Episode 9

Intergenerational Wealth: Preparing the Next Generation for Financial Inheritance

In this episode of Activate Your Wealth, David Murdoch discusses the critical aspects of preparing the next generation for wealth inheritance. Key topics include:

  • The importance of financial education for children in today's digital economy
  • How different generations approach money and wealth differently
  • Practical strategies for teaching children about saving and investing
  • The role of structures like testamentary trusts in protecting family wealth
  • Why binding financial agreements matter in modern wealth planning
  • How to have meaningful conversations about money across generations
  • Balancing support with responsibility when transferring wealth
  • Digital alternatives to traditional saving methods for today's youth
  • Special considerations for family members with unique challenges
  • The "joy of giving" versus waiting until inheritance

David shares practical examples, including how small, consistent contributions can build significant wealth over time, and why understanding the "why" behind inheritance is crucial for recipients.

You can get in contact with David Murdoch on LinkedIn https://www.linkedin.com/in/davidsmurdoch/

Or you can reach out to Paxton Bridge

https://www.linkedin.com/company/paxton-bridge/

https://paxtonbridge.com/

---------------------------------------------------

This podcast has been produced by: https://podcastsdoneforyou.online

Transcript
Anthony Perl:

Intergenerational wealth.

2

:

Preparing the next generation

for financial inheritance.

3

:

Welcome to Activate Your Wealth.

4

:

In this episode, David Murdoch,

the principal advisor at Paxton

5

:

Bridge and the pioneer of wealth

activism, talks about preparing future

6

:

generations for wealth inheritance.

7

:

You'll learn how to educate children

about financial responsibility, why

8

:

structures matter in wealth protection,

and how to have meaningful conversations

9

:

about money across generations.

10

:

I'm your co-host Anthony Perl, and

whether you're a successful business

11

:

owner, executive, or family seeking

to align your wealth with your values,

12

:

it's time to activate your wealth.

13

:

David, when we talk about

the next generation.

14

:

How do you prepare them to accept or to

be ready for wealth for inheriting wealth?

15

:

David Murdoch: Oh, Anthony,

that's an interesting one.

16

:

Look at that.

17

:

Again, it's, I feel

like a lawyer sometimes.

18

:

It depends.

19

:

That is always really interesting because

some family groups don't because I,

20

:

well, I don't need to worry about it.

21

:

There's X coming my way.

22

:

Then the other side is that they're

very open and very transparent

23

:

around the way things are.

24

:

Therefore, because we have, in the

last 20 years in Australia, we've had

25

:

some individuals and family groups

have made an enormous amount of

26

:

money, like either very good operating

businesses or a lot of real estate.

27

:

Like it's not, we don't

need to shy away from that.

28

:

That's the reality.

29

:

But you've had someone, you know, again,

if you talk about a post-war immigrant,

30

:

so you're in the fifties, you know,

they've arrived suitcase clothing on their

31

:

back, and they just work bloody hard.

32

:

Okay, so they've been through

that difficult period.

33

:

They've started something that builds

it, and we've probably had some ups

34

:

and downs along the way, and then

another generation may have come in

35

:

and helped and, but sometimes that

third generation never really sort

36

:

of seen those difficult periods.

37

:

So part of it is about understanding

and irrespective of the money that's

38

:

available within the family, I think

it's very important for kids to

39

:

work to understand that there's a

whole range of jobs that need to be

40

:

done, and things just don't happen.

41

:

By, I mean, AI is not

gonna take away every job.

42

:

Things still need to be done.

43

:

Also to understand, it's like, wow,

I've worked four hours and I got paid

44

:

eggs, and then I'm about to go out for

drinks with friends, and that drink

45

:

that I'm purchasing is 20 to $25.

46

:

That's, that's an hour's work.

47

:

Like Yeah, it is like really simple

things like that to get people to

48

:

understand, or even the simplicity

of, you know, running a car.

49

:

Well, you're gonna pay for the petrol

and you need to save to pay for

50

:

the registration and the insurance.

51

:

It's like, oh, like yeah, I know.

52

:

It's about five to six

grand a year to run a car.

53

:

That's after purchasing.

54

:

That's just keeping it on the road.

55

:

Fuel, maintenance, tire, like all that.

56

:

Oh, okay.

