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Talking to Children About Inheritance

Communicating details about inheritances to children, such as dollar amounts, dates, and the ins-and-outs about trusts, should be done on a case-by-case basis. Each discussion is different; and conventional wisdom is that the parents know best when the children should be informed as to the specifics of a family’s wealth.

In my experience, clients often avoid discussing these matters with children younger than 18, and often through their early 20s. Most parents simply do not view such discussions as necessary, and are concerned that an incomplete or immature understanding could impede their child's work /school ethic, or their level of desire and focus on self-development.

For example, we know of some very wealthy but practical parents who were asked by their adolescent child, (who had been told of his wealth by schoolmates), "Are we rich?"  The parents responded, “Do you live in a nice home? Do you feel loved by Mom and Dad? Do you have everything you need?” To each question the child responded “Yes.” The parents then said, "Well then, you’re rich." The point is, the parents truly wanted to avoid (as it was unnecessary) citing dollar amounts and more specific details.

On the other hand, we work with a family group comprised of a senior family member and the next generation of adult children, who collectively own stock in a very large, valuable, and successful company. The family has never shied from discussion of the source of their income, or the effort they spend on company matters. The adult children have been in the business since graduating from college and understand the family's wealth and the value of the stock in the company.

Over many years, the senior family member has transferred a large share of stock in the company to each adult child and grandchild. The stock transfers have been a culmination of a thoughtful, multi-year estate and business succession plan, in conjunction with mentoring and management training. This example is more typical of a long-term process to educate heirs as to how they will receive a share of the family wealth and how to properly manage family assets over a long-term horizon.

Timothy Speiss is the Partner-in-Charge of EisnerAmper's Personal Wealth Advisors Group and Vice President of EisnerAmper Wealth Planning LLC. He chairs our Asia Practice and is a member of the firm’s community service group, EisnerAmper Cares.

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