It’s no secret that most families do not like to talk about money. These days families talk about just about anything – sex, drugs, politics, etc. But money? That is one of the few remaining taboos.
I recently read an article claiming that;
“90% of wealthy parents don’t tell their kids what they’ll inherit.”
That is an astounding number by any measure. Most wealth advisors and other professionals will tell you that this is a mistake. They will tell you that a lack of communication is a recipe for disaster and future family disputes. They will tell you that you need to prepare the next generation for the responsibility of managing the family’s wealth. In other words, they will tell you that you absolutely have to talk to your kids about money. They are wrong.
Building a Legacy vs Wealth
Rather than talking about money, you should be talking to your children about legacy. Money is value neutral – its value is defined by is application and the purpose towards which it is applied. If you begin the conversation talking about money, then you miss the most important part: its purpose.
Here are three key reasons why you should not talk to your children about money (at least not initially):
Legacy Is A More Engaging Conversation For NextGen
By now, I am sure you have read how the millennial generation is experience oriented and purpose driven. They care less about accumulating the most money possible and more about living a fulfilling life. Rather than talking about the family’s money, this next generation of legacy creators are primed to focus on the family’s experiences, values and purpose. Instead of discussing how much the family company is worth, tell them stories about how and why you built it. This, no doubt, will be a more effective and rewarding conversation for both sides.
You Will Create A Stronger Value-Based Foundation
Not talking about money to your children will enable you to discuss the more important aspects of wealth transfer and legacy succession – namely, the knowledge, values and leadership skills upon which you built your family’s wealth and legacy. This is what your heirs will ultimately need to successfully protect, preserve and enhance your family’s wealth and legacy for future generations. By emphasizing your own purpose and the values that helped create your family’s wealth, you take money out of the equation and prepare the next generation to carry forward your purpose and legacy.
You Will Convey A Sense of Responsibility Instead of Entitlement
We have all heard the concerns voiced about telling children what they will inherit. “I don’t want my kids to be spoiled” and “I don’t want to create a sense of entitlement” are commonly heard in the wealth planning process. Telling your children how much money they stand to inherit could lead to them making short-sighted decisions about their education and career experiences, and may also encourage a lackadaisical attitude about forging their own path (not to mention the aforementioned spoiled, entitled personalities).
Talking to your children about the family’s legacy and taking control of its future, however, is a responsibility, not an entitlement. It requires an enormous amount of commitment and work to do properly. Preparing your children for that responsibility and focusing on the values and skills required to carry the family legacy forward will protect against the threat of your children mismanaging the family’s wealth and legacy. As a result, they will be more likely to grow up responsible, respectful, hard-working adults who appreciate the fruits of their – and your – labor.