You know that you can leave your heirs enough money that they’ll never have to work again. Their children may not ever have to work in their lives. You can give them a gift that most people can only dream of receiving.
But is there a downside to doing so? Could that gift actually be detrimental to them? Warren Buffett famously said that people should “leave the children enough so that they can do anything, but not enough that they can do nothing.”
In other words, an inheritance that means the children never have to work could cause them to have no motivation or direction in life. How can you avoid this outcome?
Leaving a limited inheritance
You could take Buffett’s approach, which is to leave most of his $100 billion to charity. He’ll leave some to his family so that they can start their own businesses and thrive in their careers, but not enough that they can abandon those careers. Most of the money will be used to improve the world in various ways. Remember, you don’t have to give your children the money. You can leave it to anyone or any organization you want.
Putting the money in a trust
Another option is to put the money into a trust. Then you can set rules for how it is used. You could pass 90% of the money on when your heir is ready to retire, for instance, preventing them from failing to have a job until then. You could also stipulate that they get yearly payments from the trust only if they are employed, tying the inheritance to their work.
These are just a few options, but you can see why it’s wise to explore all of the choices you have to create the best estate plan for your family.