Blog Author: Stephen C. Hartnett, J.D., LL.M. (Tax), Director of Education,
American Academy of Estate Planning Attorneys, Inc
We all want to help our kids financially, but how much is too much? Businessman billionaire Warren Buffet was quoted in a 1986 Fortune article that, even if you had ample wealth, one should leave your kids “enough money so that they would feel they could do anything, but not so much that they could do nothing.”
Bill Gates, Warren Buffett, and other philanthropists in the U.S. and abroad have pledged to give the majority of their wealth to charity. Through their inspiration, more than 200 billionaires have joined them in the Giving Pledge.
Similarly, when Gloria Vanderbilt died at age 95, her only living child, Anderson Cooper, said she wasn’t leaving him anything. There was no animosity between them, quite the contrary. Here’s a link explaining that Cooper didn’t need the money and he and his mom didn’t believe in inheritances.
It is up to each of us to decide how much is the appropriate amount to leave our children. For those of lesser or moderate means, perhaps leaving all assets to your children makes sense. But there is a point where the prospect of inheriting too much money is a disincentive for the child. This article explains how it may not take millions of dollars to cause children to lose motivation.
Whatever amount you choose to leave to your children, you can leave it to them in various different ways, not just outright. For example, you could choose to leave it to them in a trust managed by someone whom you trust until your child reaches a predetermined age. You could set a distribution standard for the trustee to go by or you could leave it completely in the trustee’s discretion, which provides the most asset protection for the beneficiary.
If you’re not leaving everything to your children (or if they predecease you) have you considered where you’d want your assets to go? There are many worthwhile charities which can promote your goals. Charity Navigator is a great resource to research charities with the best track records. It allows you to eliminate wasteful charities and those which are not transparent.
We all want to help our children. Consider what is the best way to help them.
Litherland, Kennedy & Associates, APC, Attorneys at Law are members of the American Academy of Estate Planning Attorneys. If you would like to learn more about the importance of estate planning, we invite you to attend one of our free estate planning seminars.