57

:

But so again, part of this

education is getting it early.

58

:

Being open and transparent, but

again, that's a personal choice.

59

:

Some people don't wanna talk about it.

60

:

Other people are quite open about it.

61

:

But also as we've got longevity in the

older generation, that's also a challenge

62

:

because you might have a 90-year-old with

a 70-year-old child, with 45-year-old

63

:

children, and then grandchildren.

64

:

So you've got these four generations

and it's gonna cascade its way through.

65

:

How do we make sure that they understand?

66

:

Again, it goes back to that

question that I said before.

67

:

How will future generations know

the why behind what they receive

68

:

and have they learnt and appreciate

and show a bit of respect on how

69

:

hard it has been to make this money?

70

:

And there's definitely, when

you talk to business owners,

71

:

there's always a bit of luck.

72

:

I think that's for anyone in, sometimes

it's just, you know, and other people

73

:

it's like, oh my God, I just seem to have

got so much bad luck that the business.

74

:

It didn't work, but that dust

themselves off and they go round again.

75

:

You know, what would you learn

if you had your time again?

76

:

And that's part of it, like

bringing this knowledge and yeah.

77

:

And you're not gonna allow them to

drown, but you might let them swallow

78

:

a few gobs of water along the way.

79

:

So again, that it's all about education.

80

:

And I suppose probably really talking

about it and being just open around

81

:

what it is that you'd like to achieve.

82

:

Anthony Perl: And I think the education

part is an interesting one because.

83

:

What older generations were able

to achieve is very different

84

:

to what can happen now.

85

:

I mean it, the fact of the matter of

the cost of living is very different.

86

:

So Yes.

87

:

You know, our grandparents, for

example, could work a certain amount

88

:

of hours and get ahead and be able

to buy the house in a time and pay it

89

:

off completely and buy the investments

in one shape or full or another.

90

:

Yep.

91

:

Whereas that same amount

of effort does not.

92

:

Necessarily deliver the

same amount of reward today?

93

:

Correct.

94

:

And that's

95

:

David Murdoch: where

it's really difficult.

96

:

But again, I think it still comes back

to irrespective of the overarching

97

:

wealth inside a family group or even

just a single family, there's still

98

:

an ability to educate rather than

I'll just tap it Mum or dad, hang on.

99

:

If I'm gonna just tap it, I've gotta get

the money in there to be able to tap it.

100

:

And I think we are moving away from.

101

:

The use of cash.

102

:

In a lot of circumstances, people

just cannot, I mean, there's lots

103

:

of cash around, but you know,

kids, they're not familiar with it.

104

:

They just don't deal with notes

and coins like, and that's

105

:

nothing out of the ordinary.

106

:

It's just the way it is.

107

:

So therefore, how can we educate them

and talk to 'em about, just to understand

108

:

that benchmark, where it sits, and,

and also to understand that not every

109

:

family is in the same position as others.

110

:

There's a spread across society

and you may be in certain areas.

111

:

You go, well, everyone here is so and so.

112

:

It's like, not really.

113

:

You know, some people when you

talk about paying for education.

114

:

There are some families that are, both

parents are working two jobs to get

115

:

their child into, or children into a

school because their value is education

116

:

and they're willing to sac, you know, it

goes back to the point around sacrifice.

117

:

They're habit to sacrifice because they

believe that that is appropriate for

118

:

their child to get a good education

to move on to the next thing.

119

:

And so then they, there's an

acknowledgement that sits in

120

:

there that it's been a really hard

grind, whereas other groups, it's

121

:

like, whatever, like it's not.

122

:

30, $40,000, it doesn't really matter.

123

:

Whereas someone else that, you

know, as I said, they're running

124

:

two jobs to get their kids through

because they really value that.

125

:

And they said that's

important for them to do that.

126

:

Anthony Perl: And it's interesting

what you say about the whole

127

:

idea of not having cash anymore.

128

:

We did something the other day

where we had a piggy bank that I

129

:

think my wife had got many, many

years ago, and she'd been putting

130

:

coins in more so than I had because

I've dealt with cash less and less.

131

:

In fact, to me the other day.

132

:

You know, have you been

putting anything in there?

133

:

And I said, I can't remember the last

time I received or used any cash.

