The chief risk is always that the money will impact a kids’ motivation and self-reliance. “Ideally one would set aside enough funds to allow our family members to do anything they could do, but not so much that they could do nothing.”
You give an inheritance to your younger loved ones and future generations to bless them and not to curse them. Once again, our object lesson is another celebrity estate. This time the decedent is Whitney Houston.
The inheritance left by Whitney Houston is chronicled by CNBC in an article titled “When $20 Million Is Too Much to Leave the Kids.” Without delving too much into the case, the passing of Whitney Houston has set her 19-year-old daughter, Bobbi Kristina Brown, up to receive a staggering $20 million. Recently, Houston’s mother and manager, who are the executors of the Houston estate, have filed a petition to restrict the inheritance payments on the basis that they were simply too large. According to the petition, such inheritance payments would make Bobbi too easy a target for predators, or worse, enable Bobbi to devolve into a bad lifestyle. Taking the petition at face value, this consequence would not have been Whitney’s intention.
Regardless of Whitney’s intention, the article recommends an excellent alternative that she could have employed to protect the inheritance from Bobbi and Bobbi from the inheritance. This alternative is called a “discretionary trust.” The article also provides some practical pointers, like teaching your children financial responsibility at an early age and reviewing (and revising) your estate plan from time to time.
Reference: CNBC (October 19, 2012) “When $20 Million Is Too Much to Leave the Kids”