I’ve heard it said many times now and in various ways, but the principle is the same: we should prepare our families to receive assets.
Too many times, I see families who work hard—incredibly hard—to build a portfolio of assets. The majority of their waking hours and working years are in pursuit of building a portfolio.
For what purpose? Only to leave those assets to heirs, who might not actually know them very well because of all the hours spent away building that wealth.
No matter how well adjusted they might be, they may well hold a chip on their shoulder for the neglect.
Worse still, they are quite likely unprepared to have a pile of assets dumped into their lap with little ceremony, little communication and little preparation.
What do they do with this newfound wealth? If left unprepared, they might follow the natural human inclination and spend it largely on themselves.
What’s the purpose of inheritance?
Perhaps we need to rethink the purpose of inheritance altogether.
Too many families take the view that inheritance is a matter of obligation. They believe they are supposed to leave their children something. And not only that, but it is all supposed to be equal—regardless of their station in life.
Unfortunately, this mindset of inheritance often transfers to inheritors. They tend to believe that inheritance is a matter of right.
(In a recent study, 55% of Millennials agreed that leaving an inheritance is a duty. Interestingly, this view seems to grow less prevalent the older people are, with only 44% of Xers and 36% of Boomers believing inheritance is a duty.)
But I’d like to suggest the purpose of inheritance is not simply to provide a windfall for our children. Perhaps inheritance is really about equipping our children with values and virtues. Perhaps then, and only then, we might consider a financial inheritance that allows them to enhance the quality of their lives and impact on the world.
So yes, families should prepare the next generation to receive assets. Guided by values and virtue, they can use wealth wisely to make a meaningful difference in the world.
Photo by Jennifer Regnier on Unsplash
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Published June 21, 2019
Topics: Estate Planning