Can Your Kids Handle Inheritance? The Conversation Every Parent Needs to Hear

Speaker A: 00:00:00

Welcome to make youe Wealth Work, the podcast where wealth becomes your greatest ally in achieving your dreams. Hey, guys. Welcome back. You're listening to the second part of last week's episode. Let's jump back in.

Joe Pantozzi: 00:00:14

You have a firm which is a legacy firm whose business it is to help people create legacy. Legacy firm that helps build legacy. Now, one of the things I say to my.

My prospective clients and my clients all the time is I have a vision that you might want to build a larger footprint than the one that you currently occupy.

In other words, maybe you don't want to consume every dollar that you earn just for your own lifestyle, your own enjoyment, your own vacations for yourself, your family, your kids. Maybe you want to think about legacy. So. So I've thrown this question out to people numerous times.

Hey, how would you like to write a check for $100,000 to your favorite charity? And they look at me like I have three heads. Well, yeah, I would love to write a check for $100,000, but I don't have $100,000.

And if I had $100,000, I couldn't give it all away. Cause then I wouldn't have anything.

Okay, so what I'm talking about here is creating so much enough wealth that you can survive and thrive and enjoy and having over and above money that you can give to causes that you care about, causes that are close to your heart. Kids who are sick, single moms, veterans coming back from war, whatever it is. You know, learning disabilities. Right. There's a thousand.

More than a thousand causes out there. Right. I mean, Jesus said the poor will always be with you. Right.

And that's not to say, well, they're always going to be with us, so we can ignore them. No, they're always going to be with you. So you need to have a heart for people who are never going to have what you have. Right.

So if my clients will allow me to go down this type of a conversation, we'll have the conversation. If they're not interested in that, well, then they're not. I'll help them where they're at. You know, I'll meet them where they're at.

Bryan Thompson: 00:02:22

Yeah. I would say Joe there was with. With art. One of the things he instilled in all of us was a spirit of giving and, and setting up that legacy.

And he always had that conversation with clients. And, and a lot of times we work with a lot of business clients and, you know, they're going to go through some major transactions in their lives.

Some of it's their exit of their business or maybe a sale of some properties.

And we would work with those clients on strategies and we do to put them into charitable trust or you know, create donor advised funds or just, you know, update your beneficiary on your life insurance or on your, even your investments. A contingent could be a charity of your choice.

And just a lot of those little things that we can do with people to get them thinking that hey, they do have some wealth and they can make an impact.

And that was something that he instilled in all of us and I think continues with our client base to be able to gift and gift smartly and how to do that.

You know, there's a tax code out there and it's, there's a way to be able to use it to your advantage too to be able to do kingdom giving and as well as get some deductions. And I think it's a good, you know, being a good financial steward of doing so.

And I think he instilled those values in us that we want to make sure we're sharing that information with clients and allowing them to continue to be able to give to the kingdom or a charity that they're really interested in and see that they can do that.

Joe Pantozzi: 00:04:01

It's interesting that you use the word attacks.

You know, we may be attacked by others that look at the success that we're having and again it comes from a place of scarcity most of the time because they don't think that they can achieve what they perceive we have achieved. But it does come down to simplicity. And for me it comes down to, for very many of my clients, encourage them to think long term. Right?

One of Nelson's rules, don't be afraid to think long term. And I don't know if Nelson actually had this rule because I never heard him say it, but his son in law, David Stearns mentioned rule number six.

Rule number six. I didn't know there was a rule number six. He says make way for windfalls.

And again there's a presumption there that there is going to be windfalls in the future. I've had windfalls in my life. I haven't necessarily been wise with every one of those windfalls.

But now I've learned, you know what, whether I behave wisely with one or unwisely with one, they're going to come. Windfalls are going to come and they'll come more often if you're paying attention.

And they'll come so that, or they come if they, you don't Blow the opportunity.

So when wealth does come into your hands, you might want to be prepared so that you're not caught off guard and you're not thinking about the very first place you're going to spend the money. Part of it would be put that percentage aside. I mean, we use a tenth as an example. It doesn't make any difference.

