Introduction
If you are struggling with the idea of your heirs being financially savvy enough to step into your shoes one day, this blog post is for you. As the family patriarch or matriarch, it is imperative you help your heirs make sound financial decisions, which is accomplished most effectively by learning from your experiences. Any gap they need to close to prepare for receiving significant wealth is most likely because they are lacking the experiences and firsthand knowledge required to be prepared for such a windfall, not necessarily because they simply don’t “get it.” There was a time when you probably didn’t get it either, so I encourage you to be patient and open-minded with your heirs. View any shortfall in their financial acumen as an opportunity for you to help them learn – not as a mark against them.
Thoughts on Prior Younger Generations
“The children now love luxury; they have bad manners, contempt for authority; they show disrespect for elders and love chatter in place of exercise. Children are now tyrants, not the servants of their households. They no longer rise when elders enter the room. They contradict their parents, chatter before company, gobble up dainties at the table, cross their legs, and tyrannize their teachers.”
As you read those words, you may have thought to yourself how true that seems for Gen Z or Millennials. Perhaps you are thinking of your own children, grandchildren, or nieces & nephews. But what if I told you Socrates penned those words approximately 450 years before Jesus walked the earth? That’s right – around 2,500 years ago, right about the time when the Spartans were taking their legendary last stand against King Leonidas, Socrates was grumbling over just how deplorable the youth of his time had become. Maybe today’s younger generations are lazy with a sense of entitlement, and coincidentally, so was the younger generation at the time of Socrates’ teachings? Unlikely.
By now you are probably seeing the point I am getting at: every generation thinks they are the best, viewing the generation ahead of them as fuddy-duddies and the generations after them as self-absorbed and aloof. Or, as the great English novelist George Orwell said, “Every generation imagines itself to be more intelligent than the one that went before it, and wiser than the one that comes after it.” It’s just our nature. It is important to be aware of this age-old, subtle bias when it comes to assessing and sizing up your heirs. There’s a good chance they might be more capable than you think.
The Value of Perspective
We view others by their actions, but we judge ourselves by our own intentions. And as luck would have it, our own intentions are always good (according to us). You have likely made a misguided financial decision in your past, but because of your firsthand perspective on how and why you came to that decision, you may be fairly forgiving of yourself – rationalizing why what you did was okay, all the while potentially judging others in a similar situation. We can easily see into the heart of our own intentions, but we can only witness the actions of others – we are often missing the information and circumstances that persuaded them to act as they did. So, to gain perspective, seek first to understand.
We also view the actions of younger people through adult shaded lenses. Throughout life’s journey, you rack up a large number of experiences that shape your opinions and ultimately aid you in becoming more self-aware. This in turn gives you tools you can use to discern the best path forward in future situations. Because young adults have fewer life experiences, an effective shortcut is learning from others’ experiences. So, to give perspective, share those experiences.
Helping Your Heirs Make the Grade
Sure, you can simply share your experiences & insights and empathize with your heirs to facilitate a successful long-term legacy plan, but doesn’t that only work for the picture perfect situation? Maybe. If you were to grade your heirs current financial and emotional capabilities like you would a student, it’s probably true that your A & B students only need some impactful conversations and mentorship to be adequately prepared to inherit wealth. It’s the C, D, and F students that likely have your attention, and if you have more than a couple of heirs, you have all the above!
The A-B Grade Heir
You probably already know what this person looks like. Some traits might be independently successful, entrepreneurial, balanced life, healthy relationships, etc. That doesn’t mean this person is a financial guru, or even financially savvy at all. It means they have exhibited qualities in different areas of their life that would be congruent with prudent financial concepts such as restraint, contemplative decision making, and emotional stability. These young adults can easily benefit from good stewardship with meaningful conversations, sharing resources such as books or podcasts, and watching you lead by example.
The C-D Grade Heir
This might be a child or grandchild that needs some remedial work. Overspends, impulsive purchases, not goal focused. Much like a below average student, this heir’s heart might be in the right place, or they may have tremendous potential yet are distracted, or maybe their environment (whether apparent to you or not) is not conducive for good financial decision making. Spend more time mentoring these young adults because they need it! Don’t just chalk it up to them falling short – help them close the gap. Learn more about their motivations and reasoning behind their decisions, and in a graceful way guide them to fiscal responsibility. You may have similar conversations with your C-D heir as you do your A-B heir, but with the C-D heirs, you may want to focus more on creating accountability. For example, agree to read a self-improvement finance-related book together and set a standing coffee date to share insights. Ask questions and listen. Don’t just tell, teach!
The F Grade Heir
Be careful not to paint one of your C-D heirs into the F corner by being overly critical or harsh. Admittedly, this might be where everyone wants to put their “strong-willed” child because they can be defiant or in the past have only looked to blaze a trail of their own. That may drive you nuts, but it doesn’t necessarily have anything to do with money. At the end of the day, we believe most parents are chiefly concerned with their heirs’ well-being. The F-grade heir may have flown the coop. This isn’t just someone who is simply going to use money in the future differently than you. This is not the hippie granddaughter that just wants to travel in a van and be an artist. That may annoy the patriarch / matriarch. They may not understand it. But that’s not harmful to their well-being or others. Your F-grade heir is dangerous. This is someone you want to protect from themselves and/or others as a result of addiction, manipulation, or mental health issues. You love these people in a big way, and it is okay to make boundaries. If you haven’t already, this might include counseling, rehab, or family retreats to try to move them in the right direction. If it is clear that this isn’t an option for this heir, you may want to plan for what life without you looks like for them.
An estate plan with more restrictive terms (such as trusts) might be an answer but take time to explore all avenues for this heir. Proactively working to strengthen relationships and nurture the inherent strengths of your heirs is much harder than drafting the strict terms of a trust, but seeds planted now could lead to more fruit generations down the family tree.
Conclusion: Your Role in Readying Future Generations
In closing, the role of preparing your heirs for financial stewardship is a responsibility that extends far beyond the numbers on a net-worth statement. It involves building a bridge between generations, imparting not just financial acumen but also the wisdom and values that helped you amass your wealth. Whether they’re A-B grade heirs who need minimal guidance, C-D grade heirs who require more focused mentorship, or F-grade heirs who pose significant challenges, each presents a unique opportunity for growth and education—both for them and for you. The way you engage with your heirs today will shape their approach to financial decision-making long after you’re gone, setting the stage for a legacy that could impact your family for generations to come.
Remember, it’s not just about preparing your heirs to be good stewards of the family wealth; it’s about enabling them to be good stewards of their own lives. By taking the time to understand their individual needs, struggles, and aspirations, you’ll be equipping them with far more than financial literacy. You’ll be giving them the tools they need to build fulfilling, responsible lives for themselves, creating a cycle of wisdom and financial well-being that can benefit your family for years to come. Be willing to move beyond easy cliches and generational biases to invest in what truly matters: nurturing the potential of the ones we love.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
