The Era of Intergenerational Wealth Transfer

Australia is now witnessing the largest intergenerational wealth transfer in the nation’s history, with more than $5.4 trillion¹ of assets expected to move from older generations to their heirs over the next 20–25 years. According to the Productivity Commission, inheritances and gifts have more than doubled since 2002 and are projected to quadruple in real terms by 2050², driven by ageing demographics and booming household wealth.

This seismic shift, often characterised as Australia’s “wealth tsunami”, is already unfolding. Women will inherit a disproportionately large share (estimated at 65 per cent of wealth, or roughly $3.2 trillion³) over the coming decade, partly because women outlive men and frequently control household finances at point of transfer.

However, research from Grant Thornton warns of attrition: around 70 per cent of families lose most or all inherited wealth by the second generation, rising to 90 per cent by the third, with only 1 in 20 families passing on more than they received⁴.

What Is Being Transferred? Types, Value & Timeframes

Asset Types

The incoming wave of intergenerational wealth primarily encompasses:

• Residential property / home equity, representing nearly half of household wealth in Australia⁵.
• Superannuation balances that remain unspent at retirement⁶.
• Other investment assets including shares, businesses, managed funds, cash and deposits⁷.

Asset Values by Generation

Analysis by KPMG and other studies show generational breakdowns:

• Property: Gen X holds an average of $1.31m⁸, slightly exceeding Baby Boomers.
• Super and other business wealth: Boomers hold ~$641,000, Gen X ~$586,000; younger cohorts are notably lower—Millennials at ~$260,000, Gen Z ~$43,000⁷.
• Shares: Gen X portfolios average $256,000 vs Boomers at $206,000⁷.
• Cash and deposits: Boomers have $242,000 stored; Gen X $176,000; Millennials $104,000; Gen Z $26,000⁷.

Timing & Growth Rate

• Inherited assets currently total $120 billion annually, rising to nearly $500 billion per annum over the next 25 years⁶—a fourfold increase.
• The wealth handover begins in earnest as first Boomers reach typical mortality ages (men ~81, women ~85) around 2027⁶, accelerating thereafter.
• Much of this occurs before death, through pre-death superannuation payments and gifting strategies⁶.

The Challenge: Why Families Lose Wealth

Despite the scale of transfer, wealth decay across generations is the dominant pattern:

• Research from Grant Thornton warns of attrition with only 1 in 20 families passing on more than they received⁴.

• Inadequate financial literacy, failure to diversify assets, poor communication, family disputes and non‑optimal tax structuring all play a role⁴.

Add rising residence prices and living costs—especially for younger generations—and the inequality gap widens: younger Australians struggle to build wealth even as Boomers retire with substantial super and home equity ⁹.

SMSFs: A Strategic Solution for Intergenerational Wealth

Self‑Managed Superannuation Funds are uniquely positioned to support families through this transition.

Up to Six Members Since 2021

SMSFs can now include up to six members, enabling multi-generational involvement—parents, children and potentially grandchildren—to be part of the same Fund structure, opening possibilities for succession planning and education.

Succession Without Forced Liquidity

SMSFs allow assets to remain invested within the Fund following a member’s death via binding death benefit nominations and pension strategies, preserving investment strategy and avoiding the need to sell off assets early or trigger unintended tax events. Younger members can inherit super interests without forced liquidation.  This takes time to build up the member balances and effectively transfer ownership of assets to the next generation.

Cost-Sharing and Economics

Administration and audit costs are shared across members, making SMSFs cost‑effective for families pooling resources and succession planning, especially when compared to smaller individual retail or industry fund accounts.

Mentorship and Financial Literacy Transfer

Having multiple generations within the Fund fosters intergenerational mentorship—senior members can coach younger members in investment strategies, risk tolerance, asset allocation, and financial discipline—helping reduce the rate of wealth dissipation.

Cashflow Synergy through Contributions

Younger working members may contribute salary-sacrifice or non‑concessional contributions that fund pension-phase members, enhancing fund liquidity and potentially enabling better investment positioning or early access strategies.

Tax Efficiency and Death Benefit Flexibility

SMSFs allow tax-efficient wealth structuring:

• Death benefits paid to dependants may be tax‑free within super.
• Conversely, assets held personally may be taxed at the individual’s marginal tax rates.
• SMSFs offer flexibility in managing binding or reversionary pension nominations, helping ensure the surviving generation inherits efficiently and in alignment with the donor’s estate plan.

Hypothetical Strategies in Action

Case Study 1: A Baby Boomer and Adult Children Fund

Members: Retired parents (aged 75, in pension phase) and two adult children (aged 45 and 48, in accumulation phase) are members of an SMSF. The Fund holds direct property, shares, and cash.

Scenario: One of the parents has a reversionary pension in place directing the pension to continue to a member spouse.  Upon the spouse’s later death, any remaining super benefits must be paid to adult children—who are non-dependants under SIS / ITAA.

