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When Is an Inheritance a Bad Thing?

Sid and Jean started their business out of necessity. He’d lost his job unexpectedly, and the job market appeared slim. So off they went. He was marketing. She was operations. And together, a step at a time, they built a business brick by brick.

Along the way, their children participated in various aspects of the business, but none of them really loved the work. Each carved out a separate career path.

With no one in the family to run the business and no employees ready to take over, Sid and Jean decided to sell. They met with their attorney and accountant, and because of the large capital gains tax they faced, they were advised to gift some shares to their children to reduce the tax liability. The advice made sense to them.

But what they didn’t anticipate was that the business would sell for multiples more than they dreamed. Sid and Jean would never have to work again, and neither would their children.

Each of their children quit his or her job. The two oldest, who were married, immediately undertook building a new house. Their third child quit his job and decided to travel around Europe. Their fourth child dropped out of college and seemed bent on developing new addictions.

Sid and Jean were heartbroken. It was not what they intended. They thought they could leave a meaningful inheritance that would say, “I love you.” But instead it produced a group of non-workers who seemed content to enjoy life’s pleasures without any of the sweat equity they’d had to endure.

They greatly desired that their children be productive, contributing members to society, yet their gift of stock had destroyed that opportunity. The inheritance did not accomplish their desired objectives for their children. Yet they could not un-ring the bell. They realized they should have questioned further their reason for leaving stock to their children in the amounts that they did.

Related articles:
How Much Will You Leave Your Children?
Write a Letter to Your 80-Year-Old Self
Growing a Generous Family

About Bill High

Bill is CEO of the Signatry: A Global Christian Foundation. He works with families, individual givers, and financial advisers to share the foundation’s message regarding biblical generosity and charitable giving. » Learn More. He is the co-author with David Green of Giving It All Away and Getting It All Back Again: The Way of Living Generously.

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