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How Much is Enough to Leave the Kids?

How much is enough? This vexing “elephant-in-the-room” question faces most families of wealth. “How much ought we to leave the children when we die?” Here is what Bill Gates and Warren Buffet said about leaving money to their heirs.

“One thing is for sure,” said Bill Gates in Forbes Magazine, “I won’t leave a lot of money
 to my heirs because I don’t think it would be good for them.” He stated that he would leave each of his children $10 million.

“The perfect amount to leave children,” said Warren Buffet, “is enough so they would feel they could do anything, but not so much that they could do nothing.”

The “How Much?” question is enormously complex and, once opened, reveals other questions inside. Looking closely we see the question voices the parental worry that adult children will not know how to manage their inherited wealth. But how did Bill Gates and Warren Buffet learn to manage their own wealth in ways that did not distort their character?

The idea that parents must limit their children's wealth in order to preserve their children's sanity and industry sounds appealing but, to me, it suggests either that parental values had not been inculcated into the family culture or that the parents don’t believe in their children’s ability to take to heart what they had been taught about life, wealth, and balance.

One anti-dote to the worry about inheritance distorting children later in life is to help children grow to become self-confident emotionally healthy adults, wealth aside. This growth is not a “pie-in-the-sky” dream. It is possible. However it requires family interactions that are attuned to children's emotional needs, from the crib onward. It’s a worthwhile investment because attitudes of confidence, industry, kindness, and generosity developed during childhood will protect inheritors from getting lost later in their lives. These qualities and attitudes must be absorbed early in life. They cannot be inculcated from the grave.

Usually family wealth is a veiled secret, vaguely acknowledged, but rarely discussed openly. In relation to families, I have a bias toward transparency, openness, & continuing familial communication especially because wealth does not remain a secret and end of life is way late in the game to begin such a truly intimate conversation.

I believe that wealth needs to be discussed in matter-of-fact ways in the family and that children should be brought in to the fact of family wealth at the earliest possible time, which, of course, will vary with the child and with the family. For example, young children could be present at some meetings of family foundations. When a bit older they even could be given some limited funds, under supervision, to distribute in considered ways. The tradition of judicious financial management also should begin early. When children are kept ignorant of the big secret that swirls around them they will be overwhelmed when they learn the truth. As with most things, acknowledgement rather than avoidance of life’s obvious but sometimes uncomfortable realities is a preventative vaccination.

Of course there are families of wealth that do not function well. This is not necessarily a function of wealth but of parental misattunement to the children's needs. All children rich, poor, and in between need the same thing - attuned parents. Any time a special circumstance occurs in a child's life, the child navigates that circumstance best when the circumstance is addressed and managed openly. This applies to financial specialness as well as to physical specialness, handicaps, and even remarkable personal gifts and talents.

Legal structures and limited inheritance should be matters of last resort. They are needed when children grow to be emotionally deformed adults. In these situations too, however, it is essential that the children know of the structures and limitations created by their parents and the reasons for they were created, long before their parents die. Nothing should come as a surprise at the end. Sometimes it might be useful to engage these difficult conversations with a trained third party since parents who could not engage an essential life long conversation with their children certainly will not have the ability to do that when they are looking at their disappointments as they end their lives.

The Impact of Pretending on the Estate Planning Process 

(written for Alan Orlowsky, an estate planning attorney)

Let’s pretend. Remember that phrase? Remember the radio program, “Let’s Pretend,” sponsored by Cream of Wheat? Pretending was a huge part of being a kid. Pretending was exciting. It transported us from the boring, ordinary “whatever” of life in the moment to life in fantastic places with fun-filled extraordinary roles.

As adults we sadly lose our ability to play “let’s pretend,” except when we go to the theater, where as adults, we are socially permitted to pretend. There we join actors for 90 minutes or more as they pretend to be people other than whom they actually are. When the movie or play is convincing we suspend grownup disbelief and allow the actors to transport us to make-believe world. We forget they are regular people with lives of their own and happily join them in their pretense to be someone else.

Pretending hasn’t gone completely away for grownups and actually takes on another function in adulthood. Adults pretend when they need to look past unpleasant and often difficult realities. Pretending helps us avoid realities we know are present, but that we’d rather not acknowledge. Sometimes consequences of adult pretending are minimal, like when we’re inconvenienced by a stop light and slide through, pretending it’ll be OK—only to be nabbed later by the red light camera. At tax time a cheat pretends he or she won’t get caught, not withstanding the consequences of a troubling IRS audit.

Adult pretending carries a spectrum of consequences. Sometimes, as above, the consequences are not so bad. Sometimes though, adult pretending can be disastrous! Examples of the horrific consequences that come from pretending are often in the news where we see otherwise bright people pretend to themselves that outrageous and even dangerous behavior would remain a secret from a spouse, voters, and even the press. This ability to pretend that misbehavior will not be discovered (even though in a corner of their minds they knew better) canceled out their their usually good judgment and enabled them to blindly plunge into the satisfaction of the powerful need to pursue whatever it was that got them in trouble.

We all pretend as adults. We pretend when we have essential, yet unpleasant, tasks that we try to ignore. “Ignoring” is an adult form of pretending. Of course, ignoring isn’t possible since it takes a huge emotional effort not to look squarely at what needs to be seen. Nevertheless, we try to avoid the unpleasant feelings that come with doing an unpleasant task by putting off actually doing the task. This is called procrastination but really it’s pretending. It’s like the dream we have of walking down a street and seeing a terrifying lion in front of us. We can’t get away so we pretend the lion isn’t there. It works in a dream but in real life it can end in disaster.

We also pretend when we put off upsetting tasks that acknowledge that we are not forever and that we diminish with age and eventually die. Tasks like creating an estate plan put us in direct contact with our frailty. Many of us prefer not to see this unpleasant reality so we “procrastinate” and “ignore” but really we are pretending that we don’t see what we actually know is there.

The greatest psychological accomplishment for any person is the development of an ability not to pretend that there is no end. The ability to acknowledge the eventuality of our end helps us summon the courage to face the “lion” in the street. With that courage we become able to create a will, plan an estate, and protect those we dearly love who will be here once we are sadly gone.