Wealth transfer: Setting the next generation up for success

We’ve all heard it before: shirtsleeves to shirtsleeves in three generations, the third generation curse, the 70% rule. In Chinese culture, the proverb is ‘fu bu guo san dai’. Translation: wealth never survives three generations.

A list of adages longer than your arm, they’ll all have you believe the same thing: That by the third generation, wealthy families will have lost it all.

A flawed study in the early 80s only added fuel to the fire, keeping alive what is, ultimately, a myth.

It’s human nature to believe a story when you’re told it over and over. The problem with this one is that parents often respond by sheltering their children from financial matters. And in doing so, leaving them less equipped to make sound financial decisions when wealth does eventually pass to them. The myth, then, becomes a self-fulfilling prophecy.

When beneficiaries haven’t had the opportunity to develop their own financial acumen and are kept in the dark, that’s when things often go awry. They end up thrust into the deep end, forced to swim in an ocean of things they don’t understand. Add the inherently high emotions of this transition period into the mix, and it can all become very overwhelming, very quickly.

At its core, a strong estate plan is a vehicle to protect and pass down your legacy. As wealth advisers, we know how much the content of this document matters. But equally critical is the context—the knowledge and capacity of those who will one day inherit. This is why, with our clients, a component of the estate planning conversation will always revolve around what they can do to prepare their beneficiaries.

So, what can you do to make sure your beneficiaries are ready?

1. Instill good financial habits

The truth is, most schools fall short when it comes to teaching personal finance. Too many young adults step into the world without understanding the basics of financial organisation. Without a grasp of fundamentals like budgeting, debt management and saving, being handed a lump sum of money is almost guaranteed to make life more complicated.

That’s why it’s so important to start strengthening financial literacy well before an inheritance is passed on. And while the education gap is often obvious in younger generations, the point isn’t that financial literacy is only for youth. Rather, it’s that it’s never too early or too late to build financial skills.

The best place to start is with what you already have. I often work directly with clients’ adult children, helping them put structure around their own money, setting goals, and learning to make trade-offs. In some families, parents even subsidise the cost of this advice because they understand how important this groundwork is for their children as individuals, and for their family’s legacy.

2. Bring them into the fold

When it comes to preparing beneficiaries, one of the most valuable steps is simply letting them in on some of your financial plans. This doesn’t mean laying every detail bare. As I say to my clients, there’s always going to be a line—details you prefer to keep private. That is perfectly understandable and there is no obligation to ever share the full picture with any of your family members if you don’t feel comfortable doing so.

But some level of openness is essential. If children are left completely in the dark, they can find themselves blindsided when the time comes, facing not only grief but also a financial position they have no idea how to navigate. By gradually sharing aspects of your financial circumstances, they’re able to build their understanding over time, without the overwhelm.

For some families, this looks like inviting children into specific adviser meetings. They don’t need to be involved in every conversation, but seeing how decisions are made and getting familiar with the language can make a huge difference. It helps beneficiaries feel included while also building familiarity with the adviser they may one day rely on.

3. Stay on top of record-keeping

In a wealth transfer, the information that comes with assets is often just as important as the assets themselves. Properties, business structures, and investment accounts can carry decades of records. Without clear documentation, beneficiaries may be left trying to reconstruct the full picture, sometimes stretching back twenty years or more.

In many cases, the quality of these records depends on the habits maintained during your lifetime. A long-standing relationship with an accountant can make all the difference here. An accountant who has managed your affairs over many years will hold the detailed files and history your beneficiaries will need and help them connect the dots.

For families, this means fewer gaps to fill, fewer questions to chase, and a much clearer path through what can otherwise be a complex process. Record-keeping may not be the most visible part of estate planning, but it is one of the most practical ways to make wealth transfer easier on those who come after you.

And beyond the paperwork, consider sharing with your children why you hold certain assets.

Does the asset carry personal meaning? Was it previously inherited or tied to a significant life event? These stories shape how beneficiaries perceive and value what they receive—and can foster a deeper sense of stewardship when the time comes.

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In my experience, families who focus on these areas generally have a smoother wealth transfer experience. Of course, the reality is that wealth transfer will never be without its challenges. There will always be moments of complexity, emotion, bumps in the road. But none of these need to derail the outcome. When beneficiaries are prepared and supported, families can move through the process with peace of mind.

Every family’s circumstances are different. If you’d like tailored advice on preparing your estate and beneficiaries, get in touch for a confidential consultation: Jes Wilkinson.

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