One thing that people worry about when leaving money to their children is that it will kill their sense of motivation.
The theory is that much of the hard work that people do is simply to become financially secure. If you leave your child enough money that he or she doesn’t have to work, is the child going to live a life of luxury — but also a life where nothing meaningful is accomplished?
Certainly, while this concern makes sense, experts do note that wealth itself doesn’t always create this mindset. Much of it comes down to the child’s personality and the way he or she was raised. Parents who have been successful in raising the type of kids who are already motivated and enjoy working hard can often leave their children as much money as they want without ruining that. It’s important to understand your child’s personality before deciding what to do.
For example, the Walton family is one of the richest in the United States. The eldest son alone has a net worth in the billions — certainly enough to never work or strive for any accomplishment, if he so chose. Even so, he not only went to college, but graduated from Columbia Law School. He’s a chairman for his father’s company and has, in his spare time, participated in Iron Man triathlons.
For parents, the key to deciding what to do and how to create a successful estate plan is to carefully consider all children individually, looking at their personalities and internal motivation. There are many potential solutions, from leaving a lump sum to setting up a trust fund that governs how the money is spent, and knowing what options exist can help parents decide which will be most beneficial for their children.
Source: American Bar Association, “Talking About Estate Planning,” Jon J. Gallo and Eileen Gallo, accessed June 09, 2017