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by Dr Diana Olsberg[1]
Tell me, my daughters
(Since now we will divest us both of rule,
Interest of territory, cares of state),
Which of you shall we say doth love us most,
That we our largest bounty may extend
Where nature doth merit challenge.
[Shakespeare, King Lear]
The shifts in values and priorities of older Australians together with changing family structures and resulting intergenerational tensions present challenges for legal processes of estate planning, and testamentary practice. There are strong indications that the expectations of Baby Boomers, and of their children the Generation X-ers[2], that they will inherit the family home of older Australians will not be realised. Desires for independence, flexibility, consumer and lifestyle choices now take precedence for most Australians aged over 50 years. And increasing longevity and user-pays policies for health and residential care will place what might be unexpected and crippling burdens upon the retirement savings and home equity of the war generation and so too on their Baby Boomer children. The long standing notion of ‘gerosocial succession’ or of an ‘intergenerational contract’, a set of norms defining expectations and obligations in which the family is expected to provide financial aid and support that can be passed on to second and third generations[3][4] is now under strain. Already the patterns of housing tenure and family relationships are changing in ways which challenge traditional notions of old age and family obligations.
These are the findings of a major Australia-wide research study of the future housing, financial expectations for retirement and bequest intentions of older men and women conducted in 2004 and 2005 on behalf of the Australian Housing and Urban Research Institute involving an availability sample of 7000 people aged 50 years and over[4]. The empirical research combined a broad range of quantitative and qualitative research methodologies - a national survey, in-depth qualitative research using focus groups and Internet chat rooms, and sociological narrative analysis. Data collection focused primarily upon home owners 50 years and over as many of them have already or are facing decisions concerning their future residential plans and because housing equity and housing transfers were a focus of the study. One third of respondents were aged between 50-59, comprising the first cohort of the Baby Boomer generation. This research provided the first opportunity to have some insights into future expectations of these senior Baby Boomers.
The research demonstrated that home ownership was seen by older men and women as the conduit to greater possibilities of an older person’s future lifestyle choices. Whether to sell and spend, or sell and move to a location with better lifestyle opportunities, for many respondents the prevailing attitude was the same: after years of hard work, they have earned the right to enjoy the fruits of their labour in any way they choose. In many cases, people are prepared to use their greatest asset, the family home, to achieve those desires. As well, assets of older people, particularly housing assets, may be required by older people to finance their needs for accommodation, residential care health and other services in an increasingly user-pays environment, as well as their enhanced expectations for retirement lifestyles. It is here that the foundations of traditional family obligations will be seriously tested. Downsizing, equity conversion or extraction, ways of capitalising assets are acceptable options. Respondents commonly used the expression OWLS (Oldies Withdrawing Loot Sensibly) or SKIERS (Spending Kids Inheritance) to talk of their future plans.
The prevalence of multi-generational families as a result of increased longevity, the emergence of ‘new’ family structures replacing nuclear families – divorce and serial marriages, single parent families, childless couples, same sex couples and transformation within traditional ethnic families are also changing norms and values and increasing family tensions when it comes to inheritance and the destiny of the family home.
The AMP/NATSEM Income and Wealth Report[5] reported huge increases in the wealth available for inheritance by Australia’s Baby Boomers. Total household wealth potentially available by bequest was projected to rise from $8.8 billion per annum in 2000 to more than $70 billion in 2030. The Report states that the wealth of Baby Boomers’ parents has increased markedly as a result of housing and equities market booms of the 1980s and 1990s.
