One of the most common themes among my affluent clients is a desire to see their children make it on their own. Over 90% of these clients are first-generation wealth builders, meaning they didn’t inherit their money but accumulated it from saving, investing or building a business. They value hard work and frugality and feel leaving a large inheritance to a child is more hurtful than helpful.
When it comes to planning for one's estate, most children assume their parents will leave it all to them. Is that really in the cards?
A recent Forbes article takes a different tack and asks “Why Bother Leaving an Inheritance for the Kids?”
What is an inheritance to you and to your loved ones? What does it mean? There are, in fact, many mature Americans who no longer see the value in leaving an inheritance to their children and, instead, intend to die broke. Interestingly, the author of the Forbes article offers a name for people of this persuasion: “Die Brokers.”
Perhaps Die Brokers worry about the negative influence of free money. Maybe they would like to see a little more “hustle” out of their would-be heirs. Whatever the reason, the Die Brokers appear to be keener on enjoying their own money in their own lifetime.
Are these folks in the minority? Maybe not. A recent study the financial company HSBC ranked the U.S. lowest out of the 15 countries studied in terms of parents reporting that they intended to leave an inheritance to their children. The percentage was a mere 59%.
Who is to say what the right approach is? After all, cannot those who earned and saved decide what to do with the financial representation of their efforts?
So, do you not want to leave an inheritance to your children? Or, a step further, do you want to ensure that there is no inheritance and join the ranks of the Die Brokers?
Either way, how will you accomplish your objective? While it is easier to spend the coffers dry, if you intend to leave an intentional inheritance to your loved ones, then plan to consult with an experienced estate planning attorney. Your attorney can design a plan to ensure that your benevolence is a blessing and not a curse, sometimes for generations to come.
Reference: Forbes (February 27, 2014) “Why Bother Leaving an Inheritance for the Kids?”