Imagine that you’re a self-made person with $10 million in assets…

Do you leave it all to your children, spend all you can or donate to charity?  Prudence and each family’s values should determine some balance in each.  A coming intergenerational shift in wealth raises many issues for prosperous families, including how much to give children without doing more harm than good.  The affluent families we deal with are mostly concerned with ensuring that their wealth doesn’t snuff out their children’s sense of purpose, ambition and desire to make the world a better place.  What many high-net-worth people worry about is that the money may ruin their children instead of enriching their lives.

In a national study of 206 affluent parents in 2014, one financial institution found that most people plan to leave the lion’s share of their wealth to family members, motivated by a desire to positively influence the lives of loved ones.  Given the amount of wealth that’s expected to be transferred to the next generation, more families should be discussing this.

​“While the ‘Great Transfer’ (of wealth) from the Greatest Generation to the baby boomers is still taking place, a second and even larger wealth transfer from the boomers to their heirs is starting now and will continue over the next 30 to 40 years,” consulting firm Accenture said in a 2012 report.

So how much is too much to give your child?  There’s no magic number, but there is some point at which the money creates a disincentive to achieve one’s full potential.  There is no one-size-fits-all approach to gifting assets. The process of meaningful, intentional giving, whether to family, friends or philanthropy, should be highly personalized. It requires honesty, humility and a willingness to face this all-important topic head-on. The first step in that is to determine what you want your legacy to be and with that, how much to give away during your life.

​We’re looking into programs for young heirs on financial stewardship and money management. Even though some of them don’t have an aptitude or an inclination to learn about money management, it is still important that they’re financially literate before finding themselves with a significant amount of wealth. We’ve had families for example that form a foundation and have their children serve on the board so they can experience philanthropy first hand.

Something that all of us want for our children, no matter how much money we will pass to them — is for them to grow up to be productive, self-sufficient individuals wanting to better society.

The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete.  Any opinions are those of Thomas Fleishel and not necessarily those of Raymond James.