What Keeps Wealthy Families Up at Night?

Let’s be honest: nothing stirs up family drama quite like inheritance. Even the most harmonious families can find themselves at odds when it comes to dividing up the family pie. As advisers, we’re often the first line of defence against these disputes, and the ones who get the late-night calls when things go sideways.

A recent survey of high-net-worth Aussies (but the lessons ring true here in NZ) found that the top inheritance worries aren’t about investment returns or market crashes. They’re about fairness, family dynamics, and the all-too-human messiness of money. Here’s what you need to know, and what you can do to help your clients avoid the five biggest blunders.

Consider Kevin, a self-made farmer who built a $10 million dairy operation. In his will, Kevin left:

• The entire farm (about 90 % of the estate’s value) to his son, Luke, who’d worked the land since he was 17

• $300 000 each to his two daughters, Anna and Grace, both city-based professionals.

Sound lopsided? The sisters certainly thought so. They sued under the Family Protection Act, arguing that an even three-way split was only “fair”.
Here’s what happened.

“Despite the son effectively acquiring the farm worth about $10 million, compared to the daughters’ $300 000, the Court rejected the daughters’ claims … giving weight to the clear intention of the parents for the farm to pass to the son.”
Deirdre Watson, summarising Ashworth v Lambie [2012] NZHC 1110 [Watson article]

The lesson? The law cares about “adequate provision,” not perfect equality. Anna and Grace were financially comfortable professionals; Luke’s livelihood was tied up in keeping the farm intact. Adult children have to prove real need - think illness, unemployment, or disability. A clear, well-drafted will is your client’s best friend. The clearer the intentions, the less room for argument.

But here’s where it gets tricky: “equal” isn’t always as simple as splitting things 50/50. If one child gets the business, another the house, and another the shares, those assets come with different risks and tax consequences. Advisers need to help clients look at the net position—after tax, after fees, and factoring in liquidity and risk.

And what about gifts made during life? If one child got a $2 million head start, should the others get topped up later? Equalisation clauses can help, but inflation and timing matter too. A $1.5 million gift ten years ago isn’t the same as $1.5 million today.

It’s one thing to leave a legacy; it’s another to trust the next generation to manage it. Many wealthy parents worry their kids aren’t ready, or that a sudden windfall will do more harm than good.

This is where education and gradual involvement come in. Encourage clients to bring their children into the conversation early. Family meetings, financial literacy sessions, and even involving them in the family business can make a world of difference. The goal isn’t just to pass on money, but to pass on values and skills.

No one likes to talk about taxes but ignoring them can be costly. Different assets attract different tax treatments, and the structure of the estate can have a big impact on what beneficiaries actually receive.

Advisers should work with clients to map out the after-tax value of each asset, consider the impact of capital gains, and plan for any fees or debts that might eat into the estate. Sometimes, a little planning now can save a lot of heartache (and money) later.

We’ve all heard the common theory on wealth ‘One generation makes, the next maintains it and the third loses it’. It’s a classic worry: will a big inheritance sap the next generation’s drive? Some clients want to stagger distributions, set up trusts, or tie gifts to milestones like finishing university or starting a business.

There’s no one-size-fits-all answer, but it’s worth having the conversation. What do your clients want their legacy to achieve? How can the inheritance support, not undermine their children’s ambitions? Sometimes, the best gift is a little structure and a lot of guidance.

No one wants their legacy to end up in court. But without clear planning, that’s exactly what can happen. Disputes over wills are on the rise, and they can tear families apart.

The antidote? Clarity, communication, and good advice. Encourage clients to talk openly with their families about their intentions. Document everything. And revisit the plan regularly—life changes, and so should the estate plan