Tuesday, August 12, 2014
Sting recently publicized that most of his $300 million fortune will not end up with his six adult children, “I certainly don’t want to leave them trust funds that are albatrosses round their next.” Indeed, Sting is not the exception. Bill Gates, Warren Buffet, and Philip Seymour Hoffman all have large fortunes, and none of them are giving it to their kids.
The reason celebrities and other wealthy families may decline to leave large sums of money to their children could be the negative rap on “trustafarians,” which are spoiled rich children with more money than sense. It is possible that children who have unfettered access to a large inheritance will not make smart choices or live healthy, productive lives. Celebrity chef Nigella Lawson stated she intends to leave no substantial inheritance for her children, “I am determined that my children should have no financial security. It ruins people not having to earn money.”
While wealthy families have always struggled with this issue, it is now playing out on a smaller scale for millions of baby boomers, who plan to give away $30 trillion over the next 30 years. Yet boomers are unlike other generations—they are more likely to give away money while living, and they are more concerned about their adult children finding and keeping jobs. Excess assets will go into tax-protected trusts that can be liberal or restrictive.
See Roxanne Roberts, Why the Super-Rich Aren’t Leaving Much of Their Fortune to Their Kids, The Washington Post, Aug. 10, 2014.
Special thanks to Richard E. Mattersdorff (a Texas lawyer) for bringing this article to my attention.