John Levy is a consultant
well-known for his work with individuals and families
on issues of inheritance. He can be reached at 842 Autumn
More than Money:
Do inheritances hurt
Inheriting money at age
30 was one of the best things that ever happened to me.
I believe most of the "problems" of inheritance
are avoidable with good parenting.
Personally, my inclination
is to pass on to kids more money rather than less. Some
business people--Warren Buffet comes to mind--leave only
token amounts because they want their children to make
it on their own, but that implies the only thing worth
doing in life is making money. Face it, if you are a successful
entrepreneur, your kids will probably never make as much
money as you did. Do you want them to spend their whole
lives trying to compete and falling short? If
you leave them enough to live on, they are freed to do
other things with their lives.
Throughout history, some
inheritors have done wonderful things with their money.
Give your children the opportunity and motivation to use
their money for good. If you aren't leaving them money,
you had better fully explain why.
At what age do you
recommend children be told they will get money from trust
In all my work, I have
seen no damage done from telling and much damage from
not telling: young people are not only unprepared for
the money, but filled with resentment that they weren't
more trusted and respected.
When a small child asks
"Are we rich?," the real question often is,
"Are we safe?" They're not looking for a number.
If your children do ask for numbers and you judge they're
not ready to make sense of the information, tell them
that you will explain it to them when they are older and
able to understand specifics. Remember to keep your word
about informing them.
The most important thing
parents can communicate is that all questions are fine.
Given our culture's taboo about discussing money, many
of us can't talk about it comfortably, so I say talking
uncomfortably is fine. When parents are afraid to discuss
money with their kids, I sometimes ask, "What is
the worst thing that could happen?" and have them
act out their fears. Most fears dissolve when you look
them right in the eye.
Don't young adults
with trust funds get stalled about work?
Work motivation comes
from parents. When the parents lounge around or are workaholics,
children are often lost about work; if parents work hard
at something they enjoy, children usually follow suit.
It's not so bad for young people to have a decade of searching:
people who are forced by economics to work right away
often get set in work they don't like. Their lives might
look better on the surface than the trust fund kids',
but often there's deep discontent underneath.
What's a good way for
parents to figure out how much to pass to their children?
By talking together. For
example, I have led cross-generation estate planning sessions,
where parents first divulge their estate plan to date,
explaining the thinking behind it, and then the younger
generation responds. My job is to ask facilitating questions
and make sure people hear each other. When tensions get
high people can misunderstand each other terribly.
I've dealt with parents
who were outraged by this idea. They mistakenly saw it
as giving up power, but of course the parents still have
the ultimate say in the matter. After sessions like this,
even if parents plan something different from what children
want, the family is brought closer because all members
have been heard. .
Leon Botstein is the outspoken
president of Bard College in New York.
More than Money:
You have a strong philosophy
against inheritance. Where did this come from?
My grandfather was immensely
wealthy and lost all of it in the Second World War. He
survived the Warsaw Ghetto and a Nazi labor camp, and
after the war lived an extremely simple but inordinately
happy life. He had learned that his wealth was between
his ears, not in his pocketbook. His daughter, my mother,
followed suit, and I learned an enormous lesson from both
of them about what was important in life.
I decided that my goal
in life was not to be rich, but to have life be interesting.
I have always been glad that the gift from my parents
was a set of values and not dollars.
As the president of
a private college, you must have a lot of contact with
"trust fund kids" as well as their parents.
Yes, as an educator I've
seen both sides of it. Too many parents buy into the illusion
that money provides security and the good things in life.
Parents should provide good nutrition, a good neighborhood,
good schools... and help their children develop the skills
and ambition to make their own way in life.
Leaving money only undercuts
young people learning that they can rely on themselves.
Inheritance keeps people from living life at its fullest;
one can't live fully if enveloped inside an insurance
policy or behind a glass wall.
Wealth without purpose
is like a sweet poison in nature--alluring but deadly.
Please understand, I have nothing against people leaving
enough to their children for education and maybe a little
of this or that. However, when I see people worrying that
leaving their children five million dollars might be too
little--I think they should be worrying instead about
the dangers of leaving them far too much.
Do you notice a difference
between parents who earned their wealth, and parents who
People who earned their
wealth are vastly more generous than those who inherited
it. People who inherit don't feel the money is theirs
and so don't have the courage that great philanthropists
have. Effective philanthropy is risk-taking and entrepreneurial,
qualities more characteristic of those who earned wealth.
Inheritors tend to be very cautious--they don't know they
can earn it.
People should give away
their wealth while they are alive--not leave that task
to subsequent generations or create a long-term foundation.
I endorse a great saying I read in Talmud: philanthropy
robs the rich man of his poverty.
Frankly, I don't think
money should carry over generational lines. It is a tribute
to America that there are substantial
estate taxes. However, since the taxes aren't greater,
I think people with wealth should voluntarily give it
away. It is no achievement to be rich on one's death bed.
To die with a billion dollars is simply a matter of consummate
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