An older, a longtime mentor of mine, John Savage, you may know the name or may not. John Savage died in 93. And he had a wonderful way about him.

And he said, you know, Joe, would you believe that there are some people on this planet who can't save 50% of what they make? And first time I ever heard him say that, I laughed. And guess what?

I was the only person in the room who laughed because I was the only idiot, because John was serious about that. Well, what's the reason why people aren't saving 50%? Because they made all these commitments.

And sometimes, or I should say often, the commitments are made out of obligation, expectation, thinking that other people expect us to make these commitments. And I need to keep up with my friends who are spending the same kind of money.

Bryan Thompson: 00:06:48

Well, I think.

I think one of the things we can do as advisors, too, is help kind of maybe break that generational curse where people feel like they one they don't deserve or they've never seen this displayed in their family. And like you said, they have those expectations that are still there.

One of the things, too, with that mindset of when you're, you know, when you do have a little bit of an abundance and you can give, there's a lot of power in giving.

You know, a lot of times, you know, if we give in faith and we'll get rewarded as well, and maybe you'll see some of those windfalls, but it's being able to have that mindset and even pass it down to the next generation.

And I was meeting with a gentleman recently, and he made a really good recommendation that when you're working with a family and they're talking about their legacy and they're talking about giving, having those conversations with your children about giving and even your younger children.

And the example he gave me was that, you know, you may be giving to your church or maybe giving you some causes, and your kids, they may not know what you're doing. In fact, true story, we go to church and they pass the bucket around, and my youngest sees the bucket go by us and we just pass it on.

And he finally asked, we're not putting any money in this bucket. You know what is this bucket for.

And it really occurred to me, like, we don't have that conversation with them that, you know, well, we just set it up online and we do it automatically. And it happens every month, the beginning of the month, that a portion of our paycheck is going to this church. And he had no idea.

He's sitting there and all he sees is us passing the empty bucket.

So it really struck home for me to hear that and then also to have this gentleman tell me that you really should have that discussion with your kids and talk about gifting.

And the example he gave was, you know, maybe take $1,000 and tell your child that you want them to choose where to give this money and what's important to them and give them the power to be able to do so, so that they're a part of the decision making with you, and that it starts them at a young age on having the thoughts of, okay, well, what do I feel passionate about and what do I feel like is a good cause, and where is there a need that I can help and put some money to, and hopefully that will instill those values that going forward, they'll continue when they have a paycheck of their own to want to continue doing the same thing.

Joe Pantozzi: 00:09:24

You know, that's a really good point.

I wonder how many of us financial advisors who have this type of a mindset spend more time educating our clients about the virtue of generosity and forget to teach it to our kids.

And I've said for a long time, my generation, the baby boomers, I believe, have spent our entire lives climbing out of the hole that maybe the generation before us left because they generally didn't leave a lot of financial wealth, and they were children of the war, et cetera, et cetera.

And so we reacted to that by spending our entire lives doing well and taking care of our kids, probably to the point of enabling them and over indulging them and forgetting to teach them the value of generosity and to teach them the wisdom that has to go along with the inheritance.

So I've had very, very many people I've come across who have given their kids money, who have left their kids money, who have set up trust for the kids. And I watched the child's character and their development in their career, in their heart. And I'm saying, you know what this child learned how to do?

They learned how to receive, and they learned how to receive so that they can spend. They didn't learn the value of work. They didn't learn the value of putting something up for the future.

They didn't learn the value of creating a legacy. What they've learned how to do is become a professional beneficiary or a professional heir. And that is a shame. And I harp on this verse in the bible.

It's Ecclesiastes 7:11. Sometimes I call it the Las Vegas verse 7:11. Wisdom is good with an inheritance. Wisdom is good with an inheritance.

And even in the sentence wisdom comes first.

So before you're thinking about giving your kids money, leaving them money, setting up a trust fund, you've got to impart and instill in them the wisdom to understand the real purpose of money and the real purpose of money in a generic way. You could have a thousand definitions of the purpose of money. Somebody had said to me a long time ago, capital is the ability to do good.

