Australian billionaire Gina Reinhart recently was named the richest woman in the world. Before taking first place in the rankings, however, it became known by the contemptuous attitude toward children.
In disputes over family trust funds Ms. Reinhart said that “the children lacked the necessary qualities or so – skills, knowledge, experience, judgment and work ethic of responsibility” to manage the business and his legacy, says CNBC.
Later it turned out that not only the mining business of billionaires doubt the ability of children to handle money. According to a recent survey of US Trust only half of baby boomers millionaires think it’s important to leave money to their offspring and one third of them say they would prefer to donate money to charity than to give them to his successors.
There are two reasons for this strange avarice.
A more generous explanation is that the boomers (those born after World War II until the early ’60s) now want to raise their children the values of middle class in which they grew themselves. The purpose of this is descendants them to learn to fight, to work hard to accept failures and joys of deserved success, did all the lessons that have helped their parents over the years (including the ’30s bull market and strong economic growth).
As Warren Buffett said he wanted to leave your children enough money to do everything they want, but not so much that they do nothing.
Along with this noble ranks and explain the cause of millionaires for more donations.
This brings us to the second and much more realistic explanation – boomers do not believe that children can cope with all that money. Only 32% of millionaires are confident in the emotional and financial preparation of young people to receive their inheritance.
Of course, not all parents have so little faith in their children. For example, representatives of generations Gen-X (those born since the early 60s to early 80s) and Gen-Y (born then), and the baby boomers before are much more likely to leave a legacy to their descendants. More than half of people between 18 and 46 years and those over 67 say it is extremely important to let a financial legacy for children.
“Our study shows a change in outlook and behavior of generations, formed mainly from personal experience and public reaction to economic reality,” said Keith Banks, president of US Trust. “The next generation is not a survivor or the economic growth, or similar investment income that baby boomers experienced during the longest” bull “market in history.
Can be sought and an explanation of why the third millionaire children will lose their heritage. Namely, that boomers plan to spend most of their money. Given the low return on investment today, longevity and notorious profligate lifestyle of the rich, the millionaires will most likely spend their money with such a pace that will not leave much for the next generation.
Ultimately, the study results are limited to a single issue: the baby boomers have brought up children, unprepared to inherit large sums of money granted. As survivors are used to getting almost anything you want, since childhood, they follow the generous example of their parents. And the job market is not particularly favorable for college graduates without financial support.
In the same survey last year’s US Trust announced that half of respondents multimillionaires believe that their children will not reach the necessary financial “maturity” to deal with the family fortune until they are at least 35 years.
Whose fault is this? Part of parents. Only half of respondents said their children about family wealth. And the question why are not they meet that other young people would become lazy, they took bad decisions, they wasted their money or they would become victims of “prospectors”.
This phenomenon could be called paradox of Reinhart – wealthy parents raise their children so that they can deal with money and therefore refuse to donated money. In the end, most children are harmed.