Will your family intergenerational wealth strategy stand the test of time? A check list for ensuring a successful wealth transfer

by Jeff Steiner Partner Jeff Steiner is one of Australia's most experienced and respected family advisors. Jeff has spent many years working with successful families and dealing with intergenerational change. He regularly works with the wealth creators and their families in an executive capacity to develop strategies to achieve their goals across all aspects of their wealth, including their family office, businesses, investments, philanthropy and family members. Jeff is an independent board member of various family councils and foundations. Contact Jeff

In a previous article, we explored the reasons Why 70% of Wealth Transfers Fail. This alarmingly high failure rate has permeated so many cultures across so many eras that it has been entrenched in legend and inspired the proverb “shirt sleeves to shirt sleeves in three generations” (Andrew Carnegie (1835-1919) .

The proverb is underpinned by the stereotypical journey of many wealthy families, which goes something like this:

  • The first generation creates the wealth and lives a modest lifestyle;
  • The second generation then moves into the blue chip suburbs, educate their children at top private schools while at the same time maintain the family fortune; and
  • The third generation works less, expands the family and consumes the family’s capital, leaving very little for future generations, who are forced to roll up the sleeves, goes back to work and begin rebuilding.

Our research and experience shows that the shirtsleeves proverb is as relevant today as it has ever been. However, there are steps that families can take to learn from other families’ mistakes and help prevent a failed wealth transfer. More on that in a moment. First, let’s recap on the reasons why over two out of three families get it wrong.

Four reasons why wealth transfers are unsuccessful

Research shows that the primary causes of wealth transfer failures are:

  • Family conflict caused by breakdown of communication and trust. This can be wide spread across parents, children, siblings, spouses and more broadly cousins;
  • Failure to engage, educate and prepare the next generation of heirs;
  • Lack of clarity and alignment around the purpose of the family’s capital, including differing family expectations around lifestyle, investment in education, the family business, entrepreneurial ventures and philanthropy to name a few; and
  • The growth of family members simply outpacing the growth of family capital. This is a natural cause which, without a strategy to grow capital sustainably, rapidly depletes wealth.

How to make a wealth transfer successful

With over 60 years of experience working with generational families, Mutual Trust is uniquely placed to help families prevent wealth transfer failures.

We believe that the ultimate test of a family’s wealth – and by wealth we adopt a broad definition that includes financial capital, values, knowledge, education, health and wellbeing – is whether there is harmony between family members and a sense of fulfilment among individual family members.

To help families assess whether they are prepared for a successful wealth transition, we have developed the following checklist.


If you answered yes to most of the items above, your family will most likely beat the odds and be on track for a successful wealth transition. If you answered yes to less than half of these items it may be time to review your strategy.

Mutual Trust Pty Ltd ACN 004 285 330 (AFSL 234590). Liability limited by a scheme approved under Professional Standards Legislation. For participating members (other than for the acts or omissions of Australian Financial Services Licensees). This information is general in nature and subject to change. It does not constitute tax, legal or financialadvice. We recommend you seek advice specific to your circumstances before taking any action. Copyright © 2014 Mutual Trust Pty Ltd.
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