Show Children – And Talk About – The Money
THE GLOBE AND MAIL – MANAGING – Thursday, July 8, 1999, B11
The daughter of a successful food industry entrepreneur remembers saving enough money as a child to buy a camera she desperately wanted.
Strangely, instead of congratulating her, the father became furious. "He had wanted to buy it for me, she says. "Love and power and money were all blurred and mixed up in our family. Dad would buy us things when he couldn't spend time with us."
Business families soon learn that wealth built through the business carries implications for the children. Some may become complacent, never learning their strengths and abilities because they never have to find out. For others, a parent's wealth may provide a target for the child to outstrip.
Or money and the child's inheritance may always linger as yet another weapon in a continuing struggle for control, as it did for the food industry scion. "There were always strings attached to the things my father did," the daughter recalls, "emotional strings that required people to continue doing things as he wanted them done."
These days, business families are becoming much more purposeful about handling wealth. It's a new frontier in middle-class business family life. Families tend to take much more care in deciding how the wealth generated by a family business will affect children.
"I think it's something that everybody who's successful in business faces sooner or later," says one family business leader. "How do you cash in on and share what you've built in the business without destroying the other investment — the one you've made in your children?"
The size and timing of the inheritance is one of the most explosive questions faced. Most parents want to give the children enough to meet their needs and expectations (especially if they brought them up to expect it). But how much is enough?
When you always get what you want just by asking, another heir says, an important step disappears — namely, having to wait for it or work for it. And that's the part that turns dreams into realities. The heir now wishes his parents had concentrated a little less on keeping him happy and a little more on building his character. He sounds a little like William Vanderbilt, heir to a $60-million family fortune, who said in 1885 that inherited wealth is as certain a death to ambition as cocaine is to morality.
In most cases, however, upbringing overcomes wealth's corrupting influence. Even parents with more modest estates can help children establish a healthy work ethic and with it some perspective on the wealth they may inherit. Here are some basic rules of thumb:
Business families are becoming much more purposeful about handling wealth. It's a new frontier in middle-class business family life.
- Children should inherit more than a little and less than a lot. Leave the kids enough money to feel they can do anything, but not enough money to believe they can do nothing. Give the rest to charity.
- How you perceive your newfound wealth will often rub off on the children. Families who created their wealth from hard work will usually continue to do so, while parents who, for whatever reason, feel undeserving of success will tend to raise kids who treat their inheritance as a windfall that they must spend before it disappears. A daughter once described her triumph at coming home from her first baby sitting job and displaying her earnings, only to be told that she was wrong to have accepted payment. Whether they knew it or not, her family was telling her that her work did not deserve to be rewarded.
- Don't make money a secret. Without certain details, wealth hang-ups occur. It's amazing how many children do not understand where the money came from or what it ought to represent in their lives.
- Bring, the family finances into daylight. Let the children know what they are getting and where it came from, and teach them ways to hold on to it. They should also, of course, know if they are not getting anything.
- Start talking as early as possible. Involve the children in your discussions about money. Talk about the value of money and discuss logical rules and obligations of wealth, and what it can do for them and the community.
- Present the wealth as a benefit to be used wisely, not impulsively. Tell them what questions you need answered before you will decide on an investment or donation.
- Involve them in decisions whenever possible. Let them choose the stocks in their portfolio and identify the charity of choice. The rule here is to understand what personal beliefs and values you want the next generation to pick up.
- Put child rearing before estate planning. Pay less attention to your monetary assets and a little more attention to the other assets you have to offer – such as love, time, knowledge, experience, judgment and wisdom.
In other words, try and consider inherited wealth as just one part of a larger and longer-lasting legacy. What separates happy individuals from unhappy ones is self-esteem. If people have a sense of self-worth and fulfillment, money doesn't become a problem.
Additional Resources
- Your Children and Wealth Preservation
- The Investment Club You Can't Get Into
- Family Money Consultants – Publications
- The Inheritance Project
- Cash University
- More than Money
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