Last week’s Family Legacy Planning email created quite a stir when it raised the question of how much to leave to your kids versus charity. People struggle with finding the right balance between family and philanthropy. There is no easy answer. Given the interest, we decided this week to dive deeper into the debate. Let’s see what lessons we can learn from celebrities featured in Helen Rumbleow’s London Times article “Daniel Craig and the Curse of Inheriting.”
- Daniel Craig finds an inheritance “distasteful.” His plan for his James Bond earnings is to “get rid of it or give it away before you go” (perhaps easier said than done). He elaborates that he will not leave “great sums” to his two daughters, but he doesn’t say “no sums.” Once again, we are left to wonder what’s the right balance between kids and charity?
- Bill Gates’ plan to leave his kids “only $10 million each” was inspired by his friend Warren Buffett, and though he thinks inheritance is no favor to them, he still can’t “cut the purse strings entirely.”
- Elton John says it’s “terrible to give kids a silver spoon,” but still plans to leave his children in a “sound financial state.”
- Actor Ashton Kutcher refuses to hand out money freely, but adds: “If my kids want to start a business and they have a good business plan, I’ll invest in it.”
- Andrew Lloyd Webber stated, “I am not in favour of children suddenly finding a lot of money coming their way because then they have no incentive to work,” but in the same breath admitted he will give his children “a start in life.” How much is that?
Notice the tension in each of these examples. Parents don’t want to disinherit their kids, but they don’t want to disincentivize them either. They are trying to strike a balance. They want their kids to live a good life, but they want them to still have to work. According to Rumbelow, “the necessity of work is one of the guardrails against nihilism and self-loathing.”
The answer lies in taking steps to prepare them to inherit and then leaving the inheritance in a well-crafted trust. The Blum Firm specializes in designing trusts to help families find this balance. Trust provisions can guard against creating “trust babies” by rewarding productive behavior but withholding distributions from beneficiaries who are off track. Trustees should be charged with mentoring heirs in order to educate them and help them build self-esteem. Trust distributions should be spaced out so that beneficiaries who made mistakes with earlier distributions have a chance to get it right with later distributions. We would be honored to help your family create a trust plan that benefits and empowers your heirs, but also provides for charitable causes important to your family.
Marvin E. Blum
Marvin and Laurie Blum with their kids and grandkids. Loving your family includes taking responsibility to prepare them to inherit.