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Kim Hull was a lifelong renter until an inheritance at the age of 51 allowed her to buy a home.

She is one of the Australians to benefit from a global trend dubbed the “great wealth transfer” as Baby Boomers and the generation above them die and pass on trillions of dollars in assets.

This trend is accelerating, with new analysis of Household, Income and Labour Dynamics in Australia (HILDA) data from the University of Melbourne showing the skyrocketing value of cash inheritances.

Kim Hull, a lifelong renter, is now a homeowner in her 50s thanks to an inheritance.Credit: James Brickwood

In Hull’s case, she lost her mother and her brother in quick succession four years ago, and her mother’s home in Beacon Hill in Sydney’s northern beaches was passed to her.

A Herald photo of baby Kim with her mother Helen Hull at Manly District Hospital in 1967. Kim was born premature and was one of the first babies kept alive in a humidicrib.Credit: Fairfax Archives

For Hull, who was a single mother for most of her adult life, the inheritance was life-changing. The Manly woman now owns a flat to live in, and a studio apartment that is rented to a tenant.

“I constantly feel that I’m so lucky – I didn’t want to have to lose Mum for it, but I’m so grateful for my situation,” Hull said. “I have many girlfriends who are single mums too and just scraping by, and they don’t all have inheritances coming.”

The influence of inheritance on wealth distribution across society is growing because of the ageing population. As Baby Boomers are the largest and wealthiest generation in history, the cumulative effect of their bequests over the next few decades will be massive.

The Productivity Commission in 2021 predicted $3.5 billion in assets would be inherited by 2050 in Australia alone. Global estimates put the pending intergenerational wealth transfer as high as $US68 trillion ($99.4 trillion) over the next 20 to 30 years.

Professor Roger Wilkins, co-director of the HILDA survey at the University of Melbourne, said the topic might seem macabre, but it was important to understand its social impact.

“The Baby Boomers are a very wealthy generation, and they’re a big chunk of the population, so on both of those fronts you would expect that as they die in increasing numbers … it would be a big driver of growth for bequests,” Wilkins said.

Wilkins said in 2001 to 2005, the average cash inheritance was worth $63,824. By 2018 to 2021, that had grown to $160,762, a rise of 73 per cent after adjusting for inflation.

The average age to receive an inheritance is about 50. In the past 20 years, Baby Boomers were the biggest beneficiaries of bequests. Nearly one in five people born between 1946 and 1964 received a cash inheritance between 2001 and 2021 and the average size was $187,618.

Wilkins said the HILDA survey only started collecting data on non-cash inheritances such as real estate or shares in 2022 and that would be released later in December.

The most recent data on total inheritances is from the Productivity Commission in 2021. It found the total amount of wealth transfers in 2018 was $120 billion, double the value of wealth transfers in 2002 after adjusting for inflation. Inheritances account for 90 per cent of wealth transfers.

The commission argued that inheritances reduced wealth inequality. While richer Australians generally received bigger inheritances, the less well-off got a bigger boost from wealth transfers when measured against the amount of wealth they already own.

Kim Hull feels very lucky because many of her friends are struggling and don’t have an inheritance coming their way.Credit: James Brickwood

That is the case for people like Hull, and it will be increasingly so for younger people who might one day inherit their parents’ home, but can’t rely on family money to help them onto the property ladder in the meantime.

But Wilkins said the idea inheritance reduced inequality was a “slightly misleading conclusion”.

“That was contingent on getting an inheritance, and if you’re lower income, you’re much less likely to get an inheritance full stop,” he said. “I don’t have the same sanguine view of the trend.”

Wilkins said the data suggests the tax concessions for superannuation were increasingly fuelling bequests rather than living standards in retirement.

There is no inheritance or estate tax in Australia. In countries with inheritance tax, it’s often borne by the middle class, while wealthier people structure their tax affairs to avoid it.

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