Getting Kids Inheritance Ready
One of the challenges wealthy individuals face is ensuring that their kids are ready to inherit and sustain wealth for future generations. Eric Enslin, CEO of FNB Private Wealth and RMB Private Bank, says the responsibility that comes with inheriting wealth and leading the family members to grow and preserve it can easily overwhelm anyone that isn’t adequately prepared.
“High-net-worth individuals shouldn’t wait until their kids finish school to start teaching them about the principles of wealth management. A solid foundation of good money management should be instilled at a very young age and gradually developed as the kids grow up,” Enslin says.
He has identified key factors that wealthy individuals should consider to ensure that their kids are ready for their inheritance:
Open communication with kids about the financial affairs of the family leads to better understanding and trust. However, sensitive information should be withheld until heirs are mature enough to handle it.
Solely taking on the responsibility to equip your kids with all the skills and tools necessary to manage wealth is not recommended. Rather seek professional advice. “Professional assistance can be beneficial. We are seeing this at FNB Private Wealth and RMB Private Bank where there is an increase in high-net-worth clients who have started using our wealth- and legacy-management services for the education of their kids,” Enslin says.
Growing and sustaining generational wealth becomes a challenge if family goals and values are in conflict. It is essential that the family shares the same vision and values about the management of money. Heirs should understand these principles and be able to pass them on to future generations.
Heirs should be acquainted with the principle of sound financial management and responsibility early in life. Parents can encourage this by giving kids a monthly allowance, incentives for outstanding performance, and encouraging them to save toward long-term objectives.
Talking to heirs about estate planning helps them know what to expect when you pass away. This is also an opportunity to expand more on their inheritance and to explain critical decisions you have taken.
“Equipping kids with the necessary wealth management skills at an early age places them in a better position to succeed at managing and preserving the legacy left behind,” Enslin concludes.