Reply to: Inheritance Tax

[DodgyAgent]

What's that? Funny, I thought that was what agents did too!

we do try

[Codejock]

raise revenue without doing anything to earn it.(

What's that? Funny, I thought that was what agents did too!

[DodgyAgent]

Probably a guilt thing.

Mind-you i'm surprised that DA (given his arguments in this thread) has also not voted for 100% to the gov.

I am allowing for the fact that most parents who pass on money to kids do so responsibly and not to the point of spoiling them. I also object to the govt being able to raise revenue without doing anything to earn it.

I have also got a huge chip on my shoulder about my family hating me so much that no one has ever left or will leave me even so much as a pot to "pi** in

[Codejock]

I love the fact that someone calling themselves "IR35 Avoider" has voted that they believe 100% of all wealth should end up with New Labour.

Probably a guilt thing.

Mind-you i'm surprised that DA (given his arguments in this thread) has also not voted for 100% to the gov.

[DimPrawn]

I love the fact that someone calling themselves "IR35 Avoider" has voted that they believe 100% of all wealth should end up with New Labour.

[BrilloPad]

Isn't the logical conclusion of 100% inheritance tax argument that we re-distribute all wealth?
If it is simply your choice on how you wish to raise your kids then WTF should the gov have to do with that?

I dont see that as a conclusion atall. I think it would encourage people to generate wealth. I bet there are a few who have inherited who could otherwise have had very productive careers.

Nothing wrong on spending money on your kids when they are kids(if they are taught the value of it).

[ace00]

Isn't the logical conclusion of 100% inheritance tax argument that we re-distribute all wealth?
If it is simply your choice on how you wish to raise your kids then WTF should the gov have to do with that?

[DodgyAgent]

Here you go. A web page devoted to the topic of Inherited wealth, which rather than makes any prejudged stand actually discusses the issues to do with inherited wealth.

My own position is that I have gone a step further and said that inherited wealth is bad and that the govt should act to curtail it.

http://www.jonathanpond.com/family.inheritingwealth.htm

Passing on Wealth Without Spoiling the Children

It’s certainly understandable to be concerned about passing on your estate in a way that will benefit the children. Stories abound of people who have received fat inheritances, have proceeded to lose all initiative, and have ended up far worse off as an individual or family than they had been prior to the inheritance. But these unfortunates are the exception rather than the rule. Here are some suggestions that I hope will put the dilemma in perspective and help you do right by your kids and their families without going overboard.

Coping with Inherited Wealth

Several trillion dollars will be inherited in the United States over the next twenty years. Some parents and children will be receiving very large inheritances. A number of problems accompany large inheritances, and you may have to address them for either yourself or your children, especially if you yourself are the beneficiary of affluence, and for inheritors themselves to face the specific problems and responsibilities their wealth brings them.

Children of wealth often suffer from low self-esteem. Many are uncertain whether they could achieve anything significant or be liked and respected by others if they were not affluent. This can also result in a continuing and irrational fear of losing their wealth, which may prevent them from taking the initiative and the risks required for personal and vocational achievements.

Even more than in normal cases, it is essential to familiarize children of affluence with the value of money. After all, with so much around it might seem to them as if it grows on trees, which is hardly how you want your child to become accustomed to the presence of money. Children should be expected to earn their allowances through the accomplishment of specific chores. Paid summer jobs, always a good idea, can help your children to believe that they can support themselves.

Being active participants in the decisions that affect their lives also alleviates some of the problems that can accompany being passive inheritors. Choosing a school is a particularly good example. Your child should feel that his point of view and feelings are at least heard and respected. Do not pressure your child to attend your alma mater or some school that you could not attend.

Because many young inheritors are spared their share of life's challenges, they are often slow in their personal development. The comfort and security that money provides can avoid, diminish, or delay the crises and challenges that are necessary for emotional and intellectual development. For many people, however, being able to provide this level of security and comfort for their kids is one of the main goals for which they worked. Teach your child to endure the pain and frustration of delays and disappointments, and to resist the temptation to quit when things are not going their way, rather than shield them from all of life's stresses.

A large inheritance can make it difficult to sustain an interest and commitment to anything, including most jobs and relationships that require continuing effort or the endurance of ambiguity, setbacks, and frustration. Lack of motivation is related to lack of discipline. Many inheritors have trouble finding and putting energy into meaningful pursuits long enough to obtain satisfying outcomes. Self-discipline requires concentration and the ability to postpone gratification in the interest of higher, ultimately more satisfying rewards.

