In last week’s post, I conveyed my concerns about the upcoming $84 trillion transfer falling into unprepared hands. This topic was a particular focus of the legacy planning workshops Tom Rogerson and I recently presented in Detroit and Houston.
In those workshops I reported that many parents respond to the concern of wealth ruining their kids by saying they won’t leave anything to their kids. A recent example is a power couple from the entertainment world, Ashton Kutcher and Mila Kunis. Kutcher’s Twitter post that they don’t plan to leave any money to their children ignited a “nepo baby” stir. The debate is that nepo babies born to famous parents benefit from nepotism and get an unfair advantage, risking entitled behavior.
Accordingly, Kutcher “said he and Kunis plan to give their reported combined net worth of about $275 million away to charity rather than their children.” They “don’t want their children to become spoiled and entitled, and want them to be motivated to work hard.” (“Aston Kutcher and Mila Kunis’s plan to leave no money to their children is causing a stir on social media amid the ‘nepo baby’ debate,” available here).
Discussing the concept of disinheriting kids with the workshop attendees, here’s what I reported. I hear this statement from parents often. Though many parents profess that they’ll leave little or nothing to their kids, the reality is that when I read their Wills, it still leaves the bulk of their wealth to the kids. It appears easy for parents to say they’re leaving their kids nothing, but hard to actually pull the trigger. A case in point is Anderson Cooper saying over the years that his mother Gloria Vanderbilt was going to leave him nothing, yet Gloria’s Will said otherwise when she died. Even Warren Buffett admits he’s leaving his children a larger inheritance than he originally claimed.
Given that most parents indeed leave their wealth to their children, the focus needs to be how to prepare heirs for the inheritance coming their way. Leaving money to kids doesn’t have to disincentivize them and steal their drive, if you follow certain steps. Charlie Carr recommends these steps in “How to Avoid Entitlement” (available here).
- Help your kids develop a work ethic. Make them work, starting in their childhood, whether in the family business or doing the lawn.
- In order for the next generation to gain such a work ethic, they must first see it modeled in the older generations. Take them to work with you to see you have a real job and really work hard.
- Make your kids earn their way in the business, working their way up into senior positions.
The other aspect of battling entitlement is to pass down strong family values. I recently attended a Northern Trust Wealth Planning Symposium where Barbara Bush (granddaughter of Pres. George H. W. Bush and Barbara Bush) illustrated how the Bush family instilled values in their heirs. Although famous and powerful, the Bush grandparents modeled humility and service, as well as love of family and gratitude. In restaurants, granddaughter Barbara noticed that George and Barbara would stop and interact with each person on the waitstaff. She shared a powerful story that as children, twins Barbara and Jenna (daughters of Pres. George W. Bush and Laura Bush) were bowling in the White House bowling alley and called the kitchen to bring them two peanut butter and jelly sandwiches. Grandmother (and First Lady) Barbara Bush soon appeared and said furiously, “This is not a hotel; it’s a home!” She made them go straight to the kitchen to apologize. Children of privilege don’t have to grow up spoiled.
For those of us who haven’t consistently delivered the Barbara Bush message to our children, Adrienne Penta offers words of encouragement for “Raising Kids With Wealth” (available here). Penta says it is never too late. “The question is: How do you stop a pattern and change course? The first step is acknowledging that we are on the wrong path. The second step is communicating course correction: ‘As your parents, we don’t think we have set the right tone for how we think money should be used. Let’s rethink it, starting with what matters most to us as a family.’ The conversation starts with values, which can then serve as a north star for a family’s financial plan, including allowances for young children, estate planning, and philanthropy.”
For those of you out there like me who haven’t always delivered the right message to our kids and grandkids, Penta’s words bring comfort. It’s never too late.
Marvin E. Blum
Marvin Blum and Tom Rogerson at Houston workshop, guiding parents on estate planning to create empowered, not entitled, heirs.