This is War

 In Business, Culture, Faith, Family, Foundations, Fred's Blog, Fred's Blog, Giving, Inheritance, Money, Philanthropy, Teaching, Theology, Young Givers

“I want to declare a war,” I said half-seriously, “on all the organizations, ministries and financial planners encouraging people not to trust their children.” I had thought about it for years but never said it that way until a group of foundation executives asked me recently what I wanted to focus on next year. It’s true and I don’t quite know how to go about it (having never declared a war before) but I would like you to enlist. Like any war, we’ll figure it out as we go.

I first started thinking about this 15 years ago after reading “Esau’s Delusion: Moral Consequences of the Estate Tax,” an essay written by Adam Pruzan. He wrote the essay in response to a growing movement of wealthy, well-intentioned parents announcing they were not leaving wealth to their children because it would only ruin them. A favorite saying at the time from broadcasting magnate Jim Rogers was, “Leaving children with wealth is like leaving them a case of psychological cancer.”

What once was a radical thought has become almost mainstream, and many organizations with vested interests have found it to their advantage to perpetuate the assumption that wealth left to children is not only certain to ruin them but the money can be much better cared for by people outside the family completely. It is what Pruzan called the “anti-inheritance ideology,” which encourages parents who have accumulated wealth to guard their children from certain disaster. But its consequences can be more insidious that that. It leads to mistrusting their children.

Pruzan writes, “The Judeo-Christian ethic…sees private wealth as a sacred trust. The sense of stewardship can and should motivate large-scale charity on the part of the wealthy, but even this philanthropic obligation – to borrow a term from the environmentalists – should be practiced in a sustainable manner. That is, even charitable giving requires heirs in order to fulfill its purposes. Unfortunately, however, too many of America’s wealthiest men are following the anti-inheritance ideology rather than the example of Abraham, Isaac, and Jacob…

“Inheritance is the glue that binds generations to one another. Disrupting the transmission of our material inheritance will badly erode, if not altogether destroy, our ability to transmit a spiritual legacy.”

Obviously, it is not enough to simply pass wealth to your children without proper preparation, but if we are encouraged to assume it is better to trust others than our own family, then we will do little to prepare our family for their unique responsibility. We will spend more time with professionals creating strategies for managing wealth and philanthropy than teaching our own children. The commitment to passing wealth to your children takes hard work and must begin early or they will only see wealth as a lifestyle and not a responsibility passed to the next generation, as taught in Scripture.

Pruzan encourages us to bring along our children as apprentices at an early age: “The larger and more awesome the responsibility, the more the need for a long and comprehensive apprenticeship. And what could be more comprehensive than raising a child as one’s heir from early youth? One could well find their best and most natural heirs right across from them at the breakfast table, in the person of his own children.”

Being an apprentice doesn’t mean slavish compliance or never expressing differences. I’ve written before that when my father died, he left my two sisters and me three trust funds. Nothing could have been further from his mind when we were young. In fact, there were more than a few times growing up when we had heated discussions about the role of money in our lives, the values we used in making decisions, and even organizations and causes to which we gave. That is why I was so surprised when Dad told me about the “trust” funds. How could he trust when we were so different? Isn’t trust being sure the next generation will comply with donor intent? Maybe not. Maybe what Dad had come to over the years was the confidence to trust without the necessity of agreement.

As I look at my own adult children and grandchildren now, I find myself thinking about the basis of trust in our family. Is it agreement and the promise that they will do exactly as I would? Or, is it something deeper than that and something that will one day allow me to say to them, “I have come to trust you – even if we disagree – and these funds are an expression of that.” What a gift.

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Showing 11 comments
  • Michael Bosworth
    Reply

    Thanks for a great year of Blog’s! I look forward to every Thursday!
    Merry Christmas!

    • Fred Smith
      Fred Smith
      Reply

      Thank you, Mike! As well, thank you for what you do for Children’s Park

  • Jeff Pope
    Reply

    Fred: Great words and something we are working on in our family. As I’ve talked with my “kids” and their spouses (now in their late 40s) I find they are much more thoughtful and savvy than I might have suspected–probably more so than I was at their age. So maybe we’ve done a better job of “bringing them along” than we thought. I especially like these words and this thought in your essay: “The commitment to passing wealth to your children takes hard work and must begin early or they will only see wealth as a lifestyle and not a responsibility passed to the next generation, as taught in Scripture.” That’s a key concept: wealth is not (just) a lifestyle–which usually gets much of the focus when the world discusses wealth.

    • Fred Smith
      Fred Smith
      Reply

      Thank you, Jeff. I may be “the mouse that roared” on this one but I do want people to reconsider the harder but more satisfying option of establishing trust. You are such an encouragement to me!

