Saturday, September 8, 2012

Wealthy Parents Smite Their Heirs by Giving them Nothing!

Perhaps a Catch 22 ? “Wealthy parents aren’t raising kids to be good with wealth, so they refuse to leave them wealth.” This is a quote from an article I just read “Millionaire Parents Say Their Kids Are Unfit to Inherit”

Transitioning wealth is no different than transitioning leadership in a company. If you handed a company over to a CEO with little to no experience the company would surely fail. Handling a million or billion dollars is a big responsibility; the parents should ask themselves what is the goal of the inheritance? Preserve wealth or increase wealth? Depending on the goal it may require a different strategy.

Similarly to transitioning leadership in a company the parents will need to take an active role with their children, it will require a time commitment, patience and developing a common vision for how the money will be managed. Together the parent & child need to build a strategy that aligns to a common vision of how the inheritance will be used & determine if the child is capable of realizing that vision.

The real losers in this are the children, it may be true that they are unfit to handle the inheritance or do not share the vision with their wealthy parents. Regardless of whether you pass down billions, millions or one dollar, there is a serious alignment issue between the values of the children & the parent.

Parent & child should sit down & develop a strategic plan & transition strategy, the planning should start at an early age & may take years of planning and transition to get it right!

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