The Self-Made Can Make It Again
When I talk to clients about the best way to leave assets for the next generation, I try to impress upon then the idea that inherited money feels different than money that is earned. It’s like Monopoly money, which is to say that it seems that it exists for play.
Perhaps that’s the reason why most inheritances don’t last beyond the first generation. It may also explain why heirs whose inheritance _does_ last more than one generation are not as charitable as people who have made their own fortune.
In this article from Bloomberg, Kat Rosqueta from the Center for High Impact Philanthropy suggests that for “those who made their wealth entrepreneurially, there’s a sense in which their wealth is theirs; as opposed to those whose wealth has been inherited, where they feel much more of a responsibility as a steward of somebody else’s wealth.”
A related article from the Wall Street Journal goes on to say that “the self-made rich have the confidence that even if they give away the majority of their fortune, they can always earn more.”
I think this has a lot to say about one’s view of the world. One is the belief that this is a world of abundance, and the other thinks that there is limited money to go around (so you should hold on as tightly as you can what what you have).
Charitable planning has the dual benefit of “doing good” while reducing estate taxes. Whether my clients are already charitably inclined or not, one of the things we discuss is how you can pass on life-lessons and values through estate planning. By engaging in charitable planning and leaving assets in a protected status, you can help the next generation understand that what they can make of this world is far more than what has been left to them.
And you thought estate planning was just about “documents” and taxes…
Posted by Victor J. Medina, Medina Law Group, LLC