And the more capital you have, the more good you can do. So think about having these conversations with your kids and sharing with them.

We're not put on this earth to just consume and consume and consume, consume and, and do a better job of consuming than our parents did or our great grandparents did. You know, have better cars, have nicer houses, go on more vacations and longer vacations.

Now we also have to think about, about the, the kind of legacy that we're leaving, because every one of us is going to leave a legacy.

Bryan Thompson: 00:12:34

Yeah, for sure. That's a good point. All of us are going to.

And I, I would say for anyone that's listening, it's, it's definitely, if your kids are older and are on their own, definitely not too late to even have this conversation. And especially I think with older individuals that are looking at, okay, what am I actually going to leave my children?

What a great opportunity to still have that conversation and open that up.

And I think us, as advisors can, are in the perfect position to facilitate those conversations with our clients, to talk to them about, you know who it also from? Us, selfishly, it helps us get to the next generation even better, too.

I mean, we want to continue with generational clients and keep the value and the money that's invested with us in our firm and continue to grow. And we don't want to have our older clients pass away and then the next generation fire us and move on to someone else.

We want to continue helping them. So what a great place for us to facilitate the conversation at any age.

This is what the inheritance looks like and for the parent to really express what their expectations are with those funds when they're gone and what they would like to see done and have us help facilitate that to the next generation. For sure.

Joe Pantozzi: 00:13:51

That reminds me of a project we're working on with a local nonprofit.

And it just hit me in the face that we have to have that conversation with our donors so that they're reminded to have the conversation with their kids. It's not just about raising funds for this particular project. It's about teaching the value of generosity. Because there's always going to be need.

The poor will always be with us. There'll always be projects, there'll always be causes to support.

They'll always be rich, they'll always be poor, and there'll always be people who have the means to create wealth and money and assets.

I think what I'm hearing is, as a common theme between Brian and myself, is that we're interested in encouraging people to be awake and alert to the need to have wisdom, to exercise wisdom, to pass wisdom on in addition to the assets, to the physical, tangible financial assets. There needs to be a foundation of character and wisdom, wisdom so that we do the right thing with the wealth that we're building.

Bryan Thompson: 00:15:08

Yeah, agree. I would say that the other piece for us, that advisor to come in is then help them find the smart way of giving.

Recently a gentleman said to me, friends don't let friends give cash. And I thought that seemed so funny.

And he said, honestly, he said, so many people are willing to strike, you know, take a checkbook out and just write a check.

And, and a lot of times people that do have some wealth, that's probably not the best way for them from a taxable situation, being most tax efficient to do so.

So, you know, we're trying to have more of those conversations with people that if you're giving money, maybe you should look at giving, you know, highly appreciated stock and then take that cash and just reinvest it. Or maybe if you have IRA accounts, you should be doing qualified charitable distributions versus doing your rmd.

So all of those things are ways that people can give and continue a legacy and also really help conserve the assets they even have too, that can pass on to the next generation.

It can help snowball and help continue that they can still leave money to their children and they can still do well to charity and do things the right way.

Joe Pantozzi: 00:16:27

Yeah, that just opens up a wide variety of options and choices and like you said, tax efficient methodologies that if people are of the mind to make broader donations and not keep it all in the family, there are ways to do it. There are people like Brian, like myself, who can help you come up with a strategy. That's good stuff.

I really enjoyed your being here with me, and you give me a lot to think about as well.

Bryan Thompson: 00:17:04

Thanks Joe. I appreciate it.

Joe Pantozzi: 00:17:06

Yeah, everyone, thanks for being with us and we look forward to having more conversations and hopefully taking questions where we can help you create the right type of a plan for yourself. And even before the plan, maybe encourage the type of thinking that we've been talking about during this call.

Making decisions, making gifts, building wealth that are based on values, not just based on dollars and goals and numerical targets, but looking to create things of value for the long term. Great being with you Brian and everyone. Thanks being with us. Make your wealth work and talk to you soon.

Speaker A: 00:17:50

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