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Planning for the Future with Gunderson Denton
What Legacy for Your Children
Many celebrity children are in the news because of their “socialite” status and spending their inheritance money on lavish parties, drugs and expensive apparel. There are, however, some celebrities who have decided that their children will not receive an inheritance. Sting has been most notable in the last couple of weeks after announcing, in an interview, that his six children will not receive any of his $300 million. He is quoted as saying;
“I told them there won’t be much money left because we are spending it! We have a lot of commitments. What comes in, we spend, and there isn’t much left. I certainly don’t want to leave them trust funds that are albatrosses round their necks. They have to work. All my kids know that and they rarely ask me for anything, which I really respect and appreciate. Obviously, if they were in trouble I would help them, but I’ve never really had to do that. They have a work ethic that makes them want to succeed on their own merit.”
Sting is not alone in wanting his children to work for their successes. Celebrity chef Nigella Lawson has said “I am determined that my children should have no financial security. It ruins people not having to earn money.” KISS bassist, Gene Simmons, told CNBC, “…in terms of an inheritance and stuff, they’re gonna be taken care of, but they will never be rich off my money. Because every year they should be forced to get up out of bed, and go out and work and make their own money.” Jackie Chan explained his reason for not leaving son Jaycee any of his millions by saying, “If he is capable, he can make his own money. If he is not, then he will just be wasting my money.”
Over 120 millionaires and billionaires have pledged to give at least half of their wealth to charity in “The Giving Pledge” started by Bill Gates and Warren Buffet. “The Giving Pledge” is a campaign encouraging a commitment to give to philanthropic causes. Bill Gates and Warren Buffet have also said that they will not be leaving their money outright to their children.
In contrast, Bernie Ecclestone, owner of Formula One racing management, put $3.5 billion in a trust for his two daughters, Petra and Tamara, to have free access to when they reached the age of majority. They have since spent the entirety of the funds in less than 10 years. Mr. Ecclestone was quoted as saying “The kids have had access to the money. The idea was that they’d buy super-quality property, property that would be long term, for their kids and everything else. Didn’t happen. They haven’t done that. So they’ve had access to money which they’ve spent.” How can one spend $3.5 billion in less than 10 years? A wedding for $12 million, a yacht for $150 million, a $1.5 million crystal bathtub, hundreds of thousands of dollars in shoe collections, handbag collections, expensive cars and homes ranging from $70 million to $90 million.
Now, is it bad to have an inheritance for your children? Of course not, but knowing how children will be allowed to spend the funds, at what age to give access to the trust and other framework regarding the use or distribution of the funds are important details to think about. These decisions need to be made before your death. If not, state intestacy laws or the courts will decide for you. How your money will be handled and administered after your lifetime must be decided and the necessary arrangements made to insure that your wishes are satisfied while you are living. Our experienced estate planning attorney can guide you in creating and documenting the legacy you want to leave behind.
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