Get­ting Kids In­her­i­tance Ready

SLOW Magazine - - Contents - Text: FNB Im­age ©

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.

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