Kids, Wealth, and Consequences: Ensuring a Responsible Financial Future for the Next Generation

Appendix 6. Unintended Consequences

• The lifestyle you choose to live will create certain expectations in your children as to what lifestyle they will maintain. Communication with your children about this, even when they are mature enough, may be uncomfortable or unpalatable, but it is one of the best gifts you can give them, regardless of how much or how little they may ultimately inherit.

• One family office director was concerned for one client's children. The family always flew on their private jet. At the parents' current spend rate, it was clear there wasn't going to be any money left for the kids to maintain that lifestyle, and they would be illequipped to deal with the emotional baggage and basic skills when they eventually have to fly commercially. Growing up with a wealthy lifestyle can leave offspring clueless about how to handle a different lifestyle.

• There is a tradeoff between writing too specific a trust that allows the trustee to control the beneficiaries and make them feel impotent and writing a trust that permits so much discretion that potentially irresponsible beneficiaries could use trust assets to support risky behavior, such as gambling or alcohol or drug abuse.

• If a trustee were to look at your family's assets as one big allocation and then locate the assets, this may not be considered responsible from a fiduciary perspective. Depending on who the beneficiaries are, the laws surrounding the trust, the state in which you live, and the lawyer you consult, this asset ...