Fear not: This is not going to be about taxes, codicils, trusts or any of the other anxiety-inducing terms that go into drawing up an estate plan for the material legacy you leave your children. We're going to a higher place: the emotional concerns and in particular, those of the very rich--members of Tiger 21. That's a group of wealthy individuals that have $10 million or more to invest. They not only have to deal with the eventual apportioning of millions of dollars worth of assets to their grown children, they also have to deal with the emotional side of leaving a legacy. Just like you and me.
The New York Times recently reported on a meeting for members of the elite group. The conference was entitled, dully enough, “Successful Multigenerational Families.” What I learned from the out-takes from that conference is that, when it comes to the emotional side of sharing our material wealth with our children, the rich struggle with many of the issues that bother us as well: how-much-is-too-much for our children to expect, how soon-is-too-soon to share it with them, and how to divvy it up among children, some of whom are financial super-successes and others who are not.
Here are some of the Tiger 21 tips about dealing with these legacy issues:
1. Rely on a simple plan: Too many families focus on tax savings and investment choices and end up with an overly complicated last will and testament that is a challenge to their heirs as well as the lawyers. There are lots of decisions you can leave to them. They are grown-ups.
2. Don't wait too long to share the wealth: If you have a nest egg that's big enough to cover more than your retirement needs, build into your overall estate plan a way to prefund your children’s inheritance so they don’t have to wait until you die to inherit money or other useful assets. Said one expert: “I think it’s wrong for a child to wait until their 60s to inherit. By that point they don’t need it.”
3. Split it evenly: Leave your material wealth split 50-50 (or whatever the fraction is for more than two children) among your grown children, even if one child is a schoolteacher and the other a hedge fund manager. If you want to tilt the material goods toward the child who needs it, have a clear understanding up front and get buy-in from your children. Without that, one expert said, "you’re going to tear a family apart. No matter how much a family has, if it’s not equal there is resentment.”
4. Be inclusive: Bring your grown children into the planning and understanding of what's involved. Hold family meetings, even if it's just to talk over who might want the Russian tea samovar that sits in the dining room and who is fond of the painting over the fireplace.
