Inheritance: Some ultra-rich pick charity over kids
Top reason cited: Each generation should earn its own wealth
Tough luck, kiddos: Your rich parents may give the fat inheritance you're expecting to charity instead of to you.
About 32% of high and ultra-high net worth Americans say it isn't important to leave inheritances for their children, according to a report released Monday by U.S. Trust, Bank of America's private wealth management division. Among baby boomers, that percentage rises to about 45%.
The top reason respondents cited for not leaving money to their children was that "each generation should earn its own wealth."
One in four respondents said they would rather give that inheritance to charity, while more than one in four said they worked hard for their money and plan to enjoy it themselves. A small slice, 7%, said they don't think they will have any money left to leave for future generations.
Other reasons people gave were that they need the money to fund their own health care, they would rather invest money in their children while they're growing up, their children will have enough money without an inheritance or they want to use their money "to solve difficult social problems."
And then there are people who will give a little money to their children -- but not their entire estate.
Glenn Walker, a 65-year-old from northern Kansas who took the survey and falls into the high net worth category, said he plans to leave "something" for his two children. But because he and his wife have both worked as teachers for years and want to help the education system, he said most of the money will probably go to scholarship funds at local high schools and colleges.
"They will inherit something, but both children seem to be doing fairly well," said Walker. "And I think they -- and we -- all believe that if you've made your money here in the American system and you love this country, it's okay to share some of that wealth with others outside of your family."
Of the survey respondents who do think it's important to leave an inheritance for their children, most say it's because they feel it's important to preserve their family's wealth and to positively influence the lives of their children after they pass away.
And they have a lot of wealth to decide what to do with. About 37% of the 642 respondents have between $3 million and $5 million in investable assets other than their primary residence, 31% have between $5 million and $10 million, and 32% have at least $10 million. The study classifies people with $3 million or more as high net worth individuals, and those with $10 million or more are considered to be ultra-high net worth.
But even if some respondents are planning on giving their children a chunk of this money, their kids may have no idea how much to expect.
Only 37% of respondents said they fully disclose their wealth to their children. About 12% of all respondents said they haven't disclosed anything about their wealth to their children, and 51% have only disclosed "a little" information to them.
The main motivation behind not telling their kids how rich they are is concern that it would "negatively impact their work ethic." Some respondents also worried that their children would discuss the information publicly, some said they were taught to never discuss wealth, while others said they simply don't know how to bring it up to their kids.
Walker, however, said he is an exception to this trend. He and his wife consider it extremely important to keep their children involved with all aspects of their financial planning.
"I think sometimes they think we bring it up too much," he said. "But I don't think you should be tricky and hide things about your finances -- they need to be involved and know what's going on."
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