When it comes to inherited wealth, we all have dreams of being on the (fortunate) receiving end. We seldom have to face the (possible) nightmare of being on the bequeathing end.
It’s often obvious who you’re going to give your money to when you die. Once you’ve made that decision, you then need to decide the tricky part: how you’re going to give it to them.
You want your legacy to benefit your heirs, not burden them. But too often a windfall opens the floodgates to conspicuous consumption, bad behavior, idleness, lack of purpose, and poor choices.
So what’s a responsible parent to do?
A recent article from The Telegraph has some suggestions. Keep in mind some of these suggestions are framed in the context of British law, so a conversation with your local family attorney will be essential.
Still, I found the considerations well-founded. Personally, I was the beneficiary of a ‘spendthrift’ trust, which allowed for an annual distribution of only 5% of the total amount in the trust. This kept the bulk of the principle in place for the long term. Very astute of my parents. They knew their son.
I’d like to hear your experience…as an heir, and as someone who’s going to bequeath your heirs money, real estate, or other valuables, or as an executor, someone responsible for the estate of another.
What are your plans? Have you written your will? Are you going to put restrictions or conditions upon your heirs?
Let me know.
Thanks.
- BGT
Byron,
My wife and I are 30. We benefitted from some help from our parents and grandparents (paid-for education, a house down payment, our wedding). They’ll leave us tidy sums when they pass on. Nothing we’re counting on but would be considered more than modest to most. Not enough to keep our grandchildren from needing to earn incomes.
We, on the other hand, are very high earners and have started amassing wealth at a breakneck pace. We earn on the level of a professional athlete that actually plays in the games. What we put away in securities and paid-for properties every year dwarfs a top surgeon’s income. God willing and ‘the creek don’t rise’ this will continue and what’s left when we die will be truly significant and generational.
Legal instruments exist to pass down assets from our grandparents’ and parents’ generation, this I am not concerned with.
I, however, have no first-hand knowledge of what it will be like for our children. I did not steward a “fortune” and passing it along concerns me. I am very familiar with the legal instruments and best practices; I know how to protect the money. I don’t know how to protect the attitudes of future generations toward it.
Our friends are our college friends. I have peers but they’re as equally new to this as I am.
Any words of wisdom are much appreciated.
Bonjour Tony,
Thank you for sharing. It’s great to hear that you’re doing well and that you’ve planned well.
The best thing to hear, ironically enough, is that you’re still concerned.
You are right to be concerned because, as you say, you don’t know what life will be like for your children or your grandchildren.
You’ve left them well off financially, but that can only ensure a ‘standard of living.’
What you want them to have is a ‘quality of life.’
Am I right?
That quality of life is often dependent upon your children understanding and embracing Old Money Core Values.
That includes Health, Education, Family, Manners, The Work Ethic, and the rest.
There is one thing you need to do, and one thing you need to accept.
The thing you need to do is drill these values into your children’s and grandchildren’s heads at every opportunity.
Give them a rigorous formal education and an even more rigorous informal education.
Teach them that they have an obligation to live well, with purpose, and set an example.
That’s the price of privilege.
The second thing is something you’ll have to accept: they may ignore every word you say and simply watch what you do. So you’ll have to set an example in your behavior, your dress, your choices.
That’s the price of parenting.
I am really proud for you: you’ve done well, you’ve prepared for the future, and you want to protect your children. If you’re honest, you may want to protect them from having too much, which is a valid concern.
Of course, no one can predict the future, but we can plan.
I will say this as I wind down: equip your children with the tools and resources necessary to function and thrive internationally. A second language is essential. Offshore bank accounts in foreign currencies are a consideration. A second home in another country is an idea.
As a final note: you’ve shared a lot here, and I appreciate it. I know our other readers do, too. But I would be very careful about sharing the details of your (really good) situation with anyone else.
Not everyone will be happy for you, and some may see you as a target for their agendas.
Again, congratulations and thank you for sharing. I hope my comments have helped.
If you have more questions about anything I’ve mentioned, please reach out to me via my personal email.
I’m happy to help if I can.
– BGT