Have you ever looked back upon crisis moments in your life, struggles to succeed or seasons of long hours and hard work and found yourself smiling? If so, it is likely you cherish these adventures in your life because you grew or became wiser or maybe you even failed, but you value the experience because it forms who you are today. Now, have you ever wished that your children weren’t so protected from crisis, struggles and hard work? As you compare and examine your life vs. theirs do you realize they have become protected from the experiences that made you stronger? Have you ever thought that the desire to give them a “better life” than what you had really isn’t better?
This concept of Protection or a Better Life is in part born out of our financial success. The more we have, the more we use our resources to solve or eliminate our (and their) problems. This isn’t always a bad thing, but we should be cognizant of the effects and realities of sheltering our children from consequences and situations that teach humility and build character.
For families who transfer significant wealth, this issue can be magnified. The combination of using estate planning techniques and the exponential growth in investable assets can create large income streams for future generations. Again, this is not necessarily a bad thing, but we have to understand the effect that will occur when people receive assets and income and how it influences their life. In my experience in working with high net worth families, I have seen more often than not two negative outcomes.
- When you come across problems, you have the ability to call someone else to solve them. You become Protected from life’s everyday issues and begin to live outside the reality of solving problems for yourself.
- The assets and income you have gives you the choice to not be a productive person. Given the “Better Life,” some choose to not work, pursue challenging endeavors or use their gifts for any contribution to society.
Instead of just looking at how you transfer your wealth in the most tax efficient manner, take note of the potential effects your wealth and success might have on your great-grandkids and beyond. Based upon your current assets and strategies in place, ask your advisors to project what your estate will look like at second, third, fourth generations and beyond. The numbers may surprise you. Have conversations with them about how this will positively and negatively affect lives. Ultimately, ask yourself, “Am I looking to leave behind a legacy of ‘Protection’ and a ‘Better Life,’ or something more?”
Terry McManus is the executive director at May We Help. They are located at 7501 Wooster Pike, Cincinnati, OH 45227. For more information, call 513.340.8102 or visit www.maywehelp.org.