When CNN presenter Anderson Cooper recently announced that he would not leave a great legacy to his son Wyatt, he joined a long list of wealthy, high-profile individuals who have issued similar decrees. Among them: Daniel Craig, Sting and, perhaps best known of all, Warren Buffett, whose net worth is currently estimated at $ 100 billion.
Children have to learn to go their own way in the world, these people say. Or, as Cooper, who was born into the Vanderbilt family, remarked, "I follow what my parents said, which is, 'College gets paid and then you have to move on."
But some financial experts say these well-heeled and seemingly well-intentioned individuals are missing the mark. A parent's money given before or after death can not only help in a myriad of meaningful ways, but can also be carefully given away so that it is not wasted.
The point, says Harry Grand, senior managing director of Angeles Private Wealth, a consulting firm based in New York and California, is that there is no need to be tough about caring for your offspring.
“It doesn't have to be all or nothing. There's a healthy in between, ”he says.
""People who are always looking for the next rent payment cannot make strategic decisions about what to do with their life."”
Grand and other professionals say most of their customers still go the traditional route of leaving money to their children and other family members. In fact, a study by MagnifyMoney, a personal finance website, found that the wealthiest families in the US will inherit nearly $ 1.7 million on average. And those in the next tier will inherit $ 273,000.
In addition, the money does not have to be given unconditionally, say professionals. A trust, a common estate planning tool, can contain a variety of provisions, including those that use the money for specific purposes, such as: B. Education, limit.
Paul Saganey, president of Integrated Partners, a Massachusetts-based wealth management firm, also notes the growing popularity of incentive trusts – trusts that reward recipients based on certain factors. He gives an example of a client setting up a trust that paid out a 25 percent “bonus” tied to each recipient's annual income – in other words, the more the recipient took home in salary or other income the more the recipient benefited from the trust.
Saganey notes that trusts don't just have to reward financial performance. Money can be made available for recipients who choose a career in the non-profit sector or in other less finance-oriented avenues.
However, experts emphasize that the problem with the fixed position that children “have to arrive” without financial support is that it does not take into account situations that may arise in life.
"I always say that one day you don't want to look from the sky and your grandchild comes to Harvard and they don't have the money to go," Saganey says.
In addition, experts note that the picture for the younger generation differs in terms of their financial needs. Paying for college education, as Cooper implied for his son, may no longer be enough. A completed degree is increasingly seen as a prerequisite.
And that doesn't take into account other potential needs, say professionals. What if a grandchild is born disabled and needs care and assistance for a lifetime?
There's also the simple fact that extra money can sometimes buy a little freedom or some level of security.
Adam Oliensis started his acting career with the money his grandparents left him.
Courtesy Adam Oliensis
Adam Oliensis, a New York actor and stand-up comic, says the money he received from his grandparents years ago enabled him to kickstart his theater career and even produce and perform a show on Broadway. With that in mind, Oliensis, who also worked in finance, makes sure his kids have cash for them in their life after college.
It's about the extra support, he says: "People who are always looking for the next rent payment cannot make strategic decisions about what they want to do with their life."
The money that is given by a parent, grandparent or other friend or relative can also have more than a purely financial meaning, experts say. Namely, it can serve as a message of hope and inspiration.
For Olivia Almagro, a Miami-based publicist, the money she inherited from her mother helped her start her own business. But she says its importance went way beyond that. It symbolized that her mother, a Cuban immigrant who raised a large family, always had the next generation in mind and wanted them to be successful.
“It boosted my confidence,” says Almagro of her legacy.