Preparing DS for wealth (more than ours)

[Larius]

Does anyone have experience preparing a child to come into significant wealth at 18?

This is several years away and hard to predict, but probably many millions and more than our family wealth.

I know he will need advisors, ideally relationships built over time, but don’t know how to find trustworthy ones. It’s the sort of thing that I’d really want to do by personal recommendation but we aren’t really in those circles.

Also preparing him. How much to let him know? Who to teach him? He is fairly sensible but who knows at 18, and others around him may not be as reliable.

Legal structure is set, so trust advice etc not relevant at this point. Giving it away also not an option as it’s not ours to give.

This kind of post always gets accusations of stealth bragging but this really isn’t. He was already comfortable enough and I’m worried this is now a curse. I would certainly have struggled at that age.

Would be very interested to know from anyone else who has experienced similar.

These are illiquid shares from grandparents that were worth a small fraction of this when gifted.

Personally I’d ask lots of friends for a recommended financial advisor for yourself and then trial them yourself

Does he have to know? Mine have some money. Not millions but six figures. They do actually know but don’t have access to it yet. They know it’s to be spent on a house when they need one. If we as their parents didn’t have control over the accounts then I would have contemplated not telling them until they were a bit older just so that they didn’t make foolish decisions with it.

Does he have to have the money at 18 or could it be passed over later?

Having illiquid shares isn't the same as having access to cash at 18. Are there other family members who can advise (on where to get advice)? Or do you not trust them? Same with whoever set up trust for the grandparents?

I’d certainly ask around your area for trusted financial advisers

Sounds like a share in a business then that isnt publicly traded ie a PLC

He may well be 'asset rich' but in practice either there isnt anyone to buy them or selling needs the approval of other shareholders

So am I right and what is the likley market if any for the shares?

If he is 15 or so then I think you should be telling him this will happen. It depends on what kind of child he is, but unless he will use it as an excuse to be lazy then I think by giving him this information you give him years of mental planning to make the most of it.

It is actually helpful that he will have a chance to think about it carefully and what he might want to do with it long before he physically has the money.

The only caveat would be if there is a chance he will not get it, but mentally has come to rely on it being there in future then that would be such a blow that in that case I wouldn’t tell him.

Just reread your post that these are shares. There is a possibility, however unlikely, that the value will go down, so I wouldn’t tell him until they become his.

I would start with basic financial education. Martin Lewis has a free book https://www.moneysavingexpert.com/family/financial-education/

Learning how to budget, save, mortgages etc. are life skills.

I am always grateful my parents talked about money, saving etc from an early age and taught me how to manage money.

my neighbor is an accountant and does this as a full time job! seems like a dream. he councils a small group of super wealthy young adults on how and what to do; ie not to buy pizza for everyone or charter a plane for a friend etc.
he reviews their cc statements and teaches them restraint and responsibility.
that being said some mandatory economics courses would be helpful.

I' d have thought it might be preferable to intercept the wealth. For example what mischievous grand parent would do this...it's insidious. Speak to them. Get it into a trust. Get it delayed till 25. Or expect a huge party lasting years.
Are you able to talk to them? It's not good. And in London they'll need nearly 2 million just to put a roof over their head.
A disaster of planning on someone's watch.

Hopefully if you have brought him with decent values so that he has a sensible and realistic attitude to life , and he is educated and sensible then he will be equipped to deal with acquiring wealth.
Of course he will need to be pointed in the direction of good financial advisors but a lot depends on the character grounding he has growing up.

How will he actually access the money?

How old is he now?

Would your parent consider a trust until 25?

Unpopular opinion(?) But I'd be

• looking to send him to a decent private probably ones with day boys and boarders now,
• explain money, proper investing, price vs value etc
• teeing him up on a clear career path.

Rationale:
Based on what I see of the world its pretty tough if you arent with your own peer set.
By that I mean all his friends dont need millions but ideally wealthy-ish families. if he is living in a nice 3 bed flat off upper street and his mates are paying half their salaries for a room in grotty 6 bed past clapham its going to cause resentment.
Even in my blandly mc life There's resentment and distance from friends making 100k vs thise.making 300k

Secondly he needs to understand work isn-t about just money. Its self worth and structure.
For boring reasons I was involved with some very rich people in my 20s who didnt work they had CRAZY money. Like go to new York first class for 24 hrs to watch a movie because they didnt want to wait 3 weeks rich... (this was early 2000s)
They were mostly unhappy and boring.
Lots of money spend on drugs drinking and "stuff" I was shocked at how unhappy they were as I was basically broke and was earning a grad salary.

On the value of money - for boring reasons I recently viewed a virtually unsellable house..it was incredibly "charming" but impossibly small cottage 2 bed 2 stories and under 600ft... stairs were a death trap for a healthy adult let alone anyone else.
it was bought 5 yr ago now the owner has a child and desperately wants to sell.

my comment on it to my dh was "i guarantee they didnt earn the money they used to buy that because if she'd earned it theres no way she'd have bought that property"
Similarly we have friends whose parents have businesses. They live in a v Central v impractical flat that was " a project" they wont sell it for less than 2m but no one wants it due to bizarre / bad lay out. Again if it was their own money I think theyd have scrutinised the purchase a bit more.

Thank you all. It’s around five years away and the shares will be more liquid then, although with a big inbuilt tax liability that I hope will discourage him from selling the lot.

He will have full rights to them at 18. He doesn’t currently know about them so that’s one card I can play, though I’m also reluctant to lie to him.

He is at a school where some of his classmates are very rich and others are fairly normal. I think that’s a good thing as it takes the halo off wealth a bit.

With regard to advisors, does anyone have experience with private banks? I know they have ‘next generation’ programmes but don’t know if they would consider it where there isn’t already a family banking relationship (ie I’m sure they do it in order to keep the business with them as it transfers down, but here we can’t even promise that much business unless our son chooses to do so in many years time).

Am trying to do values and judgment and value-of-money education with him (as I did anyway). The rest is a bit of a moving target as I don’t know whether it’s “buy a (London) house and get a job” money, or a “buy all the houses and never work” money. The latter is obviously the worry. On current trends it might be.

That sounds like a fun job. I will message you directly, if I may. I think he’s the sort of person I need.