By: Rick Rodgers CFP®, CRPC®, Co-Founder, Rodgers & Associates
Imagine your last day has come and gone. What kind of relationships have you left behind? Have you talked to your family about your will, or are you leaving them with many unresolved questions? Will your children fight in court because you left your estate to just one person or a charity they knew nothing about? If this sounds familiar, anger, bitterness, and hurtfulness could become your legacy.
We don’t want our family to be weighed down by an inheritance, beholden to it, or awestruck by it. Some people think it’s crazy to share financial details with their family and believe it would wreck their kids, making them lazy and indifferent to working hard, knowing what will come their way. We must start treating our children as adults when they come of age. When they are taught to respect money, rather than to fear it, and to understand that wealth is earned by risking something of themselves, they are more likely to grow up to be productive citizens and not be controlled by their inheritance. Preparing them should create a deep sense of obligation to honor the wisdom and wealth entrusted to them. I believe there are three lessons we all should teach our children about wealth:
- There are no shortcuts to wealth. Those who take shortcuts—lottery winners, marrying for money, or inheriting a sizable estate without any preparation—often live dysfunctional lives, with their windfall creating more significant problems than they faced before.
Receiving an inheritance without any preparation can be detrimental to children who will destroy themselves and their families because they know nothing about the responsibility of handling wealth. You must work to prepare your children long before an inheritance is received.
- Use wealth in service of others. Everyone is rich when wealth is used in the service of others—family, friends, and humanity. Thomas Jefferson said the “pursuit of happiness” is an internal journey to know ourselves and an external journey of selfless service to others. Children should learn this from their parents at an early age.
A family should develop a culture of sharing the family’s wealth with others and meeting to make these decisions together. Wealth management should flow to the next generation while parents are still living and can help guide the process.
- Use wealth to strengthen family relationships. Wealth can divide or connect, and wealth can grow relationships or end them. If you have wealth, does it control you, or do you control it? The answer is found when you examine your engagement with others in your life. It’s why some people with lots of money die impoverished, while some people of modest means who bask in the warm touch of family and friends die rich. Regular conversations with the next generation provide an opportunity to frame a different set of values and lead to a different kind of relationship and commitment between parent and child.
Reframe the family’s charitable giving as a family project deserving time and attention proportionate to the effort that went into making that money in the first place. Charitable giving should not be tax driven; it is values-driven, with an emphasis on need and effectiveness.
Selecting worthy causes is not just a process for the rich but also for those with modest wealth to pass on. Don’t underestimate how even a small gift to charity can leave a big impression on children when they are included in that decision. Every family, regardless of their wealth, should have family meetings.Your children need to understand that they are your legacy, not your money and possessions. For your legacy to flourish, you must involve your children, work with them to create something, and contribute something to your community for the benefit of others.
What we leave behind, most notably our words and deeds, are reflected in the lives of those we touch. Are you taking time to teach your children and grandchildren about the family and legacy you want to pass on?