Recently a survey, developed by Wealth Council, estimated that 35% of people have drafted estate management plans in order to safeguard against the mismanagement of their estates after they have been inherited. One of the simplest and most effective ways to keep your kids from blowing their inheritance is to talk to them. By discussing options with them, and allowing them to meet with a financial advisor, children inheriting large sums of money will be much more prepared to manage it. Another facet of this same idea is to allow for practice by passing down sums of money, so you can deal with the aftermath (good or bad).
The use of a trustee as a third party regulator, and the implementation of certain provisions, ranging anywhere from clean drug tests to getting a college degree, can also assist in the management of inheritance. Despite the benefits of using some of these practices, countless celebrities have still opted to leave their children with nothing, or incredibly small inheritances (in comparison to the value of their estate). A recent article in the Money section of Time online outlined some of these celebs, below are a few highlights.
· Sting: publicly announced this past weekend that little would be left for his children to inherit; “because we are spending it.” Although the singer made it clear that if his children needed financial help he wouldn’t hesitate to jump in, he also stated that he has never needed to (because of their hardworking nature). Growing up in poverty, the rock singer developed a strong work ethic, something he believes that to pass on to his children.
· Warren Buffet: with an estimated 65.1 billion dollar net worth, Buffet has publicly displayed his distaste for leaving massive inheritances. In reflection of the billions who struggle in poverty, he has pledged to donate 99% of his estate. Through The Giving Pledge, he strongly encourages other wealthy individuals to follow suit and donate at least half of their fortunes.
· Bill Gates: inspired by Buffet, Gates has declared that he will leave the vast majority of his 78.6 billion dollar fortune to his charity, The Bill and Melinda Gates Foundation.
· Michael Bloomberg: “If you want to do something for your children and show how much you love them, the single best thing—by far—is to support organizations that will create a better world for them and their children.” Bloomberg in line with Gates and Buffet has also signed The Giving Pledge, leaving the majority of his 34 billion dollar estate to various charities.
· Pierre Omdiyar: with a net worth of 7.6 billion dollars, Omdiyar (the founder of Ebay) has began donating now. Back in 2001, he stated that he has more money than his family will ever need, and began donating in large sums, planning to leave little left for his children.
· George Lucas: the creator of the Star Wars phenomena has also signed The Giving Pledge, and plans to donate the vast majority of his 4.9 billion dollar estate to charities that work to improve education.
· Ted Turner: the creation of The Turner Foundation (which gives grants on environmental causes) was just the beginning of the charitable work for this billionaire. He has publically declared that by the time of his death, virtually all of his money will have been donated.
· Jackie Chan: this UNICEF Goodwill Ambassador has declared that he will donate all of his 140 million dollar fortune as opposed to leaving inheritance to his son.
Celebrity chef and Food Network star, Nigella Lawson has taken a similar approach to the billionaires listed above, in that she plans on leaving only a small portion of her millions to her children. She explained this decision in stating that massive inheritances can lead to all sorts of negative consequences: “It ruins people not having to earn money.” While the majority of us are not managing billion dollar estates, these moguls exist as a lesson in leaving our children with the values of hard work and the importance of acts of charity, but also remind all to plan for the future of your estate.
Estate Planning and Probate Attorney, Manhattan Beach Local, Sports Enthusiast