Posted on February 21st, 2017
Marc Rittersporn/marc@integritt.com
Accumulating wealth can take a lifetime, and it can be worrisome passing it on. There are values and lessons that were learned on the way, and they are valuable lessons for your children as well. When it comes to passing wealth onto children, it is good to look at how to do it effectively.
Over the next 30-40 years, approximately 30 trillion dollars will change hands from parents to children. Parents often worry about transferring wealth without repressing their kids, who they want to succeed with their own hard work. The good news is we can raise our kids to develop their own identity, value, and success, and not ruin them when the wealth changes hands.
Good planning allows us to use our money to encourage our kids to seek and plan for their own success. We can put off inheritance to them until later in life when they are already set up on their own two feet. Money is then no longer an impedance to them, but rather it is a “quality of life” booster. Many children, in fact, are so well set up in their later years that an inheritance is simply a protection from trouble or a boost to their ability to enjoy life. Wealth passed on at a later stage can end up being used as a college plan for a grandchild or a vacation property to spend more family time together. In this sense, money inherited at a more established age can be unlike giving younger children use of their parent’s money unfettered. Unfettered access can be an obstacle to healthy adults.
If you are worried about this and are committed to passing on an inheritance in a way that will not ruin your offspring, then you can commit to providing the teachings that go along with how you came to be where you are at. Take your children to work, talk to them about who you are and where you came from, and discuss all of the hard work it took to get to the financial stability you have now. Embrace hard work; do not protect your kids from it and teach them how to balance working hard with having fun in life. Let them work hard for the things they are facing in life: grades in school, athletics, extracurricular activities, and volunteering. Allow them to get jobs that teach them responsibility; just because they don’t need money doesn’t mean they can’t or shouldn’t work. There are a plethora of volunteer positions that teach responsibility and rely on expressing maturity and leadership.
There are “game plans” that use out-of-the-box financial planning strategies and tactics that will help save the adult children that have slipped past the boundaries; the ones you are still worrying about. Worrying is a proven to destroy health. Why worry when you can plan? A good plan and good information can correct and prevent a lot of mistakes.
Call me, Marc Rittersporn, Principal at Integritt Wealth Management, with any questions at 772-266-2160.