As much as we hate to admit it, Nicole and I aren’t as young as we used to be. Much of our lives have been focused on raising and educating our children, but now we find ourselves helping them prepare to lead their own families. This shift has caused us to reflect on our role in that process, both now and in the future. Part of helping the next generation lead their own families involves knowing when and how to provide financial support. Some parents prefer to give incremental financial assistance throughout their lives, while others choose to wait and distribute it through their estate after they pass. Many take a blended approach. Regardless of your plan, you’ve likely found yourself asking some of the same questions that Nicole and I have: - How do I give to my children without hindering their personal growth?
- Are they ready for financial gifts? If not, how will I know when they are?
- How do I divide resources fairly between multiple children?
These are questions we have wrestled with, and they’ve been top of mind for many of our clients as well. I wanted to share some of what we’ve been learning with you. The Ultimate GiftThere was an interesting book released in 2001 called The Ultimate Gift1. It tells the story of a wealthy grandfather who, after recognizing the negative impact his affluence had on his children, decided to use a different approach with his grandson Jason. He orchestrated a series of twelve challenges or lessons that Jason would have to successfully navigate to receive his inheritance. As expected, Jason was not happy with the situation and resisted the process. However, visions of a significant inheritance continued to pull him along the path. Ultimately the journey helped him develop the maturity and perspective needed to receive the inheritance as the true gift his grandfather hoped it would be. Although the grandfather in The Ultimate Gift was extremely wealthy, I think all of us can learn an important lesson from this book. Our wealth, no matter how large or small, is our responsibility to steward. The wise management of our resources is on our shoulders and will affect generations to come. So, how do we carefully and responsibly pass on our wealth to future generations so it becomes a blessing and not a curse? Productive Inheritance vs. Outright InheritanceI’ve recently started to use the term “productive” gifts. I’m not sure where I picked that up, but it has come to define the criteria that Nicole and I prioritize as we consider financial gifts to our family. A productive gift is one that accomplishes something meaningful. Gifts that strengthen rather than weaken. Gifts that inspire compassion and generosity not selfishness. Gifts that foster relationships within the family and our communities. There are many questions we could ask ourselves as we consider how to give productive gifts. Here are just a few that Nicole and I are currently using: - If effort is applied to the gift, does it have the opportunity to multiply?
- Does the gift encourage cooperation and nurture relationships?
- Could the recipient use the gift to benefit others?
- Would the gift help build the recipient’s character and make them stronger?
For example, if we gifted a mower to our grandson so he could start a lawn business to save money to buy a car, that would be a productive gift. By contrast, buying him a car would be what I’ll refer to as an “outright” gift. Although both are generous gifts and both could be considered good gifts, the productive gift requires the recipient to apply themselves to the gift to experience its full potential. The mower alone has limited value. But if my grandson applies his time, effort, and ingenuity to the gift it will do much more than buy him a car over time. Productive Gifts → Productive Inheritance → Productive GenerationsConsider the impact productive gifts could have when that concept is applied to legacy gifts, or what we often refer to as an inheritance. Is it possible that the practice of teaching our family how to turn good gifts received throughout life into productive gifts would increase the likelihood that they would view a future inheritance the same way? If so, wouldn’t it be reasonable to expect that the impact our inheritance has, no matter how big or small, would likely grow throughout the next generation? And, if repeated by our children, wouldn’t it snowball over time? That’s an exciting thought to me, and something in which I want to invest! | 