Yet this empirical research indicates that the expectations of many Baby Boomers will not be realised. Certainly the desire to bequeath assets to the next generation seems to be significantly diminishing. The attitudes of many older men and women towards inheritance has shifted as to what previously would have been considered ‘the right thing to do’ in terms of obligations and responsibilities to their children. The data strongly suggest that many older people’s attitudes have taken on more of those of their Baby Boomer children; that is “put yourself first”. More than one quarter of respondents overall suggested that they expected to use up all their assets while they were alive, more than one third of Baby Boomers expected that to be the case. Only self-funded retirees were confident that they would leave a legacy. Four out of five self-funded retirees (83%) expect to have assets to leave as legacies when they die. Almost 70 per cent of people renting said they will leave no assets behind when they die. Some respondents said that they hoped that there would be enough left for their funeral, but that would be about all. Typical comments were:-
“You only live once so enjoy it while you are here.” - female (56 years)
“The lifestyle is actually the thing that has been important in my retirement, doing the kinds of thing myself and my wife always wanted to do.” – male (68 years)
“I’m not leaving them anything. They’ve had enough of my sweat and tears already.” – male (58 years)
“Children don’t want to live in the family home but they sure want to inherit the asset value. Well as far as we’re concerned we’ll need that money.” – male (76 years)
“Our children lived with us right through their University education and then some. We paid for their education and gave them money and they never had to pay board even when they started working in very good jobs. So we think we’ve done enough. They can’t expect to get anything when we die.” – female (65 years)
“Their lackadaisical attitude just can’t last. It’s about time my children realised our money is for us to enjoy.” – male (64 years)
”I’m not worrying about the children. I’m just thinking about me and my wife and our life. If there’s any money left at the end of our time well so be it, if not stiff cheddar.” – male (69 years)
“I needed to get professional care when I was sick for many months and my children were annoyed with how much money I was spending. I don’t know whether I’ll have anything left at the end but I’m certainly not going to go without so they get the house.” – female (68 years)
“Our kids are better off than we ever were. So whatever we’ve got is ours to use.” – male (71 years)
“My wife and I after some sorry times with our children now say we will spend the lot and enjoy ourselves.” - male (71 years)
Almost all respondents across all categories had made a will (97.7%). However housing tenure is demonstrably an important factor, and the large number of home-owners in the sample was obviously an influencing factor as the only categories with less than this figure were those who were not home-owners. Older people were more likely to have made a will than younger people. The predicted probabilities ranged from 97.9% for 50-59 year olds to 99.2% for those aged 75 years or over. Not surprisingly, having children was positively associated with having made a will. The predicted probabilities were 98.4% for those with children, and 97.2% for those without children. Slightly higher numbers of women had made a will than men, but the differences, although statistically significant, were not meaningfully different - predicted probability higher for women (98.4%) than for men (97.7%).
Few respondents had discussed their will with their children. Many saw their will as a potential source of conflict, and sought to avoid family confrontation by not discussing it. Typical comments were:-
“There’s no way I’m going to discuss the will with my children. It’s entirely my business what I do with my money.” – male (82 years)
“I haven’t discussed it with them and don’t intend to do so. I have enough trouble keeping the peace as it is.” – female (72 years)
“I’ve discussed my will with my children. The only thing they argue about is who gets what in the house, so we’ve put different coloured stickers on everything” – female (78 years).
“They can fight when I’m not here.” – male (76 years)
“The difference between me and my children is that they expect assistance. Well they’ve got a few surprises coming their way when I die.” Female (69 years)
“I’ve left everything equally. I haven’t talked to them about it. I’m just hoping maybe the others will help the poor one. But I don’t want the arguments.” – female (67 years)
The status of people’s current relationships, whether they were married or with a partner, whether they were living with a spouse or living alone, all were important influences in the patterns of people’s bequests. Many of these factors were influenced by the age gradient of respondents. Intended bequests to charitable institutions showed a significant age gradient, with older respondents far more likely to have intentions to make or had made such bequests. Overall, a surprisingly small number of respondents had made provision in their wills for charitable bequests (7%). Having no children also played a significant influence upon people’s attitudes and intentions in regard to patterns of inheritance, where people without children were more inclined to state they would use up all their assets before they die.
Gender was also important in the patterns of people’s bequests. Almost twice as many males (62%) as females (34.8%) indicated that they had left everything to their spouse. This may be the result of more female respondents being alone (45.7% of females lived alone compared to 21.5% of male respondents; only 45.7 per cent of female respondents were living with a spouse or partner compared to 74 per cent of male respondents). Not surprisingly, the greatest disparities were with regard to household status. Three quarters of those living with a spouse stated that they would leave everything to their spouse (75.9%), and only 20 per cent of those living with a spouse and family said they would leave everything to their spouseOnly 1.5 per cent of respondents living alone had left a legacy for a spouse. Many of the other respondents living alone may have been already widowed, divorced or perhaps never married.
