My 10-year-old granddaughter Stella Savetsky posts a weekly Instagram video, Stella’s Torah Corner, teaching that week’s Torah portion. I always learn a lot from her posts, including her most recent one on the portion Beshalach. After escaping slavery in Egypt, Jews wandering in the desert received daily manna from heaven to sustain them. Whatever manna they didn’t finish at the end of the day was destroyed. They couldn’t take the leftovers with them. Stella wisely provided a Torah lesson that resonates with her estate planning Zaidy: when you die, you can’t take your leftovers with you. Accordingly, you need to plan carefully for where those leftovers should go upon your death. Guiding people in that important decision just happens to be my life’s work.
When parents consider where to leave their “leftover” assets, the knee-jerk reaction is to leave them to their kids. However, after careful analysis, the decision is actually more complicated. How much is the right amount to leave your kids? Returning to the article featured in a couple of my recent posts “The Getty Family’s Trust Issues” (The New Yorker, Jan. 23, 2023), Evan Osnos declares: “The question of how much to leave your kids has been with us since the Ice Age…. [W]hen inheritance patterns reach extremes, they wreak social and political havoc.” All are familiar with stories of inheritances gone bad. Osnos cites two famous examples: “Even some of America’s greatest entrepreneurs saw inheritances as a handicap—a ‘misguided affection,’ as Andrew Carnegie put it. William K. Vanderbilt, a descendant of Cornelius, observed, evidently from experience, that inherited wealth was ‘as certain a death to ambition as cocaine is to morality.’”
What’s the answer? Warren Buffett’s famous advice is “enough so they can do anything, but not so much that they can do nothing.” My position is that the right amount of inheritance is the amount your heirs are prepared to receive. Any amount is too much if it lands in unprepared hands. Having witnessed all too often the disastrous consequences of money going to the unprepared, I embarked on a Family Legacy Planning initiative to encourage families to engage in a thoughtful family meeting process to equip future generations with the skills (financial and emotional) to handle whatever amount is coming their way.
Parents often joke with me that they plan to spend their last dollar on the day they die. Obviously, that only works if you have a crystal ball telling you that date. The reality is that, in the end, there will be “leftovers” to distribute. Here’s my suggestion for a three-part inheritance to leave your heirs:
- A portion as a traditional inheritance passing to a trust that provides for the health, education, maintenance, and support of your heirs, protected from creditors and divorces;
- A portion to a charitable vehicle, such as a private foundation or donor advised fund, giving your heirs a second inheritance they can use to benefit causes important to the family; and
- A portion to a FAST Trust (Family Advancement Sustainability Trust) where funds are not to be distributed to beneficiaries but are to be spent only on family enrichment activities such as family retreats, family travel, preserving a heritage, maintaining a legacy property, and providing programs to educate the family on philanthropy, entrepreneurship, and other worthwhile endeavors.
As you ponder where to allocate your leftovers at death, I urge you to work with advisors to guide you through a thoughtful process. The goal is to design an estate plan that improves the odds of multi-generational success, passing assets down to responsible, empowered (and not entitled) heirs.
Marvin E. Blum
Marvin Blum’s granddaughter Stella Savetsky posts Stella’s Torah Corner on Instagram to teach the weekly Torah portion. Last week’s post contained an estate planning lesson.