Originally published: Mar. 24, 2023 (distributed by Andrews McMeel Syndication)
My recent column ("Wills: Should You Communicate Your Wishes With Your Children?") piqued the interest of a reader who expressed strong views about inheritances. (If you missed the column, let me know at firstname.lastname@example.org; I'll send you a copy.)
"Robert," who is in his 80s and well-to-do, believes that parents should tell their children NOT to expect an inheritance. (After all, how many people do receive inheritances?)
Let me share his point of view:
"A glaring omission in your latest column concerning communication with children about estate planning is the philosophy of some that once education is paid for, one's financial obligations to heirs is over.
"In fact, for many families, even higher-education expenses are NOT paid by the parent, with no great ill effect.
"For some children, the expectation of an inheritance removes their incentive to become successful on their own, and that needn't be in a monetary sense.
"Far better is to communicate that there will be NO monetary inheritance -- rather, charities have already been chosen."
Robert is not alone, of course, in his point of view.
Take singer Marie Osmond, who told US Weekly in January 2023 that she will not be leaving her children an inheritance, saying, "I don't know anybody who becomes anything if they're just handed money." She added, "I just think all [an inheritance] does is breed laziness and entitlement" (tinyurl.com/27t6xuas). This is a high-net-worth concern, since the size of the inheritance could affect the recipients' attitudes toward it.
Robert's intention to leave his estate to charity can benefit many more people than just family. Cancer research, local hospitals, children's causes, libraries, museums, schools, financial literacy education -- all are avenues where societal "good" can be achieved with an inheritance.
Of course, charitable causes can also be funded during one's lifetime, which presents an excellent opportunity to talk with kids about giving back rather than just receiving.
That can set children on a similar path. A 2018 Fidelity Charitable study titled "Family Giving Traditions" showed that those who grew up in families with strong giving traditions are more likely to give more to charity today. Thirty-eight percent of those who grew up with strong giving traditions said their parents inspired them the most in their charitable giving, versus 14% of those who cited their parents' influence but did not grow up with strong giving traditions (tinyurl.com/uehaavzj).
One way for wealthy families to support charity is through a private foundation, an independent legal entity set up solely for charitable purposes. Unlike a public charity, which relies on public fundraising to support its activities, the funding for a private foundation comes from you -- the person who has established the foundation.
The go-to resource for private foundations is the Foundation Source (foundationsource.com). Foundation Source facilitates setting up a private foundation and works with CPAs to help make the foundation’s tax filings easier. You (and your children) choose the charities.
Let me leave you with this thought. Giving is not an issue that affects only the wealthy. Children and grandchildren learn from their parents and grandparents. Anyone of just about any financial means can help children understand the value of supporting good causes, as long as the support is fully within the family's financial means. It's not the dollars that count. It's the value of the giving lesson that counts.
On another subject, I am back to giving lectures, not in person, but online. They are short (30 minutes), with targeted topics. For example, Thursday, April 13, from 1 p.m. to 1:30 p.m. EDT, I discuss the mechanics of how to set up a gift that takes advantage of the power of compounding. If you would like to attend, register for "The Mechanics of a MarketMath & You Gift" at tinyurl.com/2p93nyys. And be sure to email me if you would like to be added to the email list for future invitations: email@example.com.
To read Julie Jason's books, go to: https://juliejason.com/author/julies-books.