In all my years of meeting with wealthy families for discussions on estate and legacy planning, I have had the privilege to listen to countless stories.
Some stories are inspiring to listen to, while others can be heartbreaking. But through them all, I took away many important lessons about wealth and life.
1. Giving Our Children Too Much in Life at a Young Age May Not Be a Good Thing
In the plans that clients want us to put in place for them, one of the common requests is to put in place structures to prevent their children from squandering their inheritance. This is not just limited to young beneficiaries but beneficiaries who can be as old as in their 50s!
The lack of trust is largely due to many of these children not needing to work for the good life that they have been enjoying from a young age. Their parents let them have the best things in life (high-end cars, branded bags, luxury watches, etc.) and some even gave them a generous monthly allowance for doing nothing. Some of them had a good education from premier colleges but were not motivated to work since they had rich parents who would provide everything for them.
But it is not that parents do not know this. No sensible parent starts off their parenting journey with the intention of spoiling their children to such an extreme. It usually begins in a small way, unintentionally, incrementally, and by the time they realise what they might have done, it is too late.
When we give our children too many good things in life, especially when they are still young, we deny them the opportunity to learn the importance of delayed gratification and we do not allow them to foster resilience and independence, which can cause them to have a self-entitlement mentality.
It is no wonder King Solomon wrote in the Book of Proverbs that “An inheritance obtained too early in life is not a blessing in the end.” (Proverbs 20:21)
2. Don’t Just Build Your Wealth at the Expense of Building a Relationship With Your Loved Ones
I have observed that while some of the ultra-rich can be very successful in their careers and businesses and have a lot of wealth, they do not necessarily have a close relationship with their spouses and children.
Some are divorced, and others are not on speaking terms with their children. The common reason is always because they had spent a large amount of their time building their businesses and wealth or on their profession that they do not have time to build relationships with their families.
As they reach the last phase of their lives, they have the means to live a luxurious life but are often lonely. As an entrepreneur, I can understand this. When I first started my firm in 2001, this new “baby” began to consume me and took time away from my wife and two young children.
Well-meaning friends warned me not to chase wealth at the expense of my family. “But I am not even trying to be richer. I am just trying to survive!” I retorted. Finally, it came to a point in my life where I did not have a relationship with my family.
Thankfully, I realised it early enough to turn around. Otherwise, I would have lost my family. Today, I still work very hard but over the years, I have learned to be very intentional in setting aside time for my loved ones.
3. Spend Some of Your Wealth on Yourself, Don’t Just Leave Everything for Your Children
Recently, the tear-jerking Thai movie “How to Make Millions Before Grandma Dies” took the nation by storm.
The story is about how a young man quits his job to take care of his dying grandmother while scheming to inherit her property. But vying for the same property were his two uncles, one of them a gambler who is always beset with debts and stealing his mother’s money, and the other a rich man who wants to be richer. The young man’s own mother was less interested in the fight and just wanted to spend more time before her mother died.
Grandma shocked everyone when she gave the property to the prodigal son to pay off his huge debt.
But after the funeral, the young man received a call from the bank about a huge sum of money that his grandma had been saving for him since he was a child. While most people were talking about whether Grandma’s decision was the correct one, I was thinking of something else.
As a parent, I can understand Grandma’s decision. But if we don’t have children like grandma’s son who was in dire straits, we should think a bit more for ourselves and our spouses.
By all means, give our children an inheritance if we wish to, as a final love gift for them but set aside wealth for ourselves so that we can do meaningful things with our spouse. There is no need to give so much that we may mess up their lives.
I have observed that many wealthy individuals are so concerned with their children after they pass away that they don’t spend as much time thinking about how they can use their wealth to live the life that they desire and deserve.
4. In Your Estate and Legacy Plan, Do Not Just Give away Your Wealth, Share the Message
In all my work with my clients, I have realised that behind every legacy and estate plan, there is a message of love. Unfortunately, this is lost in the legal documents and structures that are put in place.
I have always encouraged my clients to share their gifting plans with their beneficiaries. Share not just the “what and how” of the plan but also share the “why”.
But as Asians, some of us may not be so willing to communicate our emotions so openly, especially before our passing. In this case, one can consider using the Letter of Wishes (LOW).
The LOW is a non-legally binding document by the settlor to guide the protectors and trustees on how they wish their assets to be managed. But instead of writing it like an instruction manual, write it like a love letter to your loved ones.
Final Thoughts
Legacy and estate planning have often been used interchangeably and although there is an overlap in these two areas, there are subtle differences.
Estate planning is about the management of a person’s assets and liabilities upon his/her unfortunate demise. It covers areas such as ensuring the loved ones have enough money to maintain their lifestyle upon the demise of the testator, minimising estate leakages such as probate costs and estate duty in foreign jurisdictions, as well as ensuring that the estate is distributed to the rightful beneficiaries using instruments such as wills and trusts.
Whereas legacy planning is the process of creating a lasting legacy as well as transferring a person’s values when he/she is no longer around. It is something that takes a lifetime to do and not just through the purchase of financial products or creating legal structures.
The writer, Christopher Tan, is Chief Executive Officer of Providend Ltd, Southeast Asia’s first fee-only comprehensive wealth advisory firm and author of the book “Money Wisdom: Simple Truths for Financial Wellness“. He is also a Certified Ikigai Tribe Coach.
The edited version of this article was published in The Business Times on 22 July 2024.
For more related resources, check out:
1. Achieving Contentment Is the Greatest Gain
2. Life Decisions First Before Legacy Decisions
3. My Reflection on the True Value of Estate & Legacy Planning
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