More Than Money
Issue #13

Provocative Dialogues

Table of Contents

“Dialogue #3: Passing Money to Our Children”

Facilitator: Dennis Pearne.
Participants: Katherine, Deb, Doug, John.

Below are comments from four More than Money readers responding to provocative quotes on the subject of passing money along by inheritance. The first quote stimulating discussion is from Leon Botstein, president of Bard College, who said in part,

"Leaving money only undercuts the young people's learning that they can rely on themselves. Inheritance keeps people from living life at its fullest. Wealth without purpose is like sweet poison in nature - alluring but deadly. 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."

Katherine , 37, a fourth-generation heir from the Midwest, mother of two, is a researcher on inheritance. "I disagree with Botstein. While many heirs I interviewed struggle with wealth issues, others are blessed enough to grow up with attentive, nurturing, and socially responsible parents. For them, inheriting wealth is much more gift than burden."

Deb concurs with Katherine, "I received waves of inheritance at age 21, 28 and 30, with more coming next year when I turn 35. While money allowed me to wallow around a lot longer than my university colleagues who had to go out there and swim or drown, I would never trade the years of inner development that the money allowed me. I think that when there is a family culture that provides kids a compass to find deeper meaning, inheritance can be healthy."

Doug , 43, who came into a substantial inheritance in his mid 30's, experienced his inheritance as a mixed blessing: "At first, it turned my world upside down. I had been successfully self-employed for years, but after the inheritance I began to get soft and make weak business decisions. On the other hand, because I was raised insulated by wealth, I always felt nothing could harm me. I have always been a risk taker. The inheritance enabled me to expand on this and think creatively in all facets of my life."

John introduces himself saying, "I have only tasted what Botstein calls the "sweet poison" of my legacy, not yet grasping the cup in my own hands to quaff it to its lees. A trust fund exists in my name, providing income for my surviving parent and limited support for me, but I have yet to come into this patrimony."

John criticizes Botstein's assumptions, pointing out that gaining a place through assignment or inheritance--"ascription"--is really no different than achieving through one's talents or natural abilities, since these are also primarily acquired by certain "unearned" hereditary or environmental influences. "In short, the 'self' that Botstein commends to us is just as much a creature of luck and circumstance as any inheritor's patrimony." John reacts sharply to Botstein's contention that wealth without purpose, is like sweet poison: "This is not unique to wealth! Any gift--superior intellect, beauty, talent, charisma--that is used heedless of purpose is ultimately destructive to its possessor."

Respondents more often agreed with the sentiments of John Levy, a consultant and author on wealth issues,

"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. My inclination is to pass on to kids more money rather than less. Some business people 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. If you leave them enough to live on, they are freed to do other things with their lives."

Deb observes, "Look at the age at which John inherited old enough to have some clue about who he was. I'm a firm believer in distributing trusts at the earliest in the late twenties, or even better, early to mid-thirties, with parental access to funds for their kids for schooling and other expanding experiences. But don't dump a trust fund on a kid who doesn't even have a credit card yet!"

Doug agrees with the value of conscious parenting and of leaving a certain amount of inheritance, but has chosen not to make his kids wealthy: "I grew up in an affluent suburb in New Jersey. We had a six bedroom house, maids, six t.v.'s, thirteen telephones and one ice maker. I didn't want to pass the excess that I grew up with onto my kids. Our will leaves $60,000 (adjusted for inflation since 1988) to each of our three children. They'll get a third of it at a time when they turn 18, 22, and 26. We chose an amount that we feel will help them set material anchors early in their adult lives, without overwhelming who they might grow into. We are letting them know how much we are leaving and why, so they won't falsely expect any big windfall. Our kids are now age 9, 13, and 16. What we want most for them is that each, independent of money, will have a strong sense of self worth and the financial and practical skills to take care of themselves.

In my family growing up, we didn't talk about money at all. I don't want my kids to be compulsive about it, but we do encourage them to discuss money and feed their natural curiosity about it. We teach them about saving, investing and giving, and make sure they experience earning their own way as a normal part of life. We try to make money interesting and fun, and keep it all in perspective."