Apart from those who intended to use up all their assets before they die, even among others the traditionary testamentary patterns seem to be changing. Some respondents spoke of desires to bypass their Baby Boomer children (whom many respondents regarded as profligate and undeserving) and leave assets to their grandchildren. Some respondents had already provided for their grandchildren in their will. Typical comments were:-
“I now don’t think my children should have any of my money, so I will be changing my will to leave any income from my assets to be used for my grandchildren’s education.” – female (66 years)
“I have left everything to my cousin with funds set aside for her granddaughter’s education.” – male (78 years)
“I have 4 adult grandchildren, only one of them gets my home. I would love to be able to use up my assets beforehand, but my husband can’t help saving for the future.” – female (62 years)
“I want to leave the money to ensure my grandchildren get a good education, not for their parents to take yet another overseas holiday.” – female (68 years)
“We deprived ourselves, worked hard so we had no debt. Our Baby Boomer children have been profligate. We’re not prepared to go without now so that they can inherit the lot.” – male (76 years)
But of course not all respondents were of the same view. The research revealed that older people are extremely diverse in their experiences, their aspirations and expectations. One third of respondents (37.8%) did intend to leave bequests for their children. Typical comments were:-
“Our house will be sold & assets probably divided 50% evenly & 50% on need as two of our children are becoming wealthy and the other two not so successful.” - male (80 years)
“I’m leaving my money to the children equally. There’ll be no distinctions between favourites.” – female (58 years)
“The house will be left to our children equally. That’s if we haven’t had to sell it to survive.” – male (79 years)
“We both grew up in the Depression and started work before World War II. So we knew the struggle that our family had and we hoped and did do better for our own family. And we’ll leave them well provided for.” – male (86 years)
Many respondents commented that their children were already well established, that they had good jobs and were financially secure. Some respondents said their children had told them to go ahead and spend their money, but many stated that they still felt their children had some expectations that they would inherit at least the family home. Typical comments were:-
“I would have left my children the house but they have well paid jobs and don’t require help.” – female (73 years)
“I want to leave my home and other assets to the children but they say they don’t need and it and to spend it all myself” – female (70 years)
“I expect to leave something for my children as my parents did for me. But they keep telling me they don’t need it” – female (54 years)
Divorce and remarriage often presented difficult and complex decisions regarding family bequests. People who had remarried or were in new relationships said that they had made special provisions in their wills for their respective children. Some people reported bad experiences themselves with parents who had disregarded them in favour of new wives and children, and some anticipated that there may be problems ahead in conflict over their assets. Some respondents commented that this was the best reason for them to spend all their money while they were alive, that they had always tried to provide the best education for their children in their first or second or even third families, but that there was a lot of hostility between the children of different families.
“We very carefully drew up new wills when we got married. If I die first he can stay in the house and also receives 2/3 of my fortnightly govt super. After he dies it all goes to my children” – female (61 years)
“My second husband has a life interest in my house as long as he wishes. When he vacates the house it goes to my daughter. Previously my daughter and granddaughter, but I have changed it as I want my daughter to have the power that money brings, as her daughter has treated her badly, and I cannot see her looking after her mother in later life.” – female (78 years)
“We each have two children from previous marriages. We’ve kept the capital separate so that our respective children can benefit. The home is tenants in common not joint tenancy with provision for the remaining party to have life tenancy or until the sale of the property. Then the money is split between the children.” – male (69 years)
There were many stories of friends or relatives who had sold the family home when one partner died and put the money into one child’s house without legal provisions being made. Sometimes these had dire consequences., and these issues are already being addressed by some elder law practititoners[6]. Typical comments were:-
“My sister sold her house and put the money into her son’s house extensions. Three months later her daughter-in-law said I can’t live with your mother. She’ll have to go and she was out on the street with no money and having an awful time.” – female (81 years)
“My friend sold her house and gave the money to her daughter and they built her a granny flat. It was fine for 12 months and then the children got divorced and the house was sold and the proceeds divided and she got nothing.” – female (77 years)
“My sister had her disabled son living with her when she died. They all inherited equally and the other siblings insisted on selling the house and he ended up in a home which he wasn’t happy about.” – female (72 years)
These are particularly important issues. The incidence of intergenerational conflict over the distribution of family resources through inheritance is already on the increase in Australia. It is clear that there is real difficulty in the Courts determining contestation of wills. Such conflicts concern facts extending over many years, indeed decades, and it is necessary to bear in mind, as CJ Dixon said that ‘one story is good until another is told, but a testator is dead and cannot tell his’.[7] Matters of family histories and family dysfunction are always difficult upon which to give judgments and estate transfers on death through deceased estates now constitute an ever growing proportion of matters before Equity Courts in all Australian States.
As a judge of the Supreme Court in Equity in New South Wales commented in a research interview conducted as part of this research project:
“Disputation over the succession to property on death has been grist to the mill of the equity division of the Supreme Court since the nineteenth century in Australia. But current expansion of ownership of assets throughout society and escalation of property values particularly in Australia’s eastern States may well result in far greater levels of disputation in coming years. There are so often cases of differential treatment of children by parents throughout their lives and this can be reflected in unequal allocation of resources in testamentary provisions. As well, relations between siblings are not always amicable. The worst cases are those where there is sheer hatred between siblings. Often it is a feeling of being aggrieved about past circumstances rather than greed about money. In courts we often see a substantial erosion of the assets of the family through legal costs as a result of court disputes. It is not always the case of ‘I want it they shouldn’t have it, but I don’t care who gets the money as long as they (the opposing party or parties) don’t get it’. My advice to testators is to treat children equally, unless there is a good reason to do otherwise. Regardless of children’s individual circumstances, the disposition of assets in a person’s will is always regarded as a deep and lasting indication of the quantification of the amount of regard a parent has for their children.”
