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What we can learn from the Packer siblings’ assets split

Kerry Packer is greeted at Sydney Airport by his children James and Gretel in 1977. Photo: Trevor DallenIf the Hancock-Rinehart feud over the family fortune shows how intergenerational wealth transfer can all go horribly wrong, the Packer family provides an example of how to do it well.

When James Packer and his sister Gretel recently severed financial ties, a decade after the death of their father Kerry, the process was remarkably smooth and amicable.

Gretel Packer is now a billionaire in her own right after reaching a settlement with her brother over the division of assets and cash, essentially finalising their father’s will.

Steven Glanz, the lawyer and partner with Baker & McKenzie who acted for Gretel Packer in the settlement with her brother, says there are lessons in this for the rest of us.

Glanz has represented members of some of wealthiest and most prominent n families besides Gretel Packer, but he says good estate planning is critical for people from all walks of life.

He points out that is poised for the greatest intergenerational transfer of wealth over the next decades as the baby boomers age – the oldest of that cohort are about to turn 70.

At the same time there has never been more at stake. Over the last decade, older households have captured most of the growth in ‘s wealth that will be eventually handed onto their heirs.

A report by the Grattan Institute, released late last year, showed households aged between 65 and 74 are $200,000 wealthier than households of that age eight years ago, mostly due to increases in house prices.

Glanz says more “blended” families and more people with their own businesses mean that working out who gets what after we die is becoming more complex.

Those who do not do their estate planning properly risk splitting the family – setting sibling against sibling.

Glanz says there are three guiding principles that can help ensure a smooth handover of wealth that apply,regardless of the size of the assets.

First, it is very important to have a conversation with family members and make them aware of intentions and the reasons for dividing up the estate in a particular way.

“Many people feel uncomfortable with confronting their own mortality or don’t like having to tell one beneficiary they will not be getting as much as another,” Glanz says.

The consequences of parents not communicating their intentions with heirs is that the beneficiary who receives less is much more likely to direct their anger and disappointment at the sibling who receives more.

In Glanz’s experience, the second principle, is to try and make the heirs financially independent rather than financially interdependent on each other.

“What often happens is that someone builds a business, for example, of which they are very proud and they leave it to their kids,” he says.

“But their kids’ interpersonal relations are often challenging enough without adding the complexity of running a business between them.”

The third principle, which is even more important with the growth in blended families, is to treat all heirs equally.

“Children feel they are equally deserving and it is hard to try and displace that presumption,” Glanz says.

Wills are always contestable in the courts by anyone who feels they have missed out on what they regard as their fair share.

For parents, there is an incentive to get it right, Glanz says.

“You do not want your legacy to be a divided family and one where people dislike each other.”

Twitter: @jcollett_money

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