How to leave an inheritance when family is bad with money


Q: I am 74 and have made a will that splits inheritance 70% between two family members and 30% between three grandchildren.

As my family are very poor at budgeting or saving for the future, I hope you can help me make the right decision.

I was wondering if I could set up a new will designating a third of their inheritance to each person and two-thirds to long-term investments and/or super, so that the funds can give them an ongoing income for their later years.

inheritance family estate planning

I prefer this outcome as I do not want the family to have short-term access to all the funds, shares and property that have taken me a lifetime to accumulate.

Paul: I am delighted to get your email, Barbara. Too few of us have prepared an up-to-date will, let alone have thought deeply about the issue.

You could certainly give your views about limited short-term access to funds in your will but, while I am not a lawyer, I don't see how these views would be enforceable.

A suggestion I have for you is to put the longer-term money into a testamentary trust, established on your death. You could direct, via your will, money into these trusts.

We have these in our wills.

It allows my wife and I to ensure we care for those we leave behind and avoid the often poor impact of a lump sum that gets spent or lost.

A trust can distribute investment income only, it can provide money as a loan to repay a mortgage, or it can distribute capital as you feel appropriate, that is, you could release up to 30% on your passing, then the balance at set times in the future.

Well worth having a chat with your solicitor.


Paul Clitheroe AM is founder and editorial adviser of Money magazine. He is one of Australia's leading financial voices, responsible for bringing financial insight to Australians through personal finance books, the television show Money, radio, and most notably this publication, which he established in 1999. Paul is the chair of the Australian Government Financial Literacy Board and is Chairman of InvestSMART Financial Services. He is the chair of Financial Literacy at Macquarie University where he is also a Professor with the School of Business and Economics. Click here to email Paul your money question. Unfortunately Paul cannot respond to questions posted in the comments section. Please view our disclaimer here.
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