Wealthy people should talk to their children about their wealth and what inheritances the children will receive. That conversation should happen when the children are ready to hear it.
Parents who plan on leaving large inheritances for their children are in a bind. If they do not talk to their children about their wealth and likely inheritances, then the children might not be ready to receive the wealth and be incapable of properly managing it.
On the other hand, talking to the children about what they are likely to receive can also demotivate the children to accomplish things on their own. They may wait for their inheritances, instead of making their own fortunes.
This is even tougher for parents who are the first generation in the family to have wealth. Why? These newly rich families typically do not have wealth distribution methods already setup. This is in contrast to their “old money” counterparts with multi-generational dynastic trusts.
The New York Times points this out in "How the Wealthy Talk to Their Children about Money."
Wealthy parents need to work with estate planning attorneys to create a wealth transfer plan that works for their family’s unique circumstances. This gives parents something specific to talk to their children about.
The conversation with the children should occur when the children are ready to receive the news without it changing their own goals in life.
When that time should be will differ for every family. Most often, however, it will be when the children have already established their own careers and families.
The conversation does not need to happen all at once. Children can be told incrementally, as they are ready to receive more and more information.
For more information about estate planning in Orlando, FL (and throughout the rest of Central Florida), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.
Reference: New York Times (May 19, 2017) "How the Wealthy Talk to Their Children About Money."