LEAVING A LEGACY: MORE THAN MONEY

One question retirees face sooner or later is whether or not to leave an inheritance for their children. With the Baby Boom generation now reaching retirement age, the United States is on the verge of one of the largest transfers of wealth, as much as $41 to $44 trillion, by some estimates. While the desire to care for future generations is a noble one, the process of passing money between generations is often fraught with problems.

Consider this: Studies now show that in 65% to 70% of the cases, inherited money is gone by the end of the second generation. Go one generation further and 90% to 91% of the money is gone. Leaving money is one thing, but keeping that money in the family seems to be another thing altogether.

The problem, according to Rod Zeeb, cofounder of The Heritage Institute and author of Beating the Midas Curse, is that when families leave money to the children and grandchildren, that’s often all they leave. In a recent interview, Zeeb told us the key is to pass along the heritage, the values and the work ethic that earned that money in the first place.

Through his work with The Heritage Institute, Zeeb interviews countless families. He begins by asking what the most important thing in their lives is. “The answer is never money,” Zeeb says. “It’s always something about family or values. That’s what’s going to last through the 2nd or 3rd generation.”

So how can families transfer those values along with their money? The first thing you can do is talk. Tell stories about your past and the things that are important to you. Demonstrate your beliefs in a way that clearly shows where your priorities lie. These are things, unfortunately, that many families realize too late they should be doing. Zeeb suggests families with older children invite a facilitator and talk adult-to-adult about those things that matter most.

Families can also set up situations where children and grandchildren are given money or other assets and asked to handle them now. If future generations can learn and make mistakes under the watchful eye of their parents or grandparents, there may still be time for learning.

Leaving an inheritance is often a difficult decision and it’s one that should be made with careful thought and consideration. When the time comes, help ensure the money will be around for generations to come by passing along not just your valuables, but your values as well.

 

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