I recently read an article titled Lost Inheritance by Missy Sullivan. I couldn’t find it online so I guess it can only be found in the print edition of the Schwab Investor magazine. You can get the gist of the article through these select quotes:
“Studies show Americans blow through family fortunes at a remarkable rate.”
“…inheritors, especially those who are new to the family-windfall phenomenon, face an unpleasant reality: They’re likely to blow it. Although it’s not widely discussed, financial advisers say that new riches prove particularly hard to hold onto–and even harder to patiently nurture and grow. Indeed research shows that family money rarely survives the transfer for long, with 70 percent evaporated by the end of the second generation. By the end of the third? Ninety percent.”
I am very strongly against the idea of leaving descendants money. As this article and studies prove, inheritance does more harm than good, acting as a crutch for recipients to meander through life with a lack of ambition, without the feeling of, “Shit I need to find a job because I need to eat.” I think it’s extremely detrimental just as I think it’s harmful to give in to any of your grown children’s financial needs. If my kid needs to move back home post-college, he better make those rent checks out to Mom and Dad because I ain’t running a shelter. If you’ve got 2 arms and 2 feet, you can find a job. Enough said.
I’ve heard examples of parents paying their grown children’s cell phone bills. Are you kidding me? These parents are enablers and deserve to be taken advantage of. So ridiculous!
Clearly, I’m a big proponent of the Giving Pledge. It’s a promise by billionaires, including Warren Buffett, Bill and Melinda Gates, and Mark Zuckerberg, to donate the majority of their wealth to philanthropy. Now that’s a gift that keeps on giving.
What are your thoughts?