  • Andrew Tyndale
    Reply

    Thank you, Fred. I always find your writing thought provoking.
    I’m not sure I agree with this one, though. The assumption seems to be that the alternative to leaving a pile of money to your kids, is to let a professional firm manage it. I think the real alternative should be: give it away in your lifetime. Any dollar kept (invested, protected, etc) is a dollar not given to current need. I think there is an argument that holding on to money (not giving it) shows a lack of faith in God’s ability and willingness to replace it. Of course, this assumes all funds are provided to us as stewards for God’s purposes. God bless your 2016.

    • Fred Smith
      Fred Smith
      Reply

      Andrew – I don’t think we disagree. There are many options. Giving money in your own lifetime is one of the best. My point is more about those organizations that intentionally create mistrust of children for their own vested interests. Training our children as heirs certainly includes our being examples of generous parents.

  • Curtis Hail
    Reply

    I would completely trust my three adult children more than anyone else in the world to wisely steward a financial legacy. Alas, I’m not a person of material wealth, but I do know that they will steward well the legacy of service and mission they’ve inherited. I believe the route is the same for either form of legacy. Let them see your heart and passions put into action and involve them from an early age. Let your compassion for the lost and broken, and love of the Lord and his Kingdom be evident every day in small ways and large. Give them responsibility and freedom to minister along the way. One of the surest ways you will then know that they are worthy of your trust, for sadly not every child is, will be seeing them instill these values in their own children and lead their own horizons of ministry. As we have been blessed to see in their service through military, medicine and education . . . and now grandchildren on mission.

  • Michael Howell
    Reply

    Simply put, this financial ideology is based on greed of those who want access to family wealth. Of course it depends on the family and how well they have prepared their children to take over. There seems to be an adverse movement to those with wealth in our nation and indeed families. Once we looked up to the wealthy. They were a symbol of what could be achieved with hard work. Today, much of our country believes they some how owe us part of their wealth, that they have more money than they can possibly spend. I personally believe this philosophy has creeped into Christianity in the form of “Don’t leave it to your children it will only hurt them….give it to us we know better.”

  • Jeff Pinkerton
    Reply

    Great words. Thank you for sharing.

  • Ron Blue
    Reply

    Fred, great insight. I have taught and believe that there are three questions that every believer, especially those entrusted with much, must answer:
    1 Who owns it?
    2 How much is enough? (Primarily a lifestyle question)
    3 Is the next steward chosen and prepared?
    Many choose, but few prepare well and I think that is what you are challenging. I also teach a principle, “Do your givin while you’re livin so you know where it is goin” that includes your children. To wait until death to give to children or charities robs you of the joy of giving. I am sorry but I couldn’t resist commenting on something that I have committed my life to.
    Thanks for your wisdom

    • Fred Smith
      Fred Smith
      Reply

      Ron – Thank you for this comment. Over time, one of the top priorities of The Gathering has become helping parents prepare their children so they do not end up distrusting them. This has grown over the years. It was not on our minds when we started. In the beginning we were only focused on the donor and assisting them in becoming more competent. However, as we began to see what you have seen for so many years we became more intentional about the dilemma families faced. They had spent so much time and energy on accumulation of wealth that teaching their children about it had suffered. There was an assumption that their kids would be grateful, responsible, discerning and somehow by osmosis absorb their values. Sadly, it has not worked out that way for many. That is why we realise how early this must start and how hard the work is for all of us. I wrote this a few years ago to describe what I think is needed.

      “I had dinner with Don Palmer and Doug Wilson in Indianapolis this week and we were talking about the many conversations we have had with friends about the danger of leaving wealth to children only to ruin them. It started me thinking about the way we define wealth today compared to 100 years ago.

      Today wealth is almost synonymous with money and other financial assets. One hundred years ago it would have typically been the family farm. Leaving that wealth to the children was the plan and there was little thought about “ruining” them in leaving wealth to them. What was different? Parents started the children out early in their lives with a sense of responsibility. They had chores when they were young. They had animals to care for – not just pets. They had associations with others living on farms through FFA and 4-H clubs. As they grew up they had genuine ownership of the wealth. They had responsibility for it. They knew everything about it their whole lives and they were prepared to inherit it.

      Not so today. We isolate children from the responsibilities and “chores” of wealth. There are no official clubs and associations for them to learn about wealth. They associate through private schools summer camps and family vacations with others from wealthy families but they don’t learn about the “work” as they would have on a farm. Wealth is not tangible to them. It is a lifestyle. They don’t see it or feed it or plow it or contribute their labor to it. They are separated from it for the most part. They are the beneficiaries of it but not connected to it and so inheriting it becomes a completely different issue. Many of our children have no way of knowing how to care for the wealth they inherit and so we worry about their being ruined by it. We didn’t worry about being ruined by the family farm because we were brought up and trained all our lives to inherit it.

      What if we did the same now? What if we included our children in the care of wealth from early in their lives? Perhaps we might see fewer parents talking about the fear of ruining their children and more having the joy of their children inheriting what they had been grown to care for.”

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