I’m trying my hand at a new format for this article: a simple parable. Having seen wealth transferred successfully – and unsuccessfully – across generations, I’ve observed a few common “financial personality types” and behavioral tendencies among heirs. It’s important for wealth creators to know the financial personality types and tendencies of their children/heirs, and to establish their wealth transfer plans with this knowledge in mind. It’s important, too, for heirs to be aware of their own tendencies, and to take proactive steps to improve their behaviors. Finally, it’s important for both generations to engage in some degree of open dialogue around the wealth. After all, an ounce of prevention is worth a pound of cure.
There once was an old man who had four adult children. The man had found great success in business, and when he passed, he left his children a considerable fortune. While he had taken steps to ensure that each child would receive an equal share, he had done little to prepare them for their inheritance, simply stating that he wished for them to use the money wisely. As soon as the estate was settled, the four heirs set about their respective ways with their newfound wealth.
The first heir, a son, was a risk-taker, never satisfied with the status quo and driven by a relentless desire for growth. He had launched and invested in a great many ventures throughout his career, and viewed his inheritance as nothing more than additional fuel. He accepted losses as part of doing business, but gains were his sole aim, and these could never be achieved quickly enough. Over the course of time, his wealth oscillated wildly. Some years, his bets yielded astronomical returns, which he would immediately attempt to parlay into still larger winnings. Other years, he could hardly maintain his debts, barely managing to remain solvent.
The second heir, a daughter, was a spendthrift. She had an insatiable appetite for the finer things in life, and she chased novel experiences across the globe. Though her inheritance was considerable, it declined steadily due to her habitual, irrepressible spending. She accumulated valuable properties and artifacts, saw exciting places, and created beautiful memories. However, in the course of time, her possessions had to be sold, and she was largely confined to her house, lacking the resources to travel. She was remorseful in her old age, preoccupied with the past and dissatisfied with the turn her life had taken. She yearned to regain her wonderful possessions and revisit those exciting places.
The third heir, a son, was a loner and a miser. He could not abide the thought of losing, or giving away, any of what he possessed. Consequently, his wealth neither grew nor dwindled. It remained as stagnant and shrouded as he himself was, obscured by his frugal habits and furtive ways. When he died, his bank account was full, but his friends were few.
The fourth heir, a daughter, was, in a word, balanced. She took pride in her professional accomplishments, but nothing was dearer to her than her family. To that end, she viewed her share of the inheritance as a source of support for those she loved. Together with her husband and children, she charted a vision for what they hoped to achieve with the money: enabling educational and entrepreneurial pursuits; supporting, rather than elevating, their lifestyle; giving generously to causes that were important to them. She took intentional steps to ensure that her children were well-educated and well-prepared to receive their share of the inheritance. Caring for the wealth, and carrying it forward, became a collective endeavor, and by the time of her passing, the money had done more to bring them closer together as a family than drive them apart.
By the time the last sibling passed away, the old man’s fortune had been consolidated into one branch of the family tree, and to this day, that branch continues to yield good fruit.
Which of the heirs honored their father’s legacy? Who bore more responsible for the incongruity of outcomes: the father, or the heirs themselves? To which of the siblings do you most closely relate? What steps have you taken with your own family, whether as a wealth creator or as an heir, to promote an enduring family legacy?
And Now For Something Completely Different…
As someone who values physical health and fitness, I was struck by this article, in which Philip Yancey reflects on his recent Parkinson’s diagnosis with his characteristic candidness, eloquence, and humility. For one thing, it made me very grateful for my good health. Moreover, it inspired me to consider how I would react to a debilitating health event or diagnosis, and to be mindful of the “complex and courageous human being[s] who exist behind the screen of [physical disabilities].”