Our last author's quote is from Chuck Collins, director of United for a Fair Economy in Boston and an inheritor himself.

"The choice to pass on substantial wealth to one's children is a vote for individual security over collective security. It essentially says, 'I do not believe my child will flourish in our society without special privileges.' Each time we choose individual security, we withdraw support for collective security. And the more we do, the more we feel justified because the services for the majority crumble further and further, creating a self-fulfilling prophecy."

John takes issue with Chuck's analysis: "Simply put, I do not agree with Collins' collectivist world-view. He assumes that the pursuit of "individualized solutions" --self-interest--must inevitably come at the expense of the public good. I do not assume that these objectives are so antagonistic, provided individuals are allowed to experience the consequences, good or bad, of their actions or inactions.

When self-interest does conflict with the common good, this conflict often has its roots in the perversion of individual choices by a pernicious combination of costly and restrictive bureaucratic regulations, economically chaotic legal procedures, incentive-distorting subsidies, and growth-inhibiting taxation. All these function to disconnect actions and consequences.

Collins assumes that the wealth that an inheritor would sacrifice will be allocated toward the public good. I assume that much of this wealth is likely to be diverted instead to subsidize elite special interests (i.e, corporate, bureaucratic, military) or politically powerful constituencies, many of whose members are not impoverished by any meaningful definition."

Collins' passage evokes a more personal inner conflict in Deb , who resonated with Collins' social concerns but was unsure how to reconcile them with her concerns as a prospective parent, "I got some of the best education this country offers and I came out of it with a true and deep love of learning. I see one of my godchildren who is so bright, in touch with his heart and shining with promise, yet he is coming out of California public schools with a real contempt for the system knowing he was never challenged to rise to his highest abilities. I don't want my kids to have similar experiences, yet I know that what Chuck is saying is true. I feel tension inside between wanting the very best for my own children, and not wanting to draw the line there - wanting the best for all of the children of the human family.

How can we promote collective security and still seek the best opportunities for those closest to us?"

"I admire Chuck Collins," says Katherine , "whose decision to give away the bulk of his inheritance resulted from seasoned and well thought-out convictions. What I find unfortunate and wasteful are those who, out of fear and guilt, shirk the responsibilities that accompany wealth and give their wealth away in order to avoid the emotional challenges."

Doug speaks of his own experience: "When at age 16 I first learned that one day I would inherit a large estate, I decided that the buck would stop with me. In other words, I didn't buy the assumption that every generation was supposed to pass the wealth onto the next. Like Chuck, I honestly believed (and still do) that from my inheritance the world at large could and should benefit far more than a few children, who just happen to share my last name and bloodline. After my father died, my wife and I decided to give away the bulk of my inheritance over ten years time. It was a very carefully thought-through decision. We kept enough to provide a measure of comfort and security.

If I were to inherit again, I would essentially do the same thing, only better still: more strategic planning, more leveraged gifts, more inspiration for like-minded philanthropists.

It's easy to be critical of a Chuck Collins or someone talking about giving so much away. But when people talk about how much they are keeping, I never hear anyone say, 'Why in heavens name are you doing that?!' I'm not saying there is any right or wrong. I applaud those people, even if they are keeping most or even all their wealth in their families, who are making conscious choices about what they are doing and why."

Having had the privilege to moderate this discussion, I suspect that the respondents would agree in large measure with this summary from Katherine : "Were I to pose my vision of the way inheritances would work in this country, it would involve, at the core, parents who know how to care for the real needs of their children, families who communicate openly about the challenges of their wealth, consultants who are available to help wealthy families work through the baggage they have about inherited money, and estate planners who consider the emotional well-being of their clients along with tax minimization. Philanthropy would be a staple of the value systems in wealthy families - not just a heavy obligation, but a joyful, vibrant, and ultimately connective act." .

Keep the Dialogue Going

Welcoming further e-mail dialogue on passing money to children:

Dennis Pearne,



or write to them care of More than Money , 2244 Alder St. Eugene, OR 97405.

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