A fascinating piece recently found in The Telegraph…
https://www.telegraph.co.uk/money/tax/inheritance/inherit-100m-im-giving-it-all-away/
I’m sure we’re going to have quite a few opinions on it.
Personally, I’m not sure if inheriting more than $10 million in cash or its equivalent is really beneficial to most people. (Full disclosure: I inherited. The benefits and drawbacks have pretty much cancelled each other out in my case.)
It takes an incredible amount of self-knowledge and discipline to handle a $1 million windfall without repercussions. If you’re educated, you’ll probably be okay. If you’re already wealthy, you’ll probably be okay. If you’ve been raised with Old Money Values, you’ll probably be okay. If you’re working in a business or profession that you really love, regardless of the paycheck, you’ll probably be okay.
The people who might not be so ‘okay’ are your family members and friends who aren’t as wealthy as you are now, after the inheritance. Which is why I advise everyone I know to keep their windfalls secret, or at least private.
But that’s another issue.
The big obvious question: is this inheritance really going to help? Sure, the financial security is a wonderful feeling. You don’t have to work, maybe. You don’t have to worry. But you will. You’ll just worry about other things.
The more nuanced situations involve not the children of self-made millionaires and billionaires. They’ve probably benefited from the family fortune, even if they are left nothing in the will.
It’s the children of potential heirs, the grandchildren and nephews and nieces. Should they not have the opportunity to get a first class education? Yes, a fortune can be given to charity and do a lot of good for a lot of people. Maybe.
Personally, I’m more inclined to offer opportunity (in the form of education) to young family members first. Adults, in my opinion, have made many of their own choices and are more likely to be set in their ways. There’s a limited amount of change that most people over 40 are going to embrace.
But with children, teenagers, and young adults, the sky is the limit, and the fuel for that potential is education.
Let me know your thoughts on inheritance. How much? When? And to whom?
Thanks.
- BGT
The answer to the question of how to transfer money responsibly to people who will use it wisely would be a book length answer, so I won’t try to answer that question here. I will say that paying for someone’s education, even possibly someone to whom I am not related, is one of the best uses of money I can think of.
I have not inherited and I doubt I will. If one is a Christian, giving your children an inheritance is expected. It is biblical. There is so much fraud and mismanagement being exposed within charitable organizations why not leave as much as possible to your children? I understand how it can be a double edged sword. Teach your children well, and remain flexible. Let them know you’re building empires not an amusement park life style.
My situation is similar to the one that Byron talks about in his book for women. I’m very grateful for his books, and all the information on this blog. I always wonder what constitutes ‘not much’ in the circles this article is speaking about, because it seems so relative. Is ‘a small amount’ one percent of the family estate? One million dollars? And couldn’t it create more problems (desperation, manipulation, excess risk-taking) if you raise someone in a world where certain material items or expensive experiences are required, but don’t give them at least some of the financial means to achieve them?
Thank you for the kind words, EMR.
I’m going to say that ‘not much’ in today’s inheritance terms would be less than $1 million. In my experience, life and lifestyles can really change when someone inherits $5 million or more. Otherwise, the (smart) heirs just go out for dinner, go on vacation, or go on a (modest and brief) shopping spree. Then life gets back to normal. Change too much too soon and you run into problems, as you rightly point out.
To your other point, I think the most important thing to give a child is an education. With the experience and the credentials, they’re equipped to accomplish pretty much whatever they want in life, with or without an inheritance.
– BGT
Well, giving to your children is common by most religions, which is not a point in its favor. I would rather set my children the moral example of helping others in addition to them.
The Telegraph is, as I think most readers know, is a conservative UK newspaper so readers comments and views might be quite different to say readers of The Guardian. Embedded in the link Byron provided and I assume only open to subscribers was a short survey on this article. I have copied and pasted the results as they were a moment ago:
How much money will you leave to your children ?
As much as I can
70%
Some of it, the rest to society or good causes
13%
None – I’m enjoying my wealth with them now
10%
None – they can make their own way
7%
Total votes: 6888
I wonder what a survey or readers of this blog might reveal (?)
If I may I would like to suggest a a short documentary which was made by ‘Manager Magazine’ which is part of the German Der Spiegel group. I have watched it several times and recommend readers taking the time to do so. It touches on the subject of inheritance and succession. It is called ‘The Discreet Lives of the Super Rich’.
https://youtu.be/NXaVLXSZdEw?feature=shared
The ultra-wealthy who hoard their fortunes from their own heirs under the guise of “teaching them independence” aren’t noble stewards of legacy—they’re just poor parents with inflated egos. Instead of seeing wealth as a tool for generational empowerment, they idolize their own climb, romanticizing struggle while denying their children the very leverage they once lacked. It’s not discipline—it’s vanity. A refusal to pass the torch, cloaked in wisdom, but rooted in self-importance.
Although my wealth wasn’t inherited, my values are—and they taught me that real legacy isn’t about proving how hard I had it, but about making sure the next generation doesn’t have to.
Hello Byron. No chance you were in Leiden, Netherlands lately, right? We were there for a day trip on our European vacation and I could have sworn I saw you at the train station as we were coming and you were going…
Bonjour Amber. I was not in the Netherlands. Sorry! Hope we can run into each other if you’re still in Europe.
– BGT