Leaving Wealth to Children—Examples from the Real World
He’s famous for it. William Buffett pledged $31 billion to the Bill and Melinda Gates Foundation—instead of leaving it to his children. Buffett has often said that parents should leave their children enough to do anything they want but not so much that they do nothing at all.
But what about others besides Buffett? A USA Today article entitled, Should Kids be Left Fortunes or Be Left Out notes a number of examples.
Actor Stephen Lang notes that the majority of his father’s estate will go to charity. His father Eugene Lang founded Refac Technology, a multimillion patent firm.
Steve Forbes says that “allowing children to build upon what you’ve built is a good thing, not a bad thing.” Similarly, John Chambers, of the Cisco Corporation, plans to leave substantial wealth to his children. And even though Wal-Mart founder Sam Walton drove a pickup long after amassing billions in wealth, he still left his children billion dollar fortunes.
Some parents are less inclined to leave that kind of wealth. They reason that most wealth is obtained through simple hard work and ambition. Some fear that leaving wealth will rob their children of that ambition and the joy of achievement.
John Carr, who founded Heartland Payment Systems, grew up as one of seven children in a 2 bedroom house, the son of a waitress and high school dropout. In his case, Carr and his wife have elected to leave the majority of their money to award scholarships to children of families with household income less than $50,000.
Chuck Collins, the great grandson of Oscar Mayer, questions the value of a large inheritance. At age 26, Collins donated his $500,000 inheritance to charity. He said, “I felt like I was making the first real decision in life. I felt some sense of relief that I was aligning my beliefs with my actions. I didn’t want a legacy of a fortune that came from my family founding a business a century earlier.”
Similarly, Richard Cohen, of the Sweet and Low family fortune, shared: “Money messes you up. It is like a funhouse mirror. It distorts and enables the worst. There is a degree of satisfaction of working for something.”
In that vein, psychologist Gary Buffone and author of Choking on the Silver Spoon says large inheritances can devastate otherwise healthy children, even children who are adults before they find out that they have been made rich.”
What’s the punch line? Forbes pushes back and says, “How kids handle their circumstances depends on how they were brought up.” But at the same time, there’s no question that inherited wealth magnifies existing weaknesses in our parenting, the inherent weaknesses in our children and the values transmission taking place.
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Published April 27, 2017
Topics: Estate Planning