How much is too much? In
1986, Fortune magazine asked Warren Buffett his thoughts on inheritance.
He responded children should receive, “…enough money
so that they would feel they could do anything, but not so much that they could
do nothing.”
It’s
an important question, even though relatively few Americans may need to grapple
with it. According to the Federal Reserve:
·
55 percent of
inheritances are less than $50,000
·
85 percent of
inheritances are less than $250,000
·
93 percent of
inheritances are less than $500,000
·
98 percent of
inheritances are less than $1 million
·
2 percent of
inheritances are more than $1 million
A
2015 survey conducted by Merrill Lynch’s
Private Banking and Investment Group found, “a majority (91 percent) of
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. Yet the
results indicate that many see significant risk in passing on wealth without
context, conversation, guidance, or accountability.”
So,
how much is too much? Is there an amount of inheritance that will sap your
children’s motivation and undermine their work ethic? The answer may depend on
the source of the wealth, reported The
Atlantic:
“Perspectives on what constitutes ‘too much’ seem to
vary depending in part on whether parents inherited their wealth or earned the
majority of it themselves. When significant wealth gets passed down through
multiple generations, inheritors can get the sense that ‘they’re just the
caretakers of it’, which means they might be more
inclined to keep up the family tradition and will it to their own children…Self-made
rich people can have a different relationship to their fortune, because they
have firsthand knowledge of what was required to amass it. As such, they might
be more interested in bequeathing not just money to their children, but a good
work ethic as well.”
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