Navigating wealth succession starts with an eye to the future

The transition of wealth and legacy  across generations is monumental for ultra-high-net-wealth families. Many have built their fortunes over decades or longer through successful businesses and thoughtful investing. So the way wealth is passed on must be carefully considered. As Josephine Hanna, Commonwealth Private National Head, Ultra High Net Wealth, writes, the most effective approach rests on a strategic mindset, drawing on expert advice. 

How best to transition wealth is a universal challenge for our clients, a changing one as family dynamics shift over the generations. In an increasingly common scenario, many ultra-high-net-wealth (UHNW) families start with a small family business that grows into a substantial enterprise. As the business expands, transitioning leadership and ownership from one generation to the next becomes a priority.  

One of our UHNW family clients, now in its fourth generation, began with a modest business and has since grown its wealth to more than $2 billion through diversified investments and strategic property developments. Their success lies in financial acumen and a commitment to structured succession planning.  

With the support of a dedicated Private Banking team, their family office operates as a cohesive unit, coordinating services and anticipating needs across generations. This preserves their legacy and empowers each generation to contribute meaningfully.  

Governance plays a vital role in this process. Establishing clear governance frameworks helps families make informed decisions and opens the lines of communication. For instance, when the next generation joins the family business, they need clarity on how they can create their own financial independence outside of the family enterprise, while still adding value to it.  

This includes understanding income expectations and how to manage their own financial futures. Tailored trusts and holding structures provide control and flexibility, allowing family members to pursue independent ventures while preserving core assets. By creating a structured environment with defined rules of engagement, families can foster better understanding and cooperation among members. 

Of course, the emotional dynamics of family relationships must be taken into consideration. This often requires balancing legacy considerations with a desire for innovation, reconciling differing visions for the business.  

There is a number of ways to approach this. One UHNW family began succession conversations informally over shared dinners and retreats well before any formal transition was planned. These early discussions created a safe space for the rising generation to express their aspirations and concerns, and for the founding generation or legacy holders to share their journey and values. Over time, this evolved into a structured succession plan supported by a family charter and mentoring pathways. The result was a seamless transition that preserved both wealth and relationships. 

Later on, governance workshops can help clarify roles and responsibilities. This has many benefits, strengthening the leadership pipeline and aligning family values with business strategy, enhancing trust and transparency across generations. 

We have found this structured approach helps establish a positive long-term relationship among family members and better outcomes overall. We saw a recent example of a multi-generational, UHNW family that established a family office with the sole purpose of managing wealth, primarily through property developments and cash holdings. While the intention was sound, the execution lacked critical structure. There were no governance frameworks, no formal communication channels and no clear decision-making processes.  

Over time, this absence of structure led to confusion, stalled projects and ultimately, conflict among family members, resulting in an unnecessary split of the family and the wealth. Our experience indicates this could have been avoided with a proactive and planned approach.  

As families consider their wealth transfer strategies, it’s vital to recognise the importance of adapting to changing circumstances. The financial landscape is constantly evolving and wise families are prepared to adjust their plans accordingly. This adaptability is particularly important in the context of economic fluctuations, regulatory changes and shifts in family structures.  

Alongside this, education must be central to every UHNW family’s strategy. We encourage younger members to shadow senior leaders to build capability and confidence. Then, rising generations enter the business at their choice and have the opportunity to explore different aspects of the business they wish to pursue. 

As wealth grows, it’s rewarding to see philanthropy play a more significant role in the lives of our UHNW clients. Many families engage in charitable giving as a way to create a lasting legacy, often related to causes with a personal connection. The emotional aspect of philanthropy fosters deep connections among family members, particularly when younger generations are involved in forward planning.  

In recent years, there has been a shift from ad hoc giving to more structured philanthropic approaches, such as private ancillary funds. It’s worth noting recent proposals to change the tax system have sparked discussions among clients about their giving strategies. These funds allow families to distribute donations gradually, while also providing tax benefits. Families are increasingly looking at impact investing as a way to align their financial goals with their philanthropic values. 

With these considerations in mind, Commonwealth Private supports families by providing a stable and holistic banking relationship that evolves with their needs. Backed by deep expertise in wealth management and a thorough understanding of intergenerational financial planning, we offer tailored guidance that empowers families to make informed decisions. By accessing our comprehensive banking services, families can simplify their financial requirements across generations, ensuring continuity and clarity. This elevates them from day-to-day financial concerns, allowing them to focus on their legacy and long-term wealth management goals. 

To learn more about how Commonwealth Private can help you with your private banking needs visit commbank.com.au/private

The article provides general information and has been prepared without taking into account any of your objectives, financial situation, or needs. You should consider whether the information in this article is appropriate for you before you act on the information. Eligibility criteria applies. Investment carries risk. No liability is accepted by Commonwealth Private, its related entities, agents and employees for any loss arising from reliance on its content. Commonwealth Private Limited ABN 30 125 238 039 AFSL 314018 (Commonwealth Private), a wholly owned non-guaranteed subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL and Australian Credit Licence 234945 (Commonwealth Bank). Private Bankers are representatives of Commonwealth Bank and Investment Directors are representatives of Commonwealth Private.