A number of today’s wealthy parents have chosen to give away their estate primarily to charities instead of to their own children. They have a number of reasons for making these decisions, such as not approving of their child’s lifestyle, feeling that their child would misuse the funds or to push their children to achieve their own success.
|Andrew Carnegie is often credited as the inspiration behind this philanthropic view in today’s millionaires and billionaires. Carnegie stated that, “the parent who leaves his son enormous wealth generally deadens the talents and energies of the son.” Carnegie amassed $492 million due to the sale of U.S. Steel, which would equate to approximately $12.4 billion today. He handed out much of his funds during his life to those less fortunate and left less than 10 percent of his fortune to his daughter Margaret.|
|Vladmire Potanin, a Russian billionaire states that, “A million (dollars) handed over from inheritance helps a person to receive a good education, find employment without haste and find himself. A transferred billion (dollars) kills him and deprives him of the sense of life.” While most of us would be thrilled with a million dollars, the children of a billionaire may feel that the sum is insufficient when it makes up a very small portion of their father’s estate.|
|Due to a divided relationship, Hollywood director Aaron Spelling left his daughter Tori Spelling with only $800,000 – a meager sum for a young woman who grew up in luxury. Aaron Spelling’s estate was worth an estimated $500 million. Tori did not see her father for nine months out of the final year of his life and her parents are said to have disapproved or her autobiographical sitcom spoof titled “NoTORIous.”|
|Eugene Lang built his fortune of over $50 million through REFAC Technology Development Corp and started the “I Have a Dream” Foundation to fund the educational dreams of low-income children. He funded his own children’s education, gave them a “nominal sum” and then cut them off from his funds. Lang states that “inheritance dilutes the motivation that most young people have to fulfill the best that is in them. I want to give my kids the tremendous satisfaction of making it on their own.”|
|Yu Pengnian, a real estate tycoon inChina worth over $500 million, gave the remainder of his assets all to charity. When asked what his children thought of him giving all his assets to charity and not to them, Pengnian stated that they had not opposed the idea, “at least not in public.” He noted, “If my children are competent, they don’t need my money. If they’re not, leaving them a lot of money is only doing them harm.”|
|Duncan Bannatyne, a wealthy Scottish actor, cut his daughter out of his estate when he caught her smoking. “If they want to smoke, they can, but they’ll not get their trust fund,” he stated. This millionaire has put a number of restrictions and stipulations upon his assets requiring his children to demonstrate proper moral fiber, and to avoid drinking and smoking in order to get their portion of his estate. He also has been giving up large sums of his estate to various charities, including “No Smoking Day.”|
|Bill Gates, one of our best known billionaires and the second-richest person in the world, pledged half of his $54 billion estate to their poverty-fighting foundation. When compared to his vast estate, his children will receive only a minor portion of his funds – approximately $10 million to each child. He has been known to expound his desire for his children to earn their own way and also feels that an exorbitant inheritance would cripple that drive.|
|Warren Buffett, the third-wealthiest person in the world agrees with Gates’ view. In fact, he and Gates created a “Giving Pledge” to encourage other billionaires to donate their assets as opposed to keeping the fortune in the family. Buffet has pledged 85% of his $44 billion estate to charity, much of it going to the Gates Foundation. Buffett’s children have expressed frustration with his determination to not leave more of his assets to his children. Buffett states, “A very rich person should leave his kids enough to do anything, but not enough to do nothing.” However, they all stand to receive over $2 billion a piece even with the majority of his estate going to charity, so we’re sure they won’t be too destitute.|
While the majority of us would be thrilled with even the most “miniscule” of these sums, most of these children have been raised in great wealth and could take the smaller-than-expected inheritance as a slight. And the wealthy are not the only ones that cut their children out of their estate plan or give them a smaller portion than expected – in fact, it is more common than you may think. In situations such as these, proper estate planning is imperative to ensure that your wishes are met in regards to the distribution of your assets. It is important to explain your reasoning, whether in person or in writing in your estate plan, so that your children understand and do not take offense or feel unloved.
If you would like more information or to discuss planning options with one of our qualified estate planning attorneys, contact us at 888.222.1328 to schedule a free consultation today!
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