June 24

Some super-rich parents — Warren Buffett and Bill Gates — have said they do not plan to leave their adult children a great percentage of the wealth they’ve accumulated.

Of course, it’s a bit relative if you’re still getting millions of dollars from mom and pop.

“Intergenerational transfers are a widespread phenomenon, with an average of roughly 2 million households receiving either an inheritance or a substantial gift each year,” according to a 2018 Federal Reserve report.

But stories that wealthy business people such as Gloria Vanderbilt, who died last week at 95, do not want to pass on their considerable fortune to their heirs made me wonder: Should you leave an inheritance to your children?

CNN anchor Anderson Cooper, Vanderbilt’s son, said his mother had made clear that he would not get a trust fund.

While interviewing Cooper in 2014, radio host Howard Stern asked: “Your mother inherited money. Why shouldn’t you inherit money?”

“I think it’s an initiative sucker,” Cooper said. “I think it’s a curse. Who’s inherited a lot of money that has gone on to do things in their own life? From the time I was growing up, if I felt like there was some pot of gold waiting for me, I don’t know that I would have been so motivated.”

Stern was in disbelief, arguing that leaving your children an inheritance is a loving gesture.

“It’s just fascinating to me that she wouldn’t leave you her fortune,” Stern pressed.

To which, Cooper responded, “We believe in working.”

To see Cooper’s point, you need only look at his grandfather, Reginald Vanderbilt. News reports indicate he was a gambler. By the time he died in 1925 at age 45, he had squandered the vast railroad and shipping fortune passed on to him by his grandfather.

During my online chat last week, I asked readers for their thoughts.

“In the case of Gloria Vanderbilt and Anderson Cooper, if she did leave him a massive amount of money, I could imagine him putting it to philanthropic use since he surely earns a handsome income as a broadcaster,” one reader wrote.

Another wrote: “I understand the fear that if you leave lots of money to your children they could become layabouts. But if you are fortunate enough to have a sizable estate, there’s no harm in leaving money to children, along with some charitable enterprises.”

I like Warren Buffett’s line about what to leave your kids: “enough money so that they would feel they could do anything, but not so much that they could do nothing.”

Gloria Vanderbilt passes away at 95

The model, actress and fashion designer lived most of her life in the spotlight as one of the most chronicled socialites of the time.

Buffett has committed to giving the lion’s share of his money to charity.

“I’m not an enthusiast for dynastic wealth, particularly when 6 billion others have much poorer hands than we do in life,” Buffett reportedly said at the New York Public Library in 2006. “I love it when I’m around the country club and I hear people talking about the debilitating effects of a welfare society. At the same time, they leave their kids a lifetime and beyond of food stamps. Instead of having a welfare officer, they have a trust officer. And instead of food stamps, they have stocks and bonds.”

Buffett is talking about a rarefied world, of course.

“The fact is that few parents are in a position to leave their kids a lot of money,” one reader wrote. “The ones that can leave money have often benefited from complex provisions of the tax codes, including the reduction to zero of inheritance taxes for most people. Anything you say should include recognition of the tremendous and expanding wealth inequality in the U.S.”

Most inheritances are relatively small; about half of them are less than $50,000, according to the Federal Reserve.

Yet many baby boomers have saved and invested enough money to leave sizable inheritances to their children. Whatever money or assets you may be planning to leave as part of your estate, be thoughtful about passing on your wealth to your adult children. (It should go without saying that you definitely should have an estate plan if you have young dependent children.)

Do you really want all your hard-earned money to be squandered by entitled heirs?

Read: Should a needy adult child get more in the parents’ will?

One of my aunts created a family education fund that upon her death was used to help her heirs pay undergraduate and graduate school expenses. Maybe your hard-earned money would be better spent to help your adult children or grandchildren buy a home or start a business. Or it could be that the wealth you’ve amassed would be put to better use by a charitable or religious organization.

Your legacy also doesn’t have to be just in the cash you leave. Have you done all that you can to raise money-smart children with a good work ethic?

Read: What do your parents owe you when they die?

An inheritance can be a great asset, giving heirs the ability to build financial security for generations. But I agree with Cooper. In the wrong hands, an inheritance can be a curse.