Nigel Latta: The changing face of intergenerational wealth

New Zealanders are not leaving money to their children the way they used to - and many are not able to. Not only are times tough, but we're living longer and older people need the money for themselves.

As part of a study to "better understand and quantify New Zealander attitudes and actions around intergenerational wealth", Public Trust commissioned a quantitative survey of more than 1000 Kiwis.

Kiwis once used to pay 4.5 times an average annual salary for a house, for example, and now it can be 10 times that. 

Clinical psychologist Nigel Latta presented the Public Trust findings in Wellington, and spoke with Sunday Morning about what it all means.

The research showed that people want to leave legacies, but often see that as sharing values and connections, instead of just money and property.

"People do kind of want to leave both," Latta said.

"Some people are more focused on the emotional legacy that they leave, the stuff that's important to all of us - it's the values, the sense that our kids have had a good upbringing, all that sort of stuff.

"But the other stuff is important, protecting the other stuff that we pass on, particularly in a world where the landscape of assets has changed from what it was, and we live longer..."

Ninety-eight of Kiwis want to leave a legacy, according to the survey.

"I think most people are thinking about legacy because it makes it easier to think about the fact that we stop.

"For most of us, you do think about how do we look after our kids and how do we kind of set them up for their life."

In the survey, 71 percent claimed an emotional benefit from receiving a legacy, which supersedes the 51 percent who received a financial benefit from a legacy.

Latta noted that people are generally left with a bit less of a financial legacy than they once had.

"How things have changed - and it's a fairly significant change, is that it used to be that our lifespan was shorter, houses were more affordable, and so the physical part of a legacy was much clearer - because you get married, you have kids, you buy a house, you die, you pass that on.

"Not so much any more. So for a lot of young people it's actually really difficult to find their way into property, so they need help from parents and extended family to get there in the first place.

"And less and less of them are going to have those sorts of things to leave for other people.

"And at the heart of all of this is this thing that none of this is stuff we like to think about or talk about because it's ultimately depressing.

"Actually the idea of a legacy in what we're passing on, that's like a conversation that is begun often by thinking about the physical things that people leave behind, but it's about those much bigger things that are behind that.

One in five people said in the survey they don't have enough wealth to worry about protecting while nearly 40 percent say their biggest concern is having enough for their own retirement.

Latta said that kind of thinking can make it harder for family left behind if someone does not have a will, or insurance protecting their assets.

"Of that 20 percent who feel that they don't have enough to be thinking about wills and stuff, they still have stuff, they still have things, it's just that it's not protected.

"And what happens is if we don't think about that stuff it just makes it so much harder for everyone else, if they're dealing with grief and everything else - to then have to untangle all of that stuff.

"This kind of stuff often just gets bumped way up the back somewhere and we don't tend to it because we think we don't have enough - and it's like no, because if you've got stuff you've got enough [to need to do something about it]."

The survey also found that only 9 percent had made a will, 6 percent a prenuptial agreement with a partner, and only 3 percent a contracting out agreement.

"One of the things that's difficult for people - is that if you're struggling and everyone is with petrol prices and inflation and all this stuff going on, the idea that you have to then go and spend money on things like wills and stuff - to a lot of people it just feels like 'I'm just going to pay a bunch of stuff for words written down on a bit of paper that sits in a drawer and it doesn't actually do anything.'

"And I think that's why traditionally, we haven't been particularly good at doing this kind of stuff because we see this as being just about documents, when really it's actually about a conversation with the people you care about, about what they need and how you can best look after them.

"And that's what got us here - the generation before us handed things to us, and we now have to think about how to hand it to the people who come after us."

The survey showed that many younger generations have had to call on "the bank of mum and dad" to afford property.

That indicates a problem with society that's bigger than just young people don't know how to save money, Latta said.

"Fundamentally we have some pretty big problems of inequality and inequity. And so we've got this view that somehow young people aren't buying houses because they're spending too much on lattes.

"Well, it's a very convenient view, but it's not true, because you can't just non-latte your way to a house - that stuff has got a lot more expensive."

We often hear phrases like "we need to have a conversation" about changes in our lives or our families, but Latta said while that's a cliche, there is value in talking about values.

"What's the stuff that actually makes us happy, and not happy in that annoying, always-happy way, but happy in that sort of feeling contentment and well-being in life?

"And it is things like feeling emotions like gratitude and being kind of connected with the people around us and having some sense of meaning and purpose in life."

It's important to have conversations with family members and discuss where they and you are at in life, Latta says.

"Where are you at in life and what do you want to do and where are you going and what's your plans, and what can I do to make sure that the stuff I've done can help you in that?"