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Some time ago, I wrote about how each generation in a family business is expected to contribute toward the company by building on the work of past generations. This building process is often long and multi-generational, and many don’t see completion for a very long time. 25 years ago, I saw a cathedral that was being built in Barcelona. Today, it is still not yet complete. Similarly, great corporations of the past were built over a similarly long process over many generations of Fords, Agnellis, Cadburys, Waltons, Boehringers, Tatas, and Birlas.
However, times are changing as there are increasing examples of families and founders today that avoid leaving large legacies to their children. The reason for this is because they want their children to begin at the beginning and taste success or failure on their own terms. Whether this is because of the numerous examples of wealthy descendants who foolishly squander family wealth is unclear, but it is more and more common to see wealthy individuals who want their children to have as normal a childhood as possible so that they can learn the value of money and build their own careers and fortunes.
There is Bill Gates, America’s richest man who has directed a major chunk of his wealth of $78.9 billion to his fund for charity. His children are expected to get only $10 million each as inheritance, which are paltry sums by comparison!
Then there is Warren Buffet, who has already pledged away 99% of his $61 billion fortune. He is reported to have said that he would provide for his kids “just enough so that they can do anything, but not so much that they feel like doing nothing“.
Politician and entrepreneur Michael Bloomberg has a net worth of $34 billion, nearly all of which will go to non-profit organisations and charities across the globe. None of his fortune will go to his kids or family, and he has been quoted as saying that he is “a big believer in giving it all away and that the best financial planning ends with bouncing the cheque to the undertaker”.
Famed music composer Andrew Llyod Webber (net worth $1.2 billion) will use his wealth to discover and nourish fresh talent “to encourage the arts, rather than raise brats”. George Lucas, the film director behind Star Wars with a value of $5.2 billion has warned his children that their inheritance will be meagre. Media tycoon Ted Turner has already channeled millions of dollars to the UN Foundation and has said that the only money left for his family of 5 children will be for his own funeral expenses. All across the Western world, one can see these signs of wealthy businessmen and figures that are becoming increasingly keen on avoiding the sense of entitlement that the second generation might develop.
Will wealthy families in the East, where the tradition of family inheritance is more deeply ingrained in the culture, be influenced by this new trend in the West? In an environment where business and even political power is often considered hereditary by family dynasties, this may be a rather dramatic step. This is not to say that such a trend is even necessary, as one cannot discount the fact that many dynastical families have been and continue to be successful in maintaining and growing the family’s wealth and business.
The choice to leave varying amounts of inheritance to the next generation is entirely up to the founder and there is certainly no right or wrong answer, but ultimately, families must remember that the culture of success and hard work that built the business is not something to be taken for granted and must be sowed and nurtured in their children in order to ensure that they live rich and fulfilling lives.