There is already considerable discussion in legal circles in Australia concerning the legal rights of older people and obligations of intergenerational relationships. Considerable attention has been drawn to these issues in particular by the recent publication of the Report by the Law and Justice Foundation of NSW ‘The Legal Needs of Older People in New South Wales.[8] As also by the recently published article by Fiona Burns which reviews the doctrine of undue influence concerning inter vivos and the elderly.[9] Burns examines the historical legacies of legal provisions regarding inter vivos transfers and recommends far reaching reforms to broad-based legal statutes in Australia.
Similarly, there is increasing concern about increases in disputation concerning awards of probate in the administration of wills. A seminar on Inheritance Disputes in New South Wales in Sydney in March 2002 attracted a new level of interest in legal circles.[1] With an increase of 75 per cent in probate disputes from 2002 to 2003, there are expectations that Supreme Courts in Equity will be overloaded as increasing numbers of cases fail to be resolved by conciliation. Disputation is always intense and the levels of animosity no doubt leave family schisms which are often irreparable, according to officers of the Probate Office interviewed as part of this research project. Most disputation occurs between siblings who are children of the deceased, or between children of previous marriages of the deceased and spouses and children of later marriages.
These far reaching transformations in personal identities and family values in Australian society are ongoing. The findings of this project are in some cases revelationary and certainly warrant the close attention of the community as a whole and of people involved in elder law who act on behalf of, and in the interest of, Australian individuals and their families. Although these shifts towards questioning the tradition of passing on everything to the children are still in the minority, there are grounds to believe that this phenomenon will only increase as the current cultural and political climate continues to espouse the virtues of self interest over collective responsibility. The findings will doubtless provoke discussion within Australian families. And in so doing, some of the previously unexpressed resentments and hostilities may well be resolved, or at the very least result in more open communication between generations. Legal challenges to wills are escalating, and court proceedings only waste money which could more productively be used by family members of whichever generation.
AMP/NATSEM, ‘You can’t rely on the old folks’ money’, Income and Wealth Report, Issue 5, Sydney.
Bengston, V.L & W A Achenbaum (eds), The Changing Contract Across Generations, New York; Aldine-de Gruyter (1993)
Burns Fiona ‘Undue Influence Inter Vivos and the Elderly’, Melbourne University Law Review, Vol 26 No 3 (2003)(2003)
Dixon CJ in The Pontifical Society for the Propagation of the Faith v Scales [1962] HCA 19; (1962) 107 CLR 9 at 20
Ellison Sarah, Schetzer Louis, Mullins Joanna, Perry Julia, Wong Katrina, The Legal Needs of Older People in New South Wales, Law and Justice Foundation of NSW (December 2004)
Olsberg Diana and Winters Mark, Ageing in Place?: intergenerational and intrafamilial housing transfers and shifts in later life, Australian Housing and Urban Research Institute (A
[1] Dr Diana Olsberg is Director University of NSW Research Centre on Ageing & Retirement and Head of the School of Sociology and Anthropology at the University of New South Wales. She is also Deputy Chair of the national tertiary sector superannuation fund Unisuper and a part-time member of the Commonwealth Superannuation Complaints Tribunal.
[2] Baby Boomers are the generation of men and women born between 1946 and 1966. Generation X are the generation born 1967 to 1986
[3] Bengston, V.L & W A Achenbaum (eds), The Changing Contract Across Generations, (1993)
[4] D Olsberg and M Winters, Ageing in Place?: intergenerational and intrafamilial housing transfers and shifts in later life (2005)
[5] AMP/NATSEM, Income and Wealth Report (2003) 12
[6] Brian Herd ABC Radio National ‘Background Briefing’ (November 6th 2005)
[7] CJ Dixon in The Pontifical Society for the Propagation of the Faith v Scales [1962] HCA 19; (1962) 107 CLR 9 at 20
[8]S Ellison et al, Law and Justice Foundation of NSW, The Legal Needs of Older People in New South Wales (December 2004)
[9] Fiona Burns , Melbourne University Law Review (2003) 499-536
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