How Much Should I Leave to My Children?

Last week’s Family Legacy Planning email shined a light on philanthropy as glue that can hold a family together, second only to endowed family travel and retreats. When including philanthropy in your estate plan, a question arises on how much to leave to your children when you die, and how much to leave to charity. What is the right balance?

As baby boomers are on the verge of passing trillions of dollars of wealth to the next generation, a hot question is: “what impact will that wealth have on my kids?” William Vanderbilt famously said that the fortune left to him by his father “has left me with nothing to hope for.” He described inherited wealth as “a death to ambition.” In a recent London Times article “Daniel Craig and the Curse of Inheriting,” author Helen Rumbelow likens an inheritance to medicine: “give someone too much and there is an overdose effect; you kill the patient (or in this case the child) you had wanted to protect.”

In my estate planning practice, I often hear people say they plan to leave their assets to charity rather than their kids. They say that, yet that’s rarely how their estate plan reads. Typically, they still leave the vast majority (if not all) of their wealth to their kids. People struggle with finding the balance between how much to leave their kids vs charities. The question most of us ponder is “How much is too much to leave to our kids?”

An early champion of the concept of balancing an estate between family and philanthropy is Warren Buffett. Buffett famously said he wants to leave his kids “enough so they can do anything, but not so much that they can do nothing.” Note that he doesn’t advocate disinheriting his kids. His message is to leave some to family and some to charity. When I had the opportunity to ask him: “How much is the right amount to leave your kids,” he admitted that he struggles with that and frequently adjusts his plan to leave them more, as he sees that they’re capable of handling it.

From Buffett’s answer, I derive this wisdom: the right amount to leave your kids is the amount they’re prepared to receive. It’s our job as parents and advisors to prepare the next generation. Without preparation, I’ve heard an inheritance described as leaving a kid a loaded gun with no instruction manual. I realize these comments are graphic and harsh, but we in the senior generation have a responsibility to train future generations for what’s coming to them. Please join me in The Blum Firm’s mission to strengthen the family bond and take steps to prepare our heirs to inherit.

Marvin E. Blum

Warren Buffett attempting to protect his wallet from the reaches of Laurie and Marvin Blum.