Yahoo Finance Why millionaires aren’t leaving their fortunes to their kids
Former US country singer, Marie Osmond, made headlines today when she revealed on the CBS show The Talk that she would not leave her children any inheritance when she dies.
“I'm not leaving any money to my children,” Osmond said.
“My husband and I decided that...you do a great disservice to your children to just hand them a fortune because you take away the one most important gift you can give your children, and that’s the ability to work,” she said.
But Osmond isn’t the only celebrity to go on record saying she won’t be leaving her kids any cash.
Elton John revealed in 2016 that his children, Zachary and Elijah, would not be inheriting the singer’s eye-watering $771 million wealth.
Also read: What to Do With an Inheritance
John told The Mirror his children would grow up just like he did.
“If they want a new car they’re going to have to pay for it, and they’re going to have the second hand car to start with - that’s what I had. They have to have a sense of value,” he said.
“They have to do chores in the house – take their plates to be cleaned, help in the kitchen, tidy their rooms and help in the garden, and each time they do they get a little star to put on these charts they’ve made.”
Microsoft co-founder and the world’s third-richest man, Bill Gates, is worth around $165 billion - but his children won’t be seeing much of that either.
Gates went on record saying that each of his three children would inherit US$10 million, which equates to around 0.006 per cent of his wealth each.
“We want to strike a balance where they have the freedom to do anything but not a lot of money showered on them so they could go out and do nothing,” Gates said in a TED Talk.
The rest, Gates said, would be donated to charity.
Intergenerational wealth transfer in Australia
Around 80 per cent of Aussies plan to leave an inheritance to their children, according to a survey by Monash University and AustralianSuper.
Of those leaving their kids an inheritance, 44 per cent plan to leave the family home, 18.5 per cent plan to leave cash and 16 per cent plan to leave their superannuation.
According to behavioural economist at AustralianSuper, Eraj Ghafoori, it’s because Aussies want to leave a legacy.
“The process of material inheritance transmission seems to be influenced by a myriad of factors, including socioeconomic and cultural backgrounds of parents and children, family traditions, values and beliefs,” Ghafoori told The Sydney Morning Herald.
But while just 18.5 per cent will leave cash, in the next 20 years, around $3.5 trillion worth of wealth is set to exchange hands between Australian boomers and their kin over the next 20 years, research from funds management firm, Perpetual, found.
If you die without a will
If you don’t have a will at all, this could create huge problems for your surviving family in the future.
"A will gives legal effect to your wishes… It helps to reduce arguments because it is clear what your wishes are," UNSW Law professor Prue Vines told Yahoo Finance.
If no will exists, you will die "intestate", which means assets – also known as your estate – will be passed to your next of kin according to local laws.
In practice, most people won’t write a will until they have enough assets to worry about, but if you’re thinking of writing one, you should see a solicitor.
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