One such element of preparedness is familiarity with the world of money and business. “I think there's a common notion out there that wealthy kids inherit cash and stocks and bonds, but they don't—they inherit structures, [like] trusts and foundations and LLCs,” Wesley said. “You have to know how the foundations and the structures and the LLCs work.”
And preparation can start early. Dustin Gale, a senior wealth adviser at the Los Angeles–based investment firm Kayne Anderson Rudnick, suggests that clients try to teach their kids about “the value of a dollar” at an early age. When kids are as young as 7, Gale says, parents can educate them about the basics of investing, perhaps by having “your child sit on your lap and when you’re looking at a portfolio, talk about a specific company.”
The standard alternative to giving money to one’s family members is to donate it, and affluent families do a good deal of that; some high-profile, ultra-wealthy people such as Buffett, Bill Gates, and Mark Zuckerberg have publicly pledged vast chunks of their wealth to charitable causes. But the half a dozen wealth managers I spoke with said that when wealthy parents figure out how much money to leave to their kids, they tend to be guided by what they perceive to be best for their kids, as opposed to what they perceive to be best for society.
Rachel Sherman, a sociologist at the New School and the author of Uneasy Street: The Anxieties of Affluence, is not surprised that broader societal concerns, particularly rising economic inequality, aren’t altering many people’s philosophies on the inheritance component of the estate-planning equation. “Since no one can predict the future, it makes sense to keep or pass on as much as you can, because you never know what might happen,” she wrote to me in an email. “In a society like ours, in which health care or elder care can bankrupt even rich people, there is all the more reason to hang onto/pass down everything they have.”
Sherman also suggested that there is a rigidity to how people think about what will happen to their money after they die: “I think conventional ideas about money and accumulation, which are reiterated by financial professionals, make it hard for people to imagine doing something else with their money other than accumulating as much as they can and passing it down.”
The decision-making processes around estate planning have, however, changed in another way: They’re more open than they used to be. Wesley, of the Merrill Center for Family Wealth, sketched out a generational evolution. “If you look at the Greatest Generation, it was pretty much estate planning behind closed doors—preserve as much as you can, create trusts, and have those trusts operated professionally for as long as possible,” he said.
The wealthy members of the following cohort, the Silent Generation, also favored trusts, but sometimes made disbursements conditional on their inheritors’ good behavior—say, keeping up a certain GPA, staying away from drugs, or even getting married. Some clauses of these “incentive trusts” were intended to thwart the motivation-killing effects that wealthy people fear their children and grandchildren might experience, but the overall arrangement, Wesley said, is “most often seen by beneficiaries as [an attempt] to control them from beyond the grave.”