To worry my DC will waste everything they inherit?

[ForGreenPombear]

Warning: This is a very upper-middle class mumsnet problem and may offend some people.

I'm in my early thirties with 2 DC aged 1 and 3. Me and DH have approximately £5 mil worth of investments, assets together (excluding houses, cars etc) but are very ambitious with DH trying to get funding for a business which may make us truly wealthy. I'm from a severely disadvantaged background, DH is from a true middle class background.

Now for my very first world worry... out of all the adult children from wealthy families I know, I'd say 25% are utterly useless, 70% can just about maintain it but their DC will be poorer and only 5% have the ability to pass more on to their DC.

I really feel like it is just because of natural talent which is very rare and all the private schools, oxbridges, connections etc in the world can't replace it. It also worries me that based on pure probability, our DC will not have the same natural talent and will slowly fritter away our money. AIBU to be worried about this?

Based on what my parents (and the parents of others I know) did, invest wisely yourselves both in a diverse investment portfolio, and in services to manage, preserve and grow wealth. Use wealth management services and consider what your long term goals are, and how best your can achieve those. You can utilize trust funds.

Prepare them for wealth. That isn’t to say deny them it and have them struggle for the sake of it, as I don’t think that engenders the healthiest attitude towards money any more than encouraging profligacy does. You don’t have to pretend their reality is different to what it is - they come from a wealthy family and that’s okay, their world is no less real than that of those with less.

Ime it boils down to education. Involve them from a young age so they grow up with an awareness and understanding of financial matters. Invest in them. If you instill in them that knowledge you will encourage in them a vested interest in both preserving and growing what your family has.

I have two friends with mutli millionaire parents. They have been brought up to be careful with money and have no expectations as far as parental money is concerned. You'd have no idea they come from money at all. Their parents gave them money for property but nothing ridiculous and they work in normal jobs and pay their mortgages. I'm sure are the back of their minds they are thinking about future inheritance but you wouldn't know it.
So.basically what I'm saying is you can bring your children up to be as privileged and entitled as you choose.

Have you heard the proverb "From clogs to clogs in 3 generations"

This .

Don’t spoil them. Don’t buy them everything. Encourage them to get jobs when they are teenagers. Give them reasonable pocket money and make them budget.

If in 20 years your children are feckless, put it in trust until they are 30.

What, honestly, is the ‘ideal’ scenario you envisage?

If you're that worried your children will fritter it away then leave it to a cats home. You'll be gone anyway. What will it matter to you how they spend 'your' money? It's no use to you when you're gone. You can't demand they return it.

Who cares? You’ll be dead

Bring them up properly - nurture them - love them - install a sense of self-worth, responsibility, kindness, and teach them that possessions have to be earned and valued and you will put them in good stead.

I've seen friends, workmates and others piss away all their parents hard earned money. It's a real thing, but I don't think there is much you can do to avoid it, especially if you provide all the trappings of wealth to your DC as they grow. My SiL is counting the days till her PiL die and the money arrives, it's just horrible to hear.
Trust fund locked down to fund education only is my vote.

Astounded that someone in your position does not have a Financial Advisor who would have explained exactly how to invest your wealth to preserve it for future generations.

@Namechangean most ultra high net worths etc are very concerned with legacy & what that looks like. You’ll have no control over children’s partners or how they’ll influence things or otherwise.

I like Warren Buffet's advice: "Leave your children enough money so they can do anything, but not enough that they don't have to do anything"

Wise words

Or maybe you will have lost it all by the time they’re due to inherit. Maybe you make some bad investments or fall for scammers. Or maybe there will be a revolution and the mobs will steal all your assets?

YABU to be worrying about if your toddlers are going to be savvy enough to grow their inherited wealth in 50 years time

@Karneval25 I expect they’ll have advice but 5 million assets inc a home not ‘Succession’ type wealth or hugely unusual across London & home counties. It’s not Ultra high net worth.

You need a financial advisor who specialises in inheritance planning.

DH family are very wealthy and across cousins the wealth trickled down. The experience has been generally very poor, ie

The children grew up with expectations that they wouldn't have to work their way in life. They expected to work in the family business and fly through to management. That got scuppered when the business was subject to a takeover bid. Whilst it made the family of several siblings very wealthy, it blew up the expectation of an easy job. There was a massive row of these entitled offspring. Was truly dreadful and beyond belief at the entitlement.

Did they get jobs? Yes but they were crap because they had never bothered to study and get exams and work experience. Never mind, some of the parents handed down money when they got married. Frankly the spouses of all of them were totally obviously money grabbing and lazy individuals. Guess what the two that married split up and spouses walked off with virtually most of the money as they got residency of the kids. The parents learnt their lesson and the third wasn't given a free handout and was tied up in a trust which resulted in a huge row with their new spouse who had expected a huge cash handout and suddenly it was trolled.

