The Philanthropist's Dilemma: When Do I Tell My Children?

You want to make a major gift to your favorite charity, but what will your children think? Do you really want them to know you have enough money that you can make such a large gift? What if they feel that money should be going to them?

These questions lead logically to others, which wealthy individuals find vexing. When do I give money to my children? Will it spoil them? Or, will they learn at a younger age to handle it responsibly? What if it kills their drive to succeed?

If there were one right answer to these questions, I could make millions writing the definitive book. Unfortunately, no single right answer exists. The right answers are as varied as our personalities, our children's personalities and the fortune or misfortune of those who come to influence their lives.

However, I will submit a list of ten principles that I feel can guide solid decision-making in this area.

1. Talk with your children about the solid values, hard work and ingenuity that created wealth in your generation or in past generations, and emphasize the responsibility to handle it prudently.

2. Be humble about one's good fortune to have wealth, and talk to children at the youngest age about the joy of giving back to those less fortunate.

3. Set an example of volunteering, and be supportive of your children's volunteer engagement at a young age.

4. Be aware of your children's initiative or sense of entrepreneurship, and encourage it in whatever form it may take and at whatever age it occurs.

5. Take your children for a test drive in family finance and philanthropy before diving in. See how they handle money and how thoughtful they are about where to give it.

6. When your children become young adults, encourage them to grow professionally. They need to appreciate first-hand the importance of each family generation creating new sources of wealth, and they need to experience the satisfaction that accompanies one's own success.

7. Hold an annual family meeting to talk about giving. Allow your young adults a voice, but also set an expectation that they become civically engaged.

8. As your children enter their 30's and 40's, their lifestyles are pretty well set, and they will be less likely to change their spending and giving habits as you turn over greater assets and family decision-making authority.

9. In their 30's and 40's, these now-mature adults should engage more fully in the family's estate planning discussions. Learning becomes a two-way street, and the priorities of the younger generation begin to become most important.

10. You can't tell your children often enough that you love them. With this value solidly in place, all the other values are more likely to take hold in desirable ways

Robert Thalhimer

Posted at 1:38 AM, Nov 08, 2007 in High Net Worth Donors | Intergenerational | Youth | Permalink | Comment