Willis notes that although our culture has
designated 21 as the age when children “magically become adults,” she argues
that many children of wealth have a hard time handling money at that point. “In
my experience, children don’t really learn the true meaning and value of work
until they are in their 30s,” agrees Judith Stern Peck, director of the Family
Wealth and Family Life project at the Ackerman Institute for the Family in New
York. “It doesn’t mean you shouldn’t help them out while they are in their 20s.
But in terms of handing over large sums of money with no strings attached, I
think you have to be aware of the dangers.” These might include mismanagement of
assets, reckless spending or a dampened incentive to work.
These problems can
be exacerbated if we do not adequately prepare our children. Randy Hustvedt,
managing director of LongVue Advisors in Boston, says that, in some cases,
parents have communicated so poorly with their children that they can be
overwhelmed when the issue finally arises. She recalls sitting in a room as
parents were informing their 18- and 20-year-old children that they would be
giving them millions—immediately. “The kids were literally shaking,” she says.
“Within a year, the son had quit college and the daughter had run off to
Australia, disavowing the money.”
Staggering Strategies
As with most family issues, the key to managing the
transfer is good communication. “We tell our clients you need to talk about your
hopes, dreams and fears for your children,” says Steven R. Bell, who heads the
Wealth Management Group at Chicago-based Northern Trust Co. “What do you want
from them, what do you expect and what do you fear?” These are, for many of us,
knotty topics to articulate. “Typically, these are private family conversations,
or you can turn to a trusted financial advisor to help facilitate them,” Bell
adds. “Intuitively, the form and manner of the allocation you determine is
shaped by your confidence in your child and your personal beliefs about how the
money should be used.”
|