134

:

I don't have any.

135

:

It's like, it's just

everything is just on my phone.

136

:

But we had this piggy bank that

was full and she was said, oh look,

137

:

why don't we finally break it open

so we can maybe buy this bit of

138

:

furniture that we wanted to buy?

139

:

And I'm sure there's not much in there.

140

:

I mean, I weighed this thing and thought,

oh, there's a fair few coins in there,

141

:

but it's not gonna be much, much value.

142

:

But we ended up, we smashed this thing.

143

:

I can't remember the last time I

smashed, because it was not one of the

144

:

ways, one three, you could, oh, your

wife didn't your towels to smash it.

145

:

You actually had to smash it.

146

:

So we had to wrap it in the

towel and actually smash it.

147

:

And actually it was quite joyous in

watching the kids as well, seeing us and,

148

:

you know, she was actually left there.

149

:

She, my wife actually had enjoyed

counting the money and the kids seeing

150

:

that saying, well, we've got this,

you know, few hundred dollars that

151

:

we didn't think we had and we'd been

saving towards, wanted to put it towards

152

:

something that's of value to both her

and I and that's what we're gonna do.

153

:

And she turned around then and

bought me a present, bought

154

:

me a, a new little money box.

155

:

Yeah.

156

:

Keep adding to, to keep

adding to in the future.

157

:

And I said, well, I get some cash maybe.

158

:

David Murdoch: But see you can do

things like that in a digital space.

159

:

Yeah.

160

:

So this is just changing that mindset.

161

:

And part of that is saying, and this

is where these monthly contributions

162

:

that might go into, you know, you might

have a, like an inequity portfolio

163

:

for a child or a grandchild that

they get some holiday out birthday

164

:

money, or as a parent might decide to

put 50 or a hundred dollars a month.

165

:

Into this account and you can sit with a

child and let them see that that starts to

166

:

grow and the fluctuations in the market.

167

:

But the objective of that is that when

they go to smash that in the sense of,

168

:

well, we've built this up and I want

you to contribute as you work as well.

169

:

And you look at the percentage split

that sits in there, and it might

170

:

only be 10% of what they make every

week when they're working over and

171

:

above their super contributions.

172

:

But again, this is educating

us through this whole process.

173

:

But those proceeds are

either to be used for travel.

174

:

'cause I think it's, that's a, that's

a, one of the greatest gifts is travel

175

:

and education or keep building it.

176

:

Or you may not want to use it for

travel, but you wanna keep it.

177

:

But it's to maybe to potentially

put themselves into a piece

178

:

of real estate in time.

179

:

So all of a sudden they're watching

this over the years, but that time

180

:

period might be 10 or 15 years

until they actually get to Breakers.

181

:

But what they've done is that

they've watched how much that works.

182

:

And that was, wow, that was really simple.

183

:

It's ugly.

184

:

I've said to her, even to my

own children, that even 10

185

:

bucks a week, you won't feel it.

186

:

Well, that's five grand, 10 years.

187

:

You know, you start to build

this money up over time.

188

:

It's a little bit here, a little bit

here, a little bit here, a little bit.

189

:

And that then added into

like it's just habit for me.

190

:

And once they're into the habit, they

don't change it because once it's taken

191

:

out of their digital bank account.

192

:

Across to another thing, which is

no different than taking the coins.

193

:

You know, you've broke a $10 loan, you've

got a few coins, I'll just drop them in.

194

:

You've forgotten that you had them.

195

:

They're sitting in the piggyback.

196

:

Same concept.

197

:

And so it's just trying to communicate

on that basis with people that once we

198

:

start setting up some of those systems

for people, it's actually quite painless.

199

:

Especially I go, oh, but

I'll need that when I go out.

200

:

No, no, no, no, no.

201

:

Won't even feel that.

202

:

You haven't got it.

203

:

It's gone.

204

:

It just automatically gets taken out.

205

:

Every month and it just

compounds over time.

206

:

And it is, it's amazing.

207

:

There could have been a really heavy with

a hole on a 2 cent pieces or 5 cent pieces

208

:

sitting in there, but if it was $2 coins

or $1 coins every time, put in same space,

209

:

but a lot more, lot higher dollar value,

210

:

Anthony Perl: you know, and won.

