If you are part of the baby boomer generation, you might be surprised to hear that you and Bill Gates and Warren Buffett have more in common than you might have thought.
Bill Gates, Warren Buffett, and other very wealthy, high-profile figures have announced that they will not be giving their large fortunes to their kids, according to a report in the Washington Post.
Why? They believe that having access to a large inheritance creates spoiled “trust fund kids,” those who have no motivation to work or do anything productive with their lives.
Celebrity chef Nigella Lawson has reportedly said, “I am determined that my children should have no financial security. It ruins people not having to earn money.”
Historically, middle class families have not had to worry about this issue: without millions to leave, there is no risk that their kids will become entitled or lazy.
However, today’s baby boomers will leave a record $30 trillion to their heirs over the next 30 years: the largest wealth transfer in history! This means that the issues that once applied only to the wealthiest in the nation have become a concern—at least on a smaller scale—for the rest of us.
As a result, more and more people are considering how much to give to their kids. Should your kids get your money, or would they be better off without it? And if you don’t give your kids the majority of your estate, where should it go?
Gates and Buffett have planned to leave their vast amounts of wealth to charity, while a much smaller amount will be left to their kids. Buffett has created a $2 billion foundation for each of his kids—but these foundations are to be used to support charities.
Similarly, you might choose to leave only a portion of your estate to your kids. And if you are worried that they won’t be able to responsibly handle a large inheritance, you might consider setting up a trust that gives them the money under certain conditions (for example, at specific ages or for specific purposes, like getting an education or starting a business). The rest could go to a charity or cause that you support.
Baby boomers also have the unique challenges of living longer than any previous generation: their children may not get as much of any inheritance because their parents are living longer and spending more money, reducing the money they would otherwise leave.
If you have questions about leaving money to your children, including when and how much to give, talk to a Dayton estate planning lawyer. The lawyers at Lovett & House Co., LPA can help you explore your options.