thecomplexestate
How Much Is Enough? This vexing “elephant-in-the-room” question faces most families of wealth. “How much ought we to leave the children when we die?” Here is what Bill Gates and Warren Buffet said about leaving money to their heirs.
“One thing is for sure,” said Bill Gates in Forbes Magazine, “I won’t leave a lot of money to my heirs because I don’t think it would be good for them.” He stated that he would leave each of his children $10 million.
“The perfect amount to leave children,” said Warren Buffet, “is enough so they would feel they could do anything, but not so much that they could do nothing.”
The “How Much?” question is enormously complex and, once opened, reveals other questions inside. Looking closely we see the question voices the parental worry that adult children will not know how to manage their inherited wealth. But how did Bill Gates and Warren Buffet learn to manage their own wealth in ways that did not distort their character?
The idea that parents must limit their children’s wealth in order to preserve their children’s sanity and industry sounds appealing but, to me, it suggests either that parental values had not been inculcated into the family culture or that the parents don’t believe in their children’s ability to take to heart what they had been taught about life, wealth, and balance.
One anti-dote to the worry about inheritance distorting children later in life is to help children grow to become self-confident emotionally healthy adults, wealth aside. This growth is not a “pie-in-the-sky” dream. It is possible. However it requires family interactions that are attuned to children’s emotional needs, from the crib onward. It’s a worthwhile investment because attitudes of confidence, industry, kindness, and generosity developed during childhood will protect inheritors from getting lost later in their lives. These qualities and attitudes must be absorbed early in life. They cannot be inculcated from the grave.
Usually family wealth is a veiled secret, vaguely acknowledged, but rarely discussed openly. In relation to families, I have a bias toward transparency, openness, & continuing familial communication especially because wealth does not remain a secret and end of life is way late in the game to begin such a truly intimate conversation.
I believe that wealth needs to be discussed in matter-of-fact ways in the family and that children should be brought in to the fact of family wealth at the earliest possible time, which, of course, will vary with the child and with the family. For example, young children could be present at some meetings of family foundations. When a bit older they even could be given some limited funds, under supervision, to distribute in considered ways. The tradition of judicious financial management also should begin early. When children are kept ignorant of the big secret that swirls around them they will be overwhelmed when they learn the truth. As with most things, acknowledgement rather than avoidance of life’s obvious but sometimes uncomfortable realities is a preventative vaccination.
Of course there are families of wealth that do not function well. This is not necessarily a function of wealth but of parental misattunement to the children’s needs. All children rich, poor, and in between need the same thing – attuned parents. Any time a special circumstance occurs in a child’s life, the child navigates that circumstance best when the circumstance is addressed and managed openly. This applies to financial specialness as well as to physical specialness, handicaps, and even remarkable personal gifts and talents.
Legal structures and limited inheritance should be matters of last resort. They are needed when children grow to be emotionally deformed adults. In these situations too, however, it is essential that the children know of the structures and limitations created by their parents and the reasons for they were created, long before their parents die. Nothing should come as a surprise at the end. Sometimes it might be useful to engage these difficult conversations with a trained third-party since parents who could not engage an essential life long conversation with their children certainly will not have the ability to do that when they are looking at their disappointments as they end their lives.
Courtesy of Allen Siegel, MD principal founder of the Nautilos Group in Chicago, IL
Website: www.nautilosgroup.com email: asiegel@nautilos.com
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Filed under: Advanced Estate Planning, Estate Planinng, Legacy Planning | Tagged: Advanced Estate Planning, Bill Gates, Inheritance, InKnowVision, Legacy Planning, Warren Buffett | Leave a Comment »