211

:

And it was, by the way, I mean, you

know, well, I don't think we've got any

212

:

2 cent coins anywhere left any anymore,

but, uh, but we certainly had the two

213

:

and $1 coins in there, so, you know, I,

I remember saying to the kids, oh, it's

214

:

probably only a hundred bucks in there.

215

:

It's probably, you know, it's

not gonna get us very much.

216

:

But it wasn't at all.

217

:

It was, there was a few hundred

dollars in there and it just

218

:

accumulated over a period of time.

219

:

But, but you're right.

220

:

I mean, I think we have to be more

active in educating, because the school

221

:

system doesn't give that to kids.

222

:

David Murdoch: Well, I don't think

it's, I don't think it's appropriate

223

:

to say the school system should.

224

:

I think the teachers across the country

have got enough on their plates and I

225

:

think that's unfair to put that life skill

upon the school and the education system.

226

:

It would be wonderful if they could,

but I think you, there'd be anarchy if

227

:

the teachers were told that now they

need to introduce this as another.

228

:

Yes, there may be an option for

kids to do something and there's

229

:

some very good digital education

programs that people can put forward.

230

:

My personal view is I do think

it's a parental responsibility.

231

:

You know, you try, if you've got

children, you gotta educate them

232

:

in life skills and one of those

life skills is money management.

233

:

I just think it's one of those things that

you need to be encouraging children to do.

234

:

Now some people say, oh,

I don't have the skill.

235

:

Okay, well let's go find that skill

to help you do that, because there

236

:

are lots of digital opportunities

for them to understand how it works.

237

:

Is it Jones clear that, I can't

remember if it's Jones Clear, that

238

:

I think makes a concept about.

239

:

Comment about the reason that people

fail and their plans due to the lack

240

:

of assistance that they have in place.

241

:

Something along those lines.

242

:

If you get your systems right,

then things roll through.

243

:

So again, if you can digitally record to

capture, to draw money out, every time

244

:

you get paid, it just automated and,

and you don't even think about that.

245

:

It just goes and it, but it's

kept in a different environment.

246

:

And so primary bank account, and

they're on their app and they see

247

:

it, oh, I've only got $50 and not 60.

248

:

Okay.

249

:

Anthony Perl: They'll spend to

what they've got in their account.

250

:

It goes back to that saying,

isn't it that are you failing

251

:

to plan or planning to fail?

252

:

David Murdoch: Correct.

253

:

Again, it goes back to the comment before

about your DI and your bank account.

254

:

That's what tells the story.

255

:

You know, Uber Eats eating

ours, just multiple coffees do.

256

:

John go, but I haven't got any money.

257

:

I'm like, you better?

258

:

This is telling me in the last month.

259

:

You've spent X amount on Uber

Eats coffee, all of these things.

260

:

It's like, could you do that differently?

261

:

Oh yeah, I could.

262

:

Yeah.

263

:

Okay, so, so there's a hundred dollars.

264

:

So put that a hundred dollars into

your investment account, purely because

265

:

you've just been conscious of where your

266

:

Anthony Perl: spending's going.

267

:

And I think then we take it from

that education at that level.

268

:

But at the same time, you also have

to put structures in place, don't you?

269

:

To protect the wealth.

270

:

David Murdoch: Yes.

271

:

So that's always an interesting one.

272

:

I mean, one of the queries

that continually comes up is

273

:

this access into real estate.

274

:

And so, you know, we do definitely

want to get people to look at it from

275

:

the point of view if the bank of mum

and dad or bank of grandma or grandpa

276

:

is being utilized, which again, I,

I think it's a really good thing.

277

:

Like it's gonna cascade

down, eventually wanna do it.

278

:

Where again, this comes into the joy

of giving as much as the recipients

279

:

attaining it, but do it in a way

that it's a loan to the child.

280

:

Not a pure gift, purely on the basis

that relationships break down, therefore

281

:

you can call it back and relent it.

282

:

Do you know what I mean?

283

:

There's just some smarts that

you can deal with that that

284

:

then evolves moving forward.

285

:

I also think it's important from people's

when you're dealing with the structures

286

:

of inheritance that you have, you

know your wills in place, that it's a

287

:

testimony, trust, and not a basic will.

