Wealthy place conditions on children's inheritance
17th Apr 2008
Many wealthy families now place strict conditions on their children’s behaviour before allowing them to inherit large sums of money, according to new research.
Barclays Wealth and the Economist Intelligence Unit surveyed 790 people across the world with assets of more than £100,000 to invest. The researchers found that more than a third of those questioned thought it was a bad idea to leave large sums to their children.
Surprisingly, perhaps, those who had inherited wealth themselves were less willing to pass on large sums than people who had built up wealth through their own efforts. There was an understandable concern among those interviewed that inheriting money might reduce their children’s desire to succeed in their own right.
The answer for many families is to set conditions whereby children have to accomplish certain goals before they can inherit. This approach was particularly popular with the very wealthy. For example, nearly 60% of people with assets above £5m insist that their children must do things like gain a university degree or hold down a responsible job for a specified amount of time.
Others have decided that while they will provide for their families, they will also leave large sums to worthwhile causes.
Very few of us consider ourselves to be rich but whatever assets we have the principles are the same. If you work hard all your life and manage to accumulate some wealth then it is only natural that you should want to pass some of it on to your children. On the other hand, you want to ensure that they appreciate what they are getting and are able to cope with it responsibly.
It is not surprising therefore that an increasing number of people are giving more and more thought to inheritance planning. If you want your wishes to be carried out then it is important to start preparing now.
It may be necessary to update your will to stipulate how you want your wealth to be divided and what conditions if any you may wish to apply. Even if you don’t feel it necessary to make such stipulations it is still important to make sure your will reflects your current thinking. People’s circumstances and views change as time goes by and so a will made several years ago may divide up your assets in a way that is no longer suitable.
It is also important to get advice about inheritance tax so your beneficiaries don’t end up giving large amounts of your money back to the Treasury. Trusts can often provide an efficient way of passing on wealth.
Contact Kate Grundy, solicitor at David Phillips and Partners Liverpool office, on 0800 027 7870 for confidential advice on making or updating your will.