It’s important to have a healthy conversation about inheritance. Not talking about it can result in bewilderment or unthinking dissipation, writes Arabella Murphy
I saw a post on social media the other day and – most unusually for me – couldn’t resist posting a reply.
The person described a common family dilemma: an elderly, unwell, wealthy parent who had always been rather controlling had now announced that he would leave his estate to his young grandchildren instead of his children. What should they do?
Opinions flew back and forth. Was this unfair, or generous? Should his children challenge him, or do nothing? I had a different reaction.
I don’t think people talk enough about death, and specifically wealth transfers.
In England, and other common law jurisdictions where there is no requirement to leave fixed portions to your children, the problem can be particularly acute, precisely because it’s largely a matter of personal choice as to how you leave your assets. Many people say ‘but the contents of my Will are private’.
English literary fiction doesn’t help, with its many representations of ‘the reading of the Will’ by the family solicitor to relatives sitting with bated breath – a thing that does not actually happen in real life, but conjures dramatic images of weeping daughters and suddenly-enriched cousins.
Overall, parents do tend to leave their money to their children, and children tend to hope or assume that their parents will leave them an equal share. So why pretend it’s secret? Plenty of problems arise when someone departs from that perceived norm. Mostly, it would be fair to explain their choice before they die – most don’t – as it’s the kind of surprise no-one wants, and brutal if you can’t even ask ‘why?’.
But even in civil law countries, where each child’s share is pre-determined by the law, there is a reluctance to talk about what will actually happen to the money.
A family doesn’t need to have great wealth to make it helpful to talk about the transition of money from one generation to the next. Nor do you need a formal family governance exercise for it to be useful to talk about values, priorities, wishes and aims. Start by asking yourself the question ‘what’s it all for?’. Then ask your family.
Not talking about it can result in bewilderment (I’ve blogged about Abigail Disney’s extraordinary story in the past), or unthinking dissipation. It can even mean family disharmony, particularly with shared assets where the heirs can’t agree.
Every culture has its own version of the English expression ‘shirtsleeves to shirtsleeves in three generations’. I’ve often wondered if that might change if each generation spoke to the next about what they would do with the money. Plenty would still be spent differently, but talking about it might focus the thoughts and priorities of the heirs.
But ‘talking about it’ also shouldn’t be a euphemism for parents dictating to their children. Money is so often used as the only means by which a parent can continue to exert influence or control from beyond the grave. A healthy conversation might be one in which the parents explain how they hope the money could be used, or what they wish they had done, and the heirs add their own ideas, or just gather information to think about.
So – back to my reply to the original question on social media. I posted: Why don’t you ask him what he would like the grandchildren to do with the money? And perhaps ask his advice on how to deal with children inheriting substantial wealth at a young age.
It might lead to a better understanding of what he’s trying to achieve – or it might prompt him to think further. You won’t change his mind by arguing, and it’s his money (whether his motives are controlling or not). But you might all benefit from having talked about how the money could be used.
Arabella Murphy is founding director of Propitious Ltd, a strategic consultant and mediator for wealthy families and individuals