288

:

Like why would you wanna pass

the asset to a child on a, in an

289

:

individual basis if they work in

a profession that's high risk?

290

:

You can always.

291

:

Not set up the will structure, the

testament trust within the will.

292

:

You can choose not to do that, but

if you've only got a basic will,

293

:

you can't insert a testament trust.

294

:

So it doesn't give you as many options.

295

:

So to me, that's also how do you

cascade through some of those scenarios.

296

:

The other one that we're seeing more and

more of is binding financial agreements.

297

:

So, you know, agreements between a family

group and a child and a partner coming in.

298

:

Which is always a challenge because

we say, oh my God, it's so unromantic.

299

:

We don't want to do that.

300

:

But this is part of the early education.

301

:

It becomes normalized.

302

:

It's like, well, you know, in my

family, this is the way we do certain

303

:

things, and it works to both sides.

304

:

It gives a bit of certainty, but

it's an agreement that says, prior to

305

:

relationship coming together, this is

what you've had and this is what we

306

:

would agree to if this was to occur.

307

:

Again, not an easy conversation, and

I accept that is a difficult one.

308

:

Sometimes I think it's important.

309

:

I think some of the younger ones are.

310

:

Yeah.

311

:

Well, I don't see what the problem is.

312

:

I'm, I'm happy to have that discussion.

313

:

They, they're seeking independent legal

advice on both sides and you move forward.

314

:

It's a really hard one, especially

if someone has been a good saver or

315

:

investor and they're younger and then.

316

:

May not join with a partner

until they're in their thirties.

317

:

They might have had 10 years

of work and it's sort of, wow.

318

:

And that doesn't matter just on their,

from a family coming down, it could be

319

:

on a personal level, but no, no, no.

320

:

I want to have a binding financial

agreement in place if we are gonna

321

:

partner up because I'm not about

to give away my heart earned work.

322

:

So that structures, I think, are

very important for people to have in

323

:

place and to consider them what the

options would be available to them.

324

:

Anthony Perl: You know, you talk

about that in a partner situation, but

325

:

then there's also those conversations

that you need to have with family

326

:

investment as well, isn't it?

327

:

Because it's one thing to be

saying, okay, you are making a

328

:

decision to partner with someone and

having that kind of an agreement.

329

:

Now you are together and you're

wanting to transfer some of

330

:

that to the next generation.

331

:

How do you have those conversations

in terms of the wealth transfer?

332

:

That's not an easy one to have either.

333

:

David Murdoch: No, it's not, and that's

where it comes back to the early,

334

:

bringing it in and consistently talking

about it and being open and transparent

335

:

around what you are as the owner of

the asset, what your view, which again.

336

:

It comes back to the question

that would be posed to them.

337

:

How will future generations know

the why behind what they receive?

338

:

So you've had that discussion as to

why you are cascading it through.

339

:

I mean, and this also goes

back to the structures.

340

:

If you have a child or a recipient

of an estate that either has drug,

341

:

alcohol, gambling, mental health issues,

you may want to have a structure in

342

:

place that they've got some support

from someone else rather than.

343

:

Great.

344

:

Here you go Anthony.

345

:

You've got a gambling addiction

and I'm about to give you a

346

:

million dollars personally, or

even half a million dollars.

347

:

I mean, that's a recipe for disaster,

and it's almost to a point that it's

348

:

actually unfair for an individual that

knows that someone has a medical or

349

:

mental condition, but we're actually

still gonna give you this like that.

350

:

That is just, I think that's an

unfair environment to put someone

351

:

into when there is an ability to put

some structures in place to enable

352

:

them to be the recipients of that.

353

:

Not in a lump sum.

354

:

So they receive an income or there

may be ways that we can pay for some

355

:

of their bills directly from that.

356

:

So therefore it bypasses them and

they can't, you know, it can't be

357

:

used for their addictive behavior.

358

:

And that is always a challenge

because some families, they

359

:

don't wanna talk about that.

360

:

They go, no, no, I don't wanna, it's

not, it does, it's not happening at bike.

361

:

That's kind of head in the sand.

362

:

So, you know, some people

will say it is what it is.

363

:

They can make their own decisions.

364

:

They're a big boy now or big girl,

you know, they're in their own age.

