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How Much is Enough?

November 2011

Most people pass their assets on to their children from a desire to keep them from going through the same hardships they did. That being said, they may choose to consciously limit what they pass on for fear that their children won't learn the value of a dollar, or of work. A few even disinherit their children because they feel it's important to make them earn it on their own.

Which is the "right" way? Warren Buffet is often quoted as saying that he wants to leave enough money to his children so "that they feel they could do anything, but not so much that they could do nothing." (1) But how much is enough to do anything, and when does it become too much? After all, most of us would like to see the remaining fruits of our labors benefit our children most (blood is thicker than water), but neither do we want to "ruin" them.

Is there a "right" amount to pass on? That's a big question, so let's take a step back to consider it in its entirety, and perhaps even to reframe the question. Rather than focusing on how much money to leave our children, let's instead focus for a moment on how best to prepare our children to become responsible stewards of wealth. This, in the end, may benefit them far more.

When you think about it, many who want to limit or eliminate an inheritance often are attempting to teach their children the same way they learned. But the school of hard knocks may not be the best place to send them. In most cases, our children have led very different lives from ours. We've given them opportunities and experiences we may never have had growing up — travel to Europe, private schools, upscale summer camps...not to mention smart phones, iPods and all the rest. (Come to think of it, if only we'd had the opportunities our kids have had, who knows what else we might have accomplished!)

When we raise our kids with such privileges, will the withholding of an inheritance teach them what took us a lifetime to learn? And what is it that they really need to learn?

One critical life skill is the making of principled decisions. Principles form the basis for our own personal codes of conduct, and arise from our having decided where we stand on certain matters; in short, what we will or will not do in a given situation. Principled decisions, then, arise primarily from a rational belief system as opposed to emotion-based feelings. Important decisions, if made thoughtfully and in alignment with our core principles, usually stand the test of time far better than those made impulsively, based largely on what
"feels right." (2)

It's normal, of course, to assume that our children already know what we believe, or where we stand on things. After all, they've grown up around us. But they may not fully grasp as much as we think. We might consider sharing with them the principles we've fashioned out of experience and reflection — not simply to have them adopt those principles, but to help them understand how we arrived at them, and why they're important to us.

As our children became more articulate, we would do well at times to assume an "interested listener" role, respecting their right to think differently and listening to them without judgment (insofar as possible) as they learn to speak and think about their own lives and principles. It's a matter, then, of teaching them not what to think but how to think for themselves, how to arrive at a decision based on logic and personal principles and being able to recognize the difference between feelings and beliefs. (3)

So, instead of worrying about how much is enough to leave our children, perhaps the question should be that of how we best prepare them to make good decisions. In that way, they can become wise stewards for whatever they earn or are given, no matter the amount. That should be enough.

1. Kirkland, Richard I. Jr., Should You Leave It All to your Children, Fortune September 29, 1986

2. Gilbert, Roberta M., Extraordinary Relationships, A New Way of Thinking About Human Interactions, 144, John Wiley & Sons, Inc., 1992.

3. Gilbert, 153.