Warren Buffet famously said about estate planning “the perfect inheritance is enough money so that they feel they can do anything, but not so much that they could do nothing”. My experience with clients confirms that there is in fact a ”Goldilocks”, ‘just right’ inheritance. Too much wealth destroys motivation and causes family hostility; too little means the child will be competing against others with massive lifetime advantages over them.
The increasing difficulty of making a good living in this harsh economy requires the successful to have solid resources at the starting gate of life. The enormous importance of this cumulative, generational advantage stems from the economic war raging among all humans on the planet. Resource allocation is a hostile process and combatants utilize all available weapons, including the biggest gun of all, an initial inheritance of moral values, education and wealth.
Americans are divided into 3 warring tribes: the Mass Poor (bottom 70%), the Mass Affluent (top 30%), and the Elite Wealthy (top 1%). My family and clients are in the Mass Affluent tribe and we battle valiantly to stay in the tribe and to keep our descendants in the tribe. Why?… because the control, security, freedom and happiness of owning sufficient assets are good things that don’t come easy. We’re fortunate to have the “Goldilocks” amount of wealth – not too little and not too much. Our family vision and values maintain a perspective on property that recognizes blind ambition to build as much wealth as possible is folly (and ridiculously difficult due to the overwhelming power of the wealthy elite).
Social justice warriors want to change the system; but it’s not going to change. John Rawls in his book Theory of Justice (1971) believes moral principles of fairness should be based on a notion of “original position” and a “veil of ignorance” where “no one knows his place in society, his class, position or social status, nor does anyone know his fortune in the distribution of natural assets and abilities, his intelligence, strength”. In Rawls view, it’s from this position that our economic system should be constructed. But that’s an artificial construct, very far removed from reality. You do know your position; and so do the elite wealthy. They will fight very hard to defend what they have; and so should you. As Mushu screamed in the movie Mulan – …. WE’RE AT WAR MAN! Be sure your children or other beneficiaries are armed with the economic weapons of education, a strong work ethic, frugality, knowledge and a deep appreciation of their “privileged” position. You are lucky to have an Estate Planning War Chest.