Who is Really Holding the Keys?

The Human Side of Capacity in Family Wealth

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When the time comes to pass the baton of a family's wealth, the question of who should take over control is never just about who is next in line. Nor is it a technicality- a line in a will or name on a trust deed. It’s a conversation that often starts quietly, maybe over a cup of tea at the kitchen table, and then grows louder as the years roll on and the stakes get higher. Who’s actually ready to make the big calls? Who has the capacity- not just in the legal sense, but the real-world ability- to steer the ship when it matters most?

In Australia, we like to think that turning eighteen means you’re free to make your own decisions. The law agrees: unless there’s clear evidence to the contrary, everyone is presumed to have capacity. But in reality, capacity isn’t always so black and white. It’s not about how old you are or how confident you sound in a meeting. It’s about whether you can really grasp what’s in front of you, hold onto the details long enough to weigh your options, and then communicate a decision that stands up to scrutiny. When it comes to managing family wealth, these aren’t just boxes to tick, they’re the bedrock of everything that follows.

Knowing when the right time to hand over the keys is not just about the capacity of the leader, but also of those assuming control.

For those currently at the helm, the ability to process information, remember the fine print, and make sound judgements is everything. The truth is, as we get older, these skills can start to fade. Sometimes it’s gradual, sometimes it sneaks up on you. It doesn’t mean every senior family member is suddenly unfit, but it does mean families need to keep their eyes open. If there’s even a whisper of doubt, it’s time to bring in the professionals. GPs are often the first stop, but more and more, families are turning to specialists like geriatricians for a thorough assessment. Their reports can be the difference between a smooth transition and a drawn-out dispute if things are ever challenged down the track.

Timing really is everything. If the person in control loses capacity before the right legal structures are in place, the family can find itself in a world of trouble. Delays, disputes, and even the risk of financial abuse become very real. That’s why these documents need to be sorted while the individual is still fully capable, and the choice of who to appoint as attorney is not a box-ticking exercise. It’s about trust, competence, and being available when it matters most.

But what about those waiting in the wings? It’s easy to assume the next generation is ready to step up, but capacity here is about more than just meeting the legal minimum. It’s about financial literacy, emotional intelligence, and the ability to navigate the sometimes choppy waters of family dynamics. The families who get this right are the ones who invest in education, who give the next generation a seat at the table before they’re handed the keys. More than anything, it’s about being genuinely prepared for the responsibility that comes with taking over the family’s wealth.

Some families choose to set up formal or informal committees or boards to oversee major decisions, creating a space for collective wisdom. These structures can be invaluable, giving the next generation a chance to learn the ropes and show what they’re made of before the full weight of responsibility lands on their shoulders. A family’s professional advisors often play a crucial role here, bringing a dose of objectivity to what can otherwise be highly charged discussions.

Of course, even the best-laid plans can’t prevent every conflict. Sometimes, the real issue isn’t who should lead, but whether someone is still fit to do so. The law has mechanisms for appointing guardians or financial managers if capacity is lost, but these are last resorts and can be deeply disruptive to family harmony. No one wants to see their family’s legacy tied up in red tape or court battles.

Capacity- both for those in control and those waiting to take over- needs to be front and centre in every succession plan. It’s not just a legal hurdle; it’s a test of honesty, foresight, and the willingness to have the tough conversations. The families who face this head-on, who talk openly and plan early, are the ones who keep both their wealth and their relationships intact.

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