365

:

It's like, it's like just acknowledging

the fact that yes, we know that you

366

:

have a particular illness or something,

but we're still gonna give you stuff.

367

:

Like why that it just seems unfair.

368

:

That's how I look at it from the

perspective, when you've got an ability

369

:

to structure things correctly, to

support the person to live the life

370

:

that they wanna live in a way that's

very supportive of the way they

371

:

need to be dealt with or supported,

372

:

Anthony Perl: really more than anything.

373

:

Part of it as well is an education

on what impact it has by you giving

374

:

as well, because it may be that, you

know, you are making some sacrifices

375

:

in order to be able to give money to

your children on a consistent basis.

376

:

So it may be that you don't, you've

had the discussion and said, well,

377

:

we've decided we are not going to

take the second holiday every year.

378

:

We'll just take one holiday per, you

know, as an example and doing that.

379

:

But often that's not.

380

:

Conversations that are had is that

it's more, you know, give me the

381

:

money and the money gets passed

down and thank you very much.

382

:

But the understanding of it on

both sides doesn't always happen.

383

:

David Murdoch: So there's

two aspects with this.

384

:

Okay.

385

:

One becomes, we like to make the

statement to people that says the

386

:

airline analogy, we need to apply face

masks first prior to supporting others.

387

:

Okay?

388

:

So that's a really important thing.

389

:

So for some people, yes, do they

take that second trip or not?

390

:

We wanna make sure that the

individual that is at that higher

391

:

end has that capacity to deal with

it on their basis, that they know

392

:

that they're supported before they

can make some of those decisions.

393

:

So there's no point in giving away all of

that money if that doesn't enable you to

394

:

do the, the life that you're looking for.

395

:

So that, again, is a really important

discussion to have with a lot of people

396

:

to say, what do your wishes look like?

397

:

Along the way, and again,

that becomes a choice.

398

:

If people then are making that decision to

choose to not take the second trip, then

399

:

that's a choice for themselves to then

cascade it down to another generation.

400

:

But sometimes people will bypass the kids

and go straight to the grandchildren.

401

:

That query started to come up more

and more when their children are

402

:

in their forties and fifties, and

they'll, they'll say, well, we've

403

:

supported the kids enough, or We feel

that we've supported them enough.

404

:

We want actually wanna start to

give a bit more support to some

405

:

of the grandchildren because.

406

:

We look at the ability to

generate wealth over the years

407

:

is gonna get harder and harder.

408

:

So therefore, let's give the grandchildren

a way to, you know, pick it up.

409

:

And again, that could be in a

whole range of different investment

410

:

strategies, including super.

411

:

I think super's a really good

way to distribute money down

412

:

to children or grandchildren.

413

:

Because yes, they're gonna get

access to it, but it's capped.

414

:

But it's in a very tax

effective environment.

415

:

Oh, but they now use it.

416

:

Yeah, I know.

417

:

But that's probably part of the point.

418

:

At least by a certain age they

will be able to get access to it.

419

:

So yeah, that's always an interesting,

but again, that's what do you wanna do?

420

:

What's your purpose and how do you

wanna sort of live your own life?

421

:

That's what it's all about.

422

:

Anthony Perl: Thanks for tuning in

to the Activate Your Wealth Podcast.

423

:

For more information about how to

get in contact with David Murdoch

424

:

and the team at Paxton Bridge.

425

:

To learn more about wealth activism,

take a look at the show notes.

426

:

There's plenty of information there.

427

:

Including details of the website and

all the social media channels to follow.

428

:

David, this podcast has been

produced by podcast Done for You.

429

:

I'm Anthony Perl reminding you to

subscribe so you never miss an episode.

Next Episode All Episodes Previous Episode

About the Podcast

Show artwork for Activate Your Wealth
Activate Your Wealth
with David Murdoch, the Wealth Activist®

Listen for free

About your host

Profile picture for David Murdoch

David Murdoch

I am passionate about helping my clients activate their wealth. Success can’t be left to chance. At Paxton Bridge, we’ve developed Wealth Activism, a philosophy that establishes a firm foundation upon which we build personalised wealth activation plans for our clients. This foundation is under-pinned by three core pillars - money mindset, asset management and intergenerational wealth - which are critical in helping us bring people together as they transition to ‘more life, less work’.