Developing a Sense of Purpose

The best solution to the lack of motivation, discipline, and interest that often accompanies inherited wealth is to never allow money to substitute for these things in the first place. You may want to discuss the obligations and ethical issues that accompany affluence with your children, so they realize that their fortunes carry certain responsibilities to society. Wealth should become a reason to accomplish, not a replacement for it. Young inheritors who are troubled at not having to "earn their living" may find an answer in "earning the right to live." This can mean careers or avocations in the arts, academic, or public service. It may mean devoting as much time and effort as money to charities or investing in noncharitable, "socially responsible" companies. Whatever their interest, your children should be advised to fight the tendency to give up when the level of their frustration and discouragement becomes unpleasant; a sense of success and competence can only occur once an inheritor's obstacles are confronted and overcome.

Power presents a particular peril for inheritors, since they have not earned it and may not feel entitled to it. They may handle power in extremes: by avoiding it, by denying its reality, or by exercising it arbitrarily and self-servingly as overcompensation for their sense of inadequacy. Most inheritors suffer from guilt. They find it hard to accept unearned good fortune and have trouble finding ways to prove themselves worthy of it.

The solutions to the problems of dealing with guilt and power are the same: Your children need to attain a constructive attitude toward their financial good fortune. This starts with you yourself being comfortable with your wealth, free of pride or shame about it. One experience that seems to distinguish those who function well with inherited wealth from those who do not is that their parents have dealt with them straightforwardly about the money itself.

Wealthy people can be afflicted with feelings of alienation and suspicion. They sometimes find it difficult to understand the lives and experiences of those in more ordinary circumstances, and they are equally convinced (with some reason) that those others cannot understand theirs. Adding to this alienation is the suspicion that many of those they encounter want something from them and are ready to manipulate them for their own purposes.

You can help this by suggesting work situations where your children are not identified as being wealthy, and where they have opportunities to succeed on their own merits. Generally it is preferable for a child to seek work outside the family business, if there is one. The young affluent must also risk making favorable assumptions about friends and associates and making true commitments to these relationships. This will expose them, like anyone else, to the possibility of being hurt, but it is the only way to full and rewarding relationships.

Don't Spoil the Child

One of the hardest but most important things you must do for your children is to learn to avoid both negligence and intrusion. Some rich parents lead active lives and purchase child care, thus neglecting to give their children the personal attention they need and deserve. Other parents may be too intrusive in their children's lives. Their legitimate concern that their wealth be preserved and used properly too often results in excessive interference. This dichotomy between negligent and intrusive parenting is reflected in the provisions they set for inheritance. Most people find it wise to wait until children show some responsibility and understanding of their positions and obligations, as well as some signs of being able to support themselves, before entrusting them with their fortunes. Whenever you make the decision to withhold money from your children, however, make it clear why you are doing so, what you expect in return, and what your children can expect from you. It is not fair to bring the child up with one set of expectations, then suddenly and inexplicably deny them their inherited wealth.

Although substantial inheritance should depend on some demonstration of your heir's ability and inclination to handle money responsibly, avoid the temptation to use the promise of an inheritance as a means of coercing children to behave a certain way. Children should not be encouraged to dissemble or deny their true nature, and your distribution of wealth among your children should be fair to all. It might help to arrange trusts or wills that make a portion of your children's inheritances available to them at a relatively young age, with the understanding that the forthcoming portions will depend on their demonstration of responsibility.

[Codejock]

Well, this is all very rivetting, but unfortunately I must get back to building up DA's childrens inheritance.

[DodgyAgent]

But you're still talking about children. What about those of us who have grown up children, who would probably not appreciate a "guardian"!

Give it to charity or blow it, dont let either your children get hold of it or the government.

[DodgyAgent]

DA, are you saying that the sole cause of their problem stems from inhereted wealth?

Mailman

No, but you will probably find that rich parents who give children lots of money are likely to be guilty of neglect.

[tay]

Currently do Life Assurance payments count towards the Inheritance Tax threshold?

[tay]

The money is not given it is to be spent by the guardians to ensure that they continue at school, and that the guardians do not have to dip into their own income to raise my kids.

Ahhh so a bit like a trust? How about £3000 a month?

[Codejock]

The guardians administer the money, the children benefit from it being spent on the roof over their heads, food, clothes and education.

But you're still talking about children. What about those of us who have grown up children, who would probably not appreciate a "guardian"!

[Mailman]

DA, are you saying that the sole cause of their problem stems from inhereted wealth?

Mailman