Advising Young People Who Will Be Heirs To Large Fortunes

With all the discussion about the estate tax exemption, several other auxiliary issues has arisen. For example, how should wealthy parents advise their children about their newly obtained wealth. As I have previously discussed, parents and children, alike, often have a difficult time talking to each other about their finances. This problem might become worse in the case of inheritance. Paul Sullivan, author of the main article, described the act of inheritance as giving “a lump sum just for being you.”

This can become a problem if those stand to inherit their fortunes are not capable of managing their new found wealth, especially when the amount of wealth that is expected to be transferred from members of the greatest generation to the baby boomers is quite large. Many parents are concerned that if they discuss how much money the children stand to receive with their children it could destroy their motivation to obtain their own wealth. While the parents of these heir-to-be have a right to be concerned about removing their children’s motivation, not advising their children could be worse. If a parent does not discuss or plan their finances with their children, this could lead to irresponsible use of the wealth. 

See Bucks Editors, What to Tell Young Heirs-to-Be, Wall Street Journal, July 20, 2012.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.