By Philip Morgan Rees, Milford Head of Private Wealth.

The ‘Sage of Omaha’, renowned US investor Warren Buffet, once said: “Someone’s sitting in the shade today, because someone planted a tree a long time ago”.

The quote speaks to Buffet’s long-term vision for investing, and is particularly poignant when it comes to intergenerational wealth planning.

Intergenerational wealth transfer is the movement of wealth between generations. Intergenerational wealth planning, therefore, is the strategy which ensures that process unfolds smoothly and in line with you and your family’s wishes.

Today, we’re also hearing another term – ‘The Great Wealth Transfer’. This applies specifically to the transfer of wealth from the Baby Boomer generation – a process which Forbes magazine described as the ‘greatest wealth transfer in history’.

The numbers are staggering, with the wealth transfer in New Zealand alone expected to involve well over $1 trillion of assets. Transactions of this scale obviously have many implications.

Let’s step through our top three:

Families can be complicated

Establishing a road map is really important. By having a plan around what will happen to your money, and who will be involved, you’ll be in a much stronger position to control your finances. This is the best way to avoid surprises and ensure your goals for your family are managed and met.

Involve them

Lots of people find it difficult to talk about money with their family, especially when planning for a time when they’re no longer around. But, when it comes to successfully passing on your wealth, it’s vital to involve them in the process. This includes introducing them to your financial adviser.

The first transfer of wealth is usually between spouses. Often the next generation will step up to help, taking over the management of the family’s finances from their parents, through their involvement in a family trust or via the use of Enduring Powers of Attorney. This transition takes time, so it’s important to start early.

The joy of giving

With intergenerational wealth planning, sooner is always better. Working with a financial adviser, you’ll start by identifying your own needs. This process is about enhancing your retirement through sound planning which ensures you’re not left short.

Remember you don’t have to be confined to strategies which unfold after you’ve gone. There’s nothing quite like the joy of giving while you’re still alive. Who says you can’t enjoy watching them in the shade of that tree you planted?!

If you would like to discuss your situation with one of Milford’s Wanaka-based Wealth Management team, please feel free to get in touch on 03 443 4695.

Intergenerational Wealth

First appeared in the NZ Herald on 18 January 2023.

Disclaimer: Past performance is not a reliable indicator of future performance. Milford Funds Limited is the issuer of the Milford KiwiSaver Plan and Milford Investment Funds. Please read the relevant Milford Product Disclosure Statement at milfordasset.com. Before investing you may wish to seek financial advice For more information on our financial advice services please visit milfordasset.com/getting-advice

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