Interestingly on another side of the family the windfall was tucked away and not distributed. The kids grew up expecting to have to work and fund themselves....they have both turned out much much better.

Money is nice but can horribly influence children negatively.

So definitely take legal advice on trust funds that will protect from greedy spouses and be very careful about handouts

Or there could be another pandemic only this time it's more like Ebola.

Sorry, OP, but this is really funny.

Most people with money worry about leaving their children a large inheritance because they're worried about the children (Will inheriting make them lazy/target for gold diggers/out of touch?) This is the Bill Gates idea- leave your children enough that they can do anything, but not so much that they can do nothing.

You seem worried about leaving your children a large inheritance because you're worried about the money for its own sake, not the children at all. It might just be how you're expressing yourself but it's properly odd 😂

If you do end up with enough money that this becomes an issue, maybe only leave them part of it. But you will have to find something to do with the rest and that means it might- gasp!- get spent on something. You can't tie it up in perpetuity.

Firstly OP, if 5million in assets excluding your house(s) isn't 'truly wealthy' already, I don't know what is...

I do understand though. I have various friends who inherited quite a lot of money early on - you can avoid IHT by gifting assets, so their parents felt it made more sense to gift their kids substantial sums fairly early on (ie when they were in their 20s) to avoid the tax that would come when they die.

As a result, a few of them haven't ever really worked, and that has fuelled regret in mid-life, particularly as there won't be similar levels of wealth to pass onto their own kids (they still won't be badly off though 🙄). It's hard to be ambitious when you don't have to be...

I think the right approach, particularly as you stand to make even more money, is not to worry about it too much! Fund an amazing education (with private fees being what they are, and rising - you are probably looking at close to 2 million to put your two kids through school and uni) and go on great holidays.

Later buy a couple of flats with small-ish mortgages that your kids will need to pay off - so they need to work themselves. They'll be far more well-rounded as a result. Set up a trust for future grandchildren. And please, donate a lot to charity or set up a foundation doing philanthropic work. There is no need for a single individual or family to have multi multi millions themselves, when there are so many causes that need help.

It is all pocket money related.

Make them earn their pocket money. Good behaviour and trying hard at school means they get a basic amount, doing chores and other things around the home earns them a bit more. And don't go silly with what they get each week.

If they spend it all on crap, let them learn the hard way that they wasted their money, and if they want something expensive, encourage them to save up for it.

They need to learn to choose between £80 on one designer top, or a bag full of stuff from Primark somewhere else.

Set them up with a modest house and a good education. Maybe do a trust for grandchildren. Help them make their own way in the world. GIve them everything and don't be surprised if they don't work.

@ACynicalDad who was it that said they’d never met a happy or fulfilled Trust Fund kid…(?)

I grew up in a working class family. My dad grew his own vegetables to make ends meet. I had a very happy childhood. By today’s standards, we would get all sorts of benefits. But this was the 70’s and not a thing. We were poor, but this made the person I am.

I now live a different life. Not your level OP but a very good life.
When I took my kids out, I never purchased everything they wanted, I purchased second hand clothes and toys. We would go to a cafe and share a drink and sandwich between them. Go out for a day, take sandwiches. Things that I grew up with. I would give them pocket money, initially 50p per week, that meant every two weeks they could buy an ice cream. They learnt to save and look forward to the treat.

They are young adults now, and have realised that we are not on the breadline. But I really wanted them to understand what a simple life means. It can be a good life. Right or wrong this is how I did it.

I really want my children to be success and happy, whatever they choose. My children know they cannot rely on inheritance. They have to make their own way. I think many mega rich / famous people do this

Talk to them about money and educate them from a young age.

No where near your scale but I have a small business which I will give to my teenagers. They know how it was set up, the financial difficulties it causes and generally lots of good and bad things about money. As a result my 17 year old is really sensible and savvy with money. I have an investment for him but he is trying to buy his own house with money he has saved himself when he is 18. (Money saved from being in the military so his expenses are very low.) He is saving a thousand pounds a month. I appreciate this is nothing compared to what you are talking about but it's the same principle. Educate them on the low points, the pit falls and how you made the money.

You are thinking about this all wrong IMO. Your DC will hopefully be well into their 50s or 60s before they inherit. It may be a nice retirement fund and a good start for their own children, but they will not be able to build their own lives on your wealth unless you let them. On the other hand, when I dream of wealth, I dream of being able to tell my children they could follow their passions without worrying about income. What else is money for?