presentations and lectured at the University of Technology Sydney and the University of New South Wales.
Navigate Advisory offers complete financial confidence through financial planning, accounting, business advisory, lending and property advisory, all in one place. Offices in Balmain, Brighton-Le-Sands and Hurlstone Park.
This article is general information only and doesn’t take your personal circumstances into account, and is not intended to constitute financial product advice. Although the statements of fact in this article are obtained from sources that are considered reliable, no warranty as to the accuracy, reliability, or completeness of any such information is provided. Estate planning involves legal considerations, so please seek your own legal advice and tax advice before acting.