While a certain percentage do allocate a portion of their estate to charities, the vast majority of my clients leave the bulk of their assets to their children. Unfortunately, great loss can drive even the most responsible to make irresponsible choices when it comes to inheritance.
While many of these children are all adults on paper, I encourage clients to think long and hard about when to give as well as how much to give. After all, an early twenty-something has a far different maturity level than a thirty-eight-year-old with a wife, a house and two children of his own.
Answering when and how much is hard. Even billionaire businessman, Warren Buffet doesn’t believe in simply bequeathing it all to family when he passes. Instead, he would rather give ''enough money so that they would feel they could do anything, but not so much that they could do nothing.''
He understands, better than anyone, that excessive wealth can be a great asset. It can pay for a nice house and for college, but it also has the potential to handicap the young from striving to achieve their own success.
You don’t have to be a billionaire, or even a millionaire, to have an estate plan lookout for your offspring. That’s why I have every client go through a worksheet exercise. While it is multilayered, so is life.
The goal of this worksheet is to help me understand your specific family needs, both from a concrete asset standpoint, as well as from less tangible angles – such as your family dynamic, values and attitudes about money.
Putting it all on paper not only allows me to assess your particular situation, but also it’s a great way to start dialogue between spouses (which is harder than you might think.) Because if you want to ensure your adult children are responsible, you first have to set a good example.
Children learn from their parents, after all.
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