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Let me start with a disclaimer. This is not my opinion, this is opinion expressed by guest poster Bill. If we ever get a kid, we will leave almost everything for him/her in our will. I think many of us think the same way. Still, no harm in listening to the other side of the argument. Enjoy the post and leave your opinion and thoughts.
Everybody always wants to know why I’ll not leave my fortunes to my kids. In this blog post I’ll talk about the following:
- The pros of not giving my children my fortunes.
- The cons of not doing so.
- Why warren buffet said he would give 99% of his wealth to charity
- How to appreciate your wealth by sharing with other people i.e. the needy.
- How to teach your children to build their own wealth without depending on your investment.
Are you ready for the insight?
Ok, lets rock
There are many good reasons. One of the most important is that I’m simply following the example of some of the richest men in the world, who have all said they would leave only a small percentage of their estate to their heirs.
For example, Warren Buffet has famously said that he would give away 99% of his wealth.
He told the Gates Foundation that he would leave his kids just enough that they would feel they could achieve anything but not so much that they would not want to do anything.
This is also why I prepay my mortgage since I don’t want to leave my children with debt.
Here are some pros of my decision not to give my children a BIG inheritance.
- I want my children to learn valuable lessons about money. I recently asked them to read the blog post What I Want My Kids to Know About Money so that they’ll realize the importance of living below their means so that they can avoid going into debt to support their lifestyle.
- I want them to learn valuable career lessons. Forbes magazine recently published an article on the twenty things that twenty-year olds don’t get, explaining some of the valuable lessons that young people should know in order to build their careers. Why would they be motivated to build a career if they have enough money that they don’t have to work?
- I don’t want them to grow up spoiled. I’m not rich enough for my children to afford services for the super-rich or swanky lifestyles in Meadow Lane, the so-called “Billionaires Lane” in the Hamptons. But I also know that if I left them my fortune, they would not appreciate the value of money.
- They might decide to keep their finances separate from their spouses. As explained in the blog post Separate Finances: A Recipe for Marital Disaster separate finances would discourage spouses from turning their marriage into a genuine partnership since they would be encouraged to spend what they want without being accountable to each other. This would encourage them to be selfish, in other words, instead of considering how their use of their finances would impact their family.
- I want them to appreciate the value of sharing with others. This is why many billionaires are opting not to pass on their fortunes to their children since they want to use their money to help the less fortunate improve their lives, as well as giving back to the community.
On the other hand, there are some cons regarding my decision not to leave money to my children.
- I want them to have enough to invest. I always encourage my children to read blog posts about investing such as My Investment Tips For Younger Look so that they would be able to develop their own investment strategies. However, it takes some money to invest in.
- I want them to have enough to start a life on their own. With times as hard as they are, my children are not earning enough to start families and establish households of their own. If they received my fortune, this would not be a problem for them.
- I want them to have a clear mind in terms of working hard and making their own money rather than depending on the family wealth.
- I don’t want my children to feel that I don’t love them. Of course we have had family discussions regarding how we should not measure affection by how much money that we are willing to spend on each other, but we live in a society where love and money are inextricably linked. When I am gone and people know that I did not leave a lot of money to my children, they might say that I did not love them.
Things to do for your kids
If you don’t want to leave your fortunes to your kids, then I’d recommend that you do the following for your kids.
- Open saving accounts which will enable your kids to save for future needs
- Teach your children on the benefits of investing
- Teach them how to pay off their debt just in-case they have when they grow up.
- Build their investment portfolio so that when they grow up they will know how to manage their investment.
- Pay off their school fees in full so as to avoid any balance
- Instill discipline in terms of money management
- Teach them to spend less especially on their birthdays and vacations
In Conclusion
Now you know why I’ll not leave my fortunes to my kids. It is not a decision that we made lightly but it is one that we feel is important to help ensure our children’s future.
After all, the most important legacy that we can ultimately leave them is not money but the life lessons that we have imparted to them that will enable them to live their lives well. Well, I know most of you are divided in whether to go this route, but all in all we need to make wise decision when allocating our wealth to our dependents.
Definitely I know this blog post will cause a lot of debate but it’s just my opinion. If you have a burning question in regards to not leaving wealth to your Kids, kindly leave your comments for intensive discussion.
Have a happy wealthy Day!!!
About the Author: Bill Achola has asked repeatedly to be called ”His Royal Awesomeness” but no one listens to him. So, he settles for CEO of EBusiness Reviews, LLC. Poor man. He is the author of www.eBusinessReviews.net a practical blog that helps bloggers and investors to make wise decision before they invest.
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I think this is a smart move. Children with inherit money usually don’t turn out so nicely. Hard decision, but I believe it’s a wise one.
Hey Peter its true its a hard decision to make,especially when you want your children to get the same favor
I think if by “fortune” the author is talking about more than $5 million, then not leaving it all to the kids makes sense. There are studies that show that fortunes are often lost within 3 generations due to frivolous spending by the heirs. If the “fortune” is less than $3 million, then it ain’t a fortune. It could be a lot of money to someone in their 20s and 30s, but it would not be enough to live off without having to also work. As long as you raise the kids right, they should be OK with handling a substantial inheritance.
P.S. Warren Buffett apparently does not like everyone in his family. In 2006, he disowned his son Peter’s adopted daughter, Nicole, and wrote, “I have not emotionally or legally adopted you as a grandchild, nor have the rest of my family adopted you as a niece or a cousin.” He also lived separately from his first wife for 24 years until she died. He shacked up with another woman during that time. He is not a role model for family life. I will not use his example or advice for how to treat my heirs.
My children are in college and I will leave them just about everything. They are very responsible and appreciate how hard we’ve worked. I think if you raise children to appreciate money and the effort it takes to earn it, then they will not be spoiled with an inheritance. Money doesn’t spoil children. Parent’s spoil children.
I think that the question to ask would be: “Will my inheritance help my children to live the best life that they can live, or will it hinder their personal growth and development.”
So the ultimate goal, under this paradigm, is to use what finances you have to help your children to the maximum extent possible.
It is difficult to speak in generalities about such a complicated subject, so I will only speak for myself. I am going to give my entire fortune to my children (low eight figures), but I am not going to do it when I die. I will try to time giving the money when it would help them the most. For example, when my son wants to buy his first investment property, I am going to help make the funds available, just as my father did for me. Also, I will make sure that by the time my children are 25 that they will have a robust retirement fund.
If, over the years, I find that my children are vain and frivolous, then I might reconsider, but I am raising them to be kind, thoughtful, and generous people and I would be surprised if they did not end up so.
I am actually hoping that by the time I peel off into the sunset that my kids won’t need the money, but with any luck that will be a long way away. In the mean time, if anything happens to me my sister will take over a trust fund that does not mature until my kids hit 40. If they need money for medical school, it will be there, but if they want to buy a lambo…at least it won’t be with my money.
I will teach my children everything about money, business, and investing, and turn them into wannabe entrepreneurs.
However, they only get my money once they’ve proven they can achieve more than that on their own, with their own business, investments, etc. Ideally, this would be set up as a trust – each year 1/3 the profit is reinvested in the trust, 1/3 goes to charity, and 1/3 goes towards matching my descendants’ passive income via business or investments. Any left over from lack of performance from my descendants is added to the charity donation.
Everybody wins.
Great post indeed. I think I will do the same to my children..
Thanks Tina for the appreciation, hopes all goes well.