by Rick Kahler
a recent column I reported on a survey done by the financial services
that found only 59% of US parents intend to leave their children an
inheritance, the lowest of the 15 nations in the survey. The fact the US is
last came as no surprise to me. What did surprise me was that 59% seemed high.
average client is someone who has saved over one million dollars. I am guessing
that less than 2% of them have any intention or goal of constraining their
current lifestyle in order to maximize their kids' inheritance. Consuming their
last penny of savings about the time they take that last breath is their
spending plan of choice. There is even a name for these folks: "Die
they did a good job of planning for retirement, however, most Die Brokers will
leave something behind. Almost all of these I work with intend to divide what
remains equally among their children. The point is that leaving an inheritance
just isn’t a priority or a goal that constrains their current spending. As a
side note, I rarely see any intention to leave any significant portion of their
estate to charity.
did the survey find such a high number of parents who intend on leaving their
kids an inheritance, as compared to my observations that almost none intend to?
My experience is that most people have a money script of, "Good parents
should leave something to their children." It is similar to another money
script of, "Good parents should pay for their children’s college
education." These are seen as things "good" parents do. My hunch
is that when most respondents answered the survey question, they let their
money script do the talking, rather than their true intention.
this does not explain why US parents intend to leave their children less than parents
in any other country. One reason could be that more parents in other countries
have money scripts that it's necessary to leave their kids an inheritance.
of the most common themes among my affluent clients is a desire to see their
children "make it on their own." Over 90 percent of these clients are
first-generation wealth builders, meaning they didn’t inherit their money but
accumulated it from saving, investing, or building a business. They value hard
work and frugality and feel leaving a large inheritance to a child is more
hurtful than helpful.
of these first-generation millionaires also feel accumulating wealth in the US
is very attainable with hard work, discipline, and frugality. This is not the
case worldwide. In many countries, it doesn’t matter how hard you work or how
frugal you are, confiscatory taxes and oppressive regulations insure that those
people not fortunate enough to be born into money will never have a chance to
become affluent. The only way to have a comfortable net worth in many countries
is to either inherit it or work for the government.
the US is closer to adopting a model that makes accumulating wealth
increasingly difficult. I can’t name a politician currently campaigning who
advocates lowering income taxes on wealth builders. Yet I can name scores who
are running on increasing taxes on "the rich."
parents in the US may soon begin to feel that, without an inheritance, their
children may never have the means to get ahead. If more US parents begin believing
this, we will probably see increasing numbers intending to leave money to their
kids. The money script of "Good parents should leave something to their
children" might become the truth.
Rick Kahler, Certified Financial Planner®, MS, ChFC, CCIM, founded Kahler Financial Group, and became South Dakota’s first fee-only financial planner in 1983. In 2009, Wealth Manager named Kahler Financial Group as the largest financial planning firm in a seven-state area. A pioneer in the evolution of integrating financial psychology with traditional financial planning profession, Rick is co-founder and co-facilitator of the five-day intensive Healing Money Issues Workshop offered by Onsite Workshops of Nashville, Tennessee. He is one of only a handful of planners nationwide who partner with professional coaches and financial therapists to deliver financial coaching and therapy to his clients. Visit KahlerFinancial.com today!