Outcome:

• The parent’s assets can largely remain in super until the death of the surviving spouse, creating efficiencies and continuity.
• The adult children cannot receive the death benefit as a rollover into their own accumulation accounts.
• The benefit must be paid as a lump sum (either in cash or in-specie) out of the SMSF.
• If assets are sold or transferred in-specie (e.g. investment property or shares), capital gains tax may apply in the SMSF.
• The Adult children will generally pay tax on the taxable component of the death benefit at 15% plus 2% Medicare Levy (17%).

Planning Insight:

• A long-term SMSF succession strategy could involve earlier re-contributions for children, family trust structures, or inter vivos asset transfers to reduce tax leakage and preserve assets for the next generation.
• Reversionary pensions to a spouse or financially dependent child may defer death benefit taxation and give time for thoughtful asset management.
• Incorporating non-super strategies (like family trusts or testamentary trusts, or investment / insurance bonds) alongside SMSFs can enhance estate flexibility.

Case Study 2: Parent Downsizes, Children Contribute

• Members: Pension-phase parent sells home, contributes downsizer proceeds into SMSF; adult child contributes to accumulation and co‑invests.
• Outcome: Debt free cash build-up funds investment strategy; child “earns” value and builds balance; parent retains investment income; seamless transfer of pension interests later.

Practical Advice for SMSF Advisers

Early Estate and Succession Planning

Utilising binding nominations, pension phase structuring, and trustee decisions early avoids forced estate decisions at death.

Education & Governance

Encourage members to attend regular trustee / fund meetings, build transparent governance charters, document risk strategies, financial controls and clarify intergenerational roles to preserve wealth.

Insurance and Asset Protection

ASIC‑compliant life and TPD insurance held in super can provide external liquidity for estate expenses or cashflow needs, conserving principal assets for heirs.

Investment Diversification

Ensure SMSF holds diversified assets — cash, fixed interest, property, shares — balancing growth and income, while maintaining liquidity for pension and death benefit purposes.

Family Charter or Covenant

Document purpose, values, stewardship expectations and succession policies—this “family charter” helps align generations and reduce conflict that often erodes inherited wealth.

Final Thoughts

Australia stands at a critical inflection point. As SMSF expertise becomes increasingly relevant for families facing this multi‑trillion‑dollar transfer, advisers who guide clients through structure design, succession planning and governance will be essential.

By aligning SMSF strategy with clear estate‑planning objectives, promoting cross‑generational literacy, and leveraging contributions and tax efficiencies, SMSFs provide a powerful vehicle for preserving—not dissipating—family wealth.

Deep experience in SMSF structures, death‑benefit planning and multigenerational trustee arrangements positions you to help families turn inheritance into lasting legacy.

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Disclaimer

This material has been prepared by © SMSF Administration Solutions Pty Ltd ABN 76 097 695 988, AFSL 291195, part of SuperConcepts Group. The information is general in nature and does not consider the financial situation of any individual. It’s important to consider your particular circumstances and read the relevant disclosure document (including the Terms and Conditions) before deciding what’s right for you. When you are considering the information on this page, if you are the trustee or prospective trustee of an SMSF, then ‘you’ and ‘your’ means the trustee(s) of the SMSF. As a trustee, you are ultimately responsible for your SMSF, including the investment decisions that you make for your SMSF. If you need assistance, please seek a financial adviser.

References

1. Source: JB Were: The Bequest Report, July 2024 JBWere-Bequest-Report.pdf
2. Source: Productivity Commission, December 2024 https://www.pc.gov.au/research/completed/wealth-transfers/wealth-transfers.pdf
3. Source: JB Were: The growth of Woman and Wealth, March 2024 JBWere-Growth-of-Women-and-Wealth.pdf
4. Source: Grant Thorton: Preparing the next generation for Australia’s largest wealth transition, September 2024 https://www.grantthornton.com.au/news-centre/preparing-the-next-generation-for-australias-largest-wealth-transition/
5. Source: ABC, July 2025 https://www.abc.net.au/news/2025-07-13/economist-warns-about-intergenerational-wealth-in-australia/105517036
6. Source: AUSIEX: On the Precipice of Change 2024 2024-ausiex-intergenerational-wealth-transfer-rgb.pdf
7. Source: KPMG: Gen X overtake Boomers for housing and shares, January 2025 https://kpmg.com/au/en/media/media-releases/2025/01/the-great-wealth-transfer-begins-as-gen-x-overtake-boomers.html
8. Source: IFA: Major milestone marks new phase of Australia’s great wealth transfer, January 2025 https://www.ifa.com.au/news/35191-major-milestone-marks-new-phase-of-australias-great-wealth-transfer
9. Source: The Guardian: The data is in: a generational shift of wealth is under way in Australia, November 2023 https://www.theguardian.com/inequality/2023/nov/25/generational-wealth-gap-study-monash-old-to-young-debt-repayments-savings-rates