Friday, January 25, 2013

Millionaires show tough love to heirs

A recent study shows American millionaires are giving their heirs a dose of tough love.

New data shows that 82 percent of American millionaires feel each generation should be responsible for creating its own wealth -- up significantly from the 65 percent who said that in 2007, according to studies commissioned by PNC Wealth Management.

And raising successful and hard-working children was priority No. 1 for 84 percent of respondents, up from 75 percent in 2007.

"It's human to want your children to have a better life than you have had, but too much financial support...might have negative longer term consequences," said Steve Pappaterri, senior PNC's managing director of wealth planning, in a statement.

"Ultimately, parents want their children to make their own way in life."

Some more interesting findings from the study:

  • Post-recession sentiments: One-third of millionaires anticipate a decline in the wealth they expect to pass on to the next generation, according to PNC's Wealth and Values Survey. But nearly half of respondents said they expect to pass on at least $500,000 of wealth to their heirs.
  • Financial legacies: Millionaires expect their finances will be a significant part of their personal legacies. And 86 percent intend to leave something for the next generation, be it passing on property, family heirlooms or ownership/participation in a business. Nearly 50 percent of millionaires expect to pass on assets via trust fund. 
  • Transfer of wealth: Most wealthy households have at least some plans in place for transfer of wealth: 82 percent have wills, 52 percent have trusts and 52 percent have estate managers. Among wealthy business owners, however, only 15 percent have a formal succession plan in place. 
  • Childhood financials: Seventy-five percent said their financial situation growing up was average, 12 percent said they grew up poor, and another 12 percent said they grew up wealthy. 
  • Generational assistance: Sixty-seven percent of millionaires said they got help from their parents, and 91 percent of them plan to do more for their children. With rising education costs, 84 percent said they have or expect to financially support their children's higher education. Many millionaire parents said they strongly support purchases such as a car (61 percent) and down payments on homes (45 percent).
Conducted in August and September 2012, the study included more than 1,100 interviews nationwide, including 560 people with assets of $1 million or more. 

9 comments:

Anonymous said...

Wish someone would leave me half a million dollors worth of "tough love."

Anonymous said...

If all parents took this approach we wouldn't be so burdened with the generational welfare scum we have today.

Anonymous said...

Here's a perspective from a 'child' (adult now) who was raised along with brothers and sisters by parents who 'made theirs'. All our lives we were basically taunted with the money possibilities. There was always that promise of "one day you'll probably inherit this or that". Do you, as a student later on in life, plan on learning the art of money management, or do you plan for making your own? If you plan your life with the idea you will inherit big money do you try to figure out the investment game, or do you spend your time learning a pragmatic trade that will help you get yourself on your own two legs? The answer is both, but in the meantime you don't really dedicate 100% to your trade. It's always in the back of your mind that you'll inherit some money. Not looking for pity, but parents with money can be very sadistic with their kids. "Tough love" can translate to manipulation and coersion.

Anonymous said...

Raise your kids to be hard-working, responsible, and accountable, and then keep them in the dark about your personal wealth.

How much is really left after the inheritance tax anyways?

Anonymous said...

My parents have amassed a good amount of money in their lifetime that they scrimped and saved for their old age and to leave some to me and my siblings. We have told them to please spend it all and enjoy their retirement. They raised us to be independent and no money would give us more pleasure than seeing our parents enjoy the fruits of their labor.

Anonymous said...

11:20 anonymous, more than you would think since,until this year the exemption was 5 million.

12:19 Actually, you're spot on with the advice to the parents. That's what I told mine, and in fact told them to leave me out of the will. However, being the depression era folks they are...especially dad, they don't think like that. They have one mode of thought: earn and save. Of course, teasing the kids with what they'll inherit one day seems bring too much pleasure. It'll all wind up in lawyers' fees after all the siblings try to sort through it all.

Ettolrahc said...

Two books everyone should read:

The Millionaire Next Door and In the Mind of the Millionaire.

Anonymous said...

Maybe this has something to do with President You Didn't Build This and his new unconscionable and immoral 55% tax $1,000,000 and above death tax that they already paid taxes on?

Anonymous said...

Actually the exemption is still $5mm indexed to inflation and really >$10mm for husband and wife.