Preparing Our Children to Inherit Wealth
By Muhammad Ali
Now this is a vast subject and a complicated one as there are many factors involved as to the amount of wealth transfer that will be left behind, the number of children involved and their age levels.
When you google the topic, you will find many websites related to preparing children for wealth, however, I believe there is a difference between preparing our children for wealth and to inherit wealth.
As I said in a previous article, one of the first things we should do, after RV, is setup our Team and once our children reach the age of maturity (usually around 25 years of age) we will introduce them to the Team. So our estate planning attorneys and financial advisors are ready, willing, and able to help prepare our children to inherit our wealth. Yet many of these plans will fail even in cases where all the documents are in place. Failure does not mean that our children will not receive the money. It means that the money may create stress and resentment among siblings and other family members instead of the benefits we may have intended.
There have been studies on wealth transfer that show children are not prepared to receive such wealth. Rarely are the failures due to legal, tax, or investment advice. The failures to prepare our children to inherit our wealth are usually the result of a breakdown in trust and communication among family members. So may be this is where we need to start.
The solution to prepare our children to inherit our wealth is to have open, honest communication about money with our family members before they inherit the assets. This does not mean that they need to know how much money we have or see copies of our financial statements or financial plan. The key is that our children appreciate the challenging work and sacrifice that was involved in earning and saving the money, in otherwise, all those years of waiting for the RV. We need to pass on our values along with the money.
So the next obvious question would be, how do we pass our values to our children. After doing a lot of reading and research on this subject, I realized there is a simple way we can do this and that's by sharing our RV stories with our children. The years of waiting, the stress, the anxiety of being close and hearing very soon and "this weekend". The motivation of holding on to the currencies when we could have sold them off to have more food on the table. The sacrifices that we made to buy the currencies and how and where we stored them. May be, some even lost or had to sell off some of their currencies. May be for some, their RV stories are more serious, with bankruptcies and being evicted and living in their cars for an extended period of time. I have a couple in my group in Malaysia that has debtors who are threatening with legal actions and even threatening with bodily harm, if their money is not returned. These matters are extending to Police reports and courts and what amazes me, these are all family involved issues. And then there are some others, may be living on budgets and limited choices of meals and/or eating out. Some losing their jobs but still wanting to hold on to their currencies or some not able to buy extra gifts for the children around celebration times. In some cases, may be tensions between husband and wife over buying the currencies, so whatever the cases may be, we all have stories of hardships and trials of waiting for the RV.
So this is my belief and I believe the best way to teach our children about money is through our RV personal stories. These are the memorable moments and lessons in our lives. Our children will remember the personal beliefs that motivated and drove us to take risks, save, and invest for the future. It is through an understanding of those transformative moments in the family’s history that our children will begin to appreciate values and develop a feeling of responsibility that comes with their family’s financial success.
And something important to remember as parents we cannot simply impose our beliefs, values, and priorities on to our children. The children should be heard and respected, and they should have a role in shaping the family’s values and philanthropic focus. Consider asking your children questions instead of telling them how they should act or what their financial priorities should be.
Successful wealth transition cannot be built overnight or through a single action or trust document, but instead requires open, ongoing communication and education. It will take time.
And on that note, I will conclude this article.
Thank you and I wish you all the success in your currency exchange.
Muhammad Ali
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