It’s rare a new client meets with us and the first words he says are, “I’m not leaving one red dime to my kids. Now tell me what I can do that doesn’t include them.” Yet, there we were – facing a relatively young man in his early 60s, and wondering if perhaps he’d recently had an argument with a family member and in the heat of the moment, opted to begin his estate planning. Turns out, he wasn’t angry at all.
He was determined for his children to sink or swim and for him, it was that simple. “If they know they’re splitting what I’ve worked my life to achieve, then there’s no incentive for them to go out there and create their own world. I’ll be damned if I have two sons whose only accomplishment is spending their old man’s money after he’s dead and gone.”
What our client wasn’t aware of is that he’s not alone. In fact, there are many families, especially those who were “self-made” who want to leave something to their children, as long as it’s not a stress free, work free and responsibility free lifestyle. Less than half of all American baby boomers believe it’s important to leave inheritances to any family member, but especially their offspring. The survey, conducted by the Insured Retirement Institute, says that the 49 percent isn’t as high as it once was. Ten years ago, two-thirds of those nearing retirement believed leaving an inheritance to their children was wrong.
Even journalist Anderson Cooper agrees and says he doesn’t believe in inheritances, calling it an “initiative sucker” and a “curse”. His mother is the famed fashion designer Gloria Vanderbilt.
So what happens to your life’s work if you’re not going to leave it to your children? Surprisingly, most say they want to spend it. They want to cover their daily living costs, have money socked away for unexpected events and sufficient insurance coverage should they become ill or incapacitated. The rest of it? They’re simply spending it on vacations, home renovations and even nights out on the town.
But even those wishing to leave nothing of any deep significance, from a financial perspective, to their children, they still need proper planning. In fact, those who are leaving nothing to their children might want to consider who they select as their medical and financial powers of attorney. That’s never a pleasant conversation with clients when they realize adult children who are receiving no inheritance might not make the best power of attorney.
If you don’t cover those important estate planning quagmires, even if you have no intention of leaving anything to any family member, you could be creating even more problems. The government will take a nice chunk of your wealth – more than what it would have taken were there proper estate planning mechanisms in place.
For our clients who are determined, we discuss what their passions are. Many opt to use those passions and leave gifts for charities. One client, also self-made, had spent time in domestic violence shelter as a young girl. Her mother had escaped an abusive marriage and our client still recalls that despite the things the shelter could not provide, what it did do was put people in her path who told her everything would be OK and showed kindness when she and her mother needed it most.
In other words, we encourage clients to do exactly what they wish. There are no rules or laws that dictate who receives inheritances, but what we do try to help our clients see is that there are better things they can do than allow the government to take more than it has to.
As for our client who came in, determined to leave nothing to his sons, he’s since worked out an estate plan he’s happy with – including a will that leaves nothing to his sons except a few family heirlooms.