• Services
    • Financial Planning
    • Investment Management
  • Blog
  • Resources
    • Retirement Q&A
    • Free Tools
    • In the Media
  • About
  • Contact

Jeremy Kisner

Mobile Menu
(480) 272-7116
  • Blog
  • Resources +
    • Retirement Q&A
    • Free Tools
    • In the Media
  • About
  • Contact

Prepare Kids to Inherit Wealth

It comes as no surprise that the largest wealth transfer in history will unfold over the next 30 years as Baby Boomers leave their assets to their children and grandchildren. There’s an army of estate planning attorneys and financial advisors who are ready, willing, and able to help prepare kids to inherit their wealth. Yet many of these plans will fail even in cases where all the documents are in place. Failure does not mean that your children and grandchildren will not receive the money. It means that the money may create stress and resentment among siblings and other family members instead of the benefits you may have imagined.

Numerous studies on wealth transfer show that many beneficiaries are not prepared to receive such wealth. The problem is more pronounced in wealthier families, but it can be seen at all levels of the socio-economic ladder. Rarely are the failures due to poor legal, tax, or investment advice. The failures to prepare kids to inherit your wealth are usually the result of a breakdown in trust and communication among family members.

Will an inherited wealth hurt my kids motivation?

There is a common concern among wealthy families that kids will lose their motivation if they are aware of the scope of the family’s wealth and their likely inheritance. I have not seen this to be the case. The fact is children are perceptive and keenly aware of the family wealth. They are more likely to take it for granted unless they understand where the wealth came from and how it is managed, spent, and given back.

Prepare Kids to Inherit Wealth

The solution to prepare kids to inherit your wealth is to have open, honest communication about money with your family members before they inherit the assets. This does not mean that they need to know how much money you have or see copies of your financial statements or financial plan. The key is that the future inheritors appreciate the challenging work and sacrifice that was involved in earning and saving the money. You need to pass on your values along with the money. That is not necessarily difficult to do, but it cannot be delegated to your professional advisors.

Two tips to prepare kids to inherit wealth:

1) Personal Stories:

The best way to teach anyone about money is personal stories. These are the memorable moments and lessons in the wealth creator’s life. It is not enough to provide a general overview of how the family nest egg or business was built. The most impactful stories show the vulnerability of key family members and how certain situations and hardships built success and character. Kids will remember personal beliefs that motivated and drove their parents and grandparents to take risks, save, and invest for the future. It is through an understanding of those transformative moments in the family’s history that children begin to appreciate values and develop a feeling of responsibility that comes with their family’s financial success.

2)  Questions, Not Lectures:

Parents and grandparents cannot simply impose their beliefs, values, and priorities on younger generations. The younger family members should be heard and respected, and they should have a role in shaping the family’s values and philanthropic focus. Try asking your beneficiaries questions instead of telling them how they should act or what their financial priorities should be.

Successful wealth transition cannot be built overnight or through a single action or trust document, but instead requires open, ongoing communication and education.
For more on this topic, read: Your Family Wealth Philosophy and/or give me a call if you would like to discuss.

 

Share
Tweet
Share

Recent Posts

  • Stock Options – How Do They Work?
  • Election 2020: How Will the Outcome Affect Your Portfolio?
  • Company Valuations – Why is a Stock Worth That Much?
  • Debt To Income Ratio: How Much House Can You Afford?
  • Reinventing Yourself in Retirement: Rich Rajacich

Jeremy Kisner, CFP

Jeremy is a lover of all things finance. He likes to play poker, go camping, and practice yoga, but he loves to talk economics and investment strategies even more.

Make sure to read his book, “A Good Financial Advisor Will Tell You” and check out an article quoting him in Barron’s or The Wall Street Journal.

Categories

  • Bucket List Travel
  • Estate Planning
  • Featured
  • Insurance & Annuities
  • Investing
  • IRAs & Qualified Plans
  • Kids & Family
  • Mortgages & Debt
  • Personal Finance
  • Real Estate
  • Retirement Planning
  • Social Security
  • Taxes
  • That's Interesting

Services

Financial Planning Investment Management

Our Recent Posts

Coronavirus Stimulus Plan: What It Means to You

The Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020 seems to have something for almost everyone. The bill is 335 pages long, so today’s article is a summary of the few provisions most likely to affect our clients, specifically recovery rebate checks, which 90% of American households will receive, and the waiver of ...View Article

Gifting Money or Assets to Adult Children

Many of our clients are torn over whether to give money to their children while they can see them enjoy it or make them wait to inherit the money after their passing.  There are pros and cons to each, so today’s article is going to help you think through these issues. Can you afford it? ...View Article

Prenuptial Agreement – 5 Required Elements

Two of my good friends have gotten divorced in the past year. One breakup went relatively smoothly and the other was more of a “scorched earth” situation. Neither of these friends had prenuptial agreements, which would have made the process simpler and less painful for all parties involved. I was heartened to share with these ...View Article

Office
2425 E. Camelback Rd, Suite 890B, Phoenix, AZ 85016

Phone
(480) 272-7116

Work With Jeremy
Financial Planning Investment Management
Keep in Touch
Get my Clear & Concise Financial Advice delivered to your inbox. You will receive one email per week and I promise to never share your email address.
© 2021 | Jeremy Kisner, CFP is an Investment Advisor Representative of Surevest Inc. | Disclosure