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 these 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.
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Reference: CNBC (October
19, 2012) “When $20 Million Is Too Much to Leave the Kids”