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Should You Leave Money to Your Kids?

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Let's pretend for a minute that you are a rich celebrity with millions and millions of dollars. Would you leave the money to your children?

Sting says he won't in this article.

Specifically Sting says:

"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 the work ethic that makes them want to succeed on their own merit."

There are lots going on here. With an estimated net worth of around $300 million dollar, what kind of commitments does he have? The interest alone is worth $9 million if it earned a paltry 3%. I don't want to tell Sting how to live his life, but that's some serious spending. He might have a problem. Furthermore to spend it all down at age 62 before his death... well that sounds a little like Brewster's Millions.

I can respect not wanting to spoil your kids so much that they can't fend for themselves. At the scale of millions it probably makes sense.

Looking at it from a personal view, though I feel differently. I am without even a single million. Yet I'm thinking about leaving money to my kids. Am I crazy? Perhaps.

My thinking is that there must be some way to structure a trust fund so that it incentivizes the kids to save money. Maybe it would look a little like a company match in a 401K. If the kids add money to a fund they can pull some extra out down the line. Perhaps the money could be structured in a trust to give them 15% annual interest rate on money deposited.

This would create a lasting legacy for Sting's future generations. Seems like a better plan than just spending it all.

As an aside, I've never really liked Sting. I thought his music is kind of girly. However, I don't mind the Police. I kind of even like them. Am I the only weird one who thinks this?

Last updated on July 11, 2014.

This post deals with: ... and focuses on:

Kids, Money Management

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9 Responses to “Should You Leave Money to Your Kids?”

  1. kosmo says:

    I’m 39, and when this topic comes up with my 83 year old mom (who is of fairly modest means), I tell her to spend her money while she’s alive.

    If I live to be 80, my kids would be 47 and 45 when I die. If we guide them well in life, I hope that they have a reasonable amount of financial security at that point.

    I grew up in a very working-class family and have been financially independent since I was 18 (including handling all of my expenses during college). I’m not rich, but I certainly am not expecting an inheritance, nor should I need one to reach my financial goals.

    Btw, Brewster’s Millions is based on a book that was written more than 100 years ago :)

  2. phr3dly says:

    Why assume that his “commitments” involve spending? Maybe he’s committed $300M to charity?

    Or, perhaps it’s as you assume and his commitments involve a new jet.

    This is obviously a very personal choice. In my opinion, except in the case of a child with special needs who simply cannot provide for himself or herself, parents should spend their money on themselves or give it to charity if they prefer.

    At the very least, kids should not be raised with the expectation that they’ll inherit anything. I have step-brothers who know that they’ll be inheriting 7-figure sums from my step-father, and now all in their 40s and 50s, none of them has bothered to save for themselves. And that’s a lesson they’ve now passed on to their kids, even though their kids are not going to have the windfall.

    I guess that’s the 3-generations phenomenon…

  3. phr3dly says:

    For example “the billionaires pledge” where rich people commit to leave a large portion of their wealth to charity when they die.

    If I were a rich person and I made that pledge, I’d consider that a commitment.

  4. robyn says:

    i adore sting and his music
    BUT
    this is the same man whose accountant embezzeled from him and he didn’t notice because ‘when you’re making millions, who notices a few hundred thousand?’

    this is a person qualified to give financial advice? really?

    as for me, if i had it, i’d gift it to my kids while i was alive. since i don’t [my ex spouse having run through the million or so i inherited from my brother] i have lots of life insurance. i’d like them to have a leg up,have enough for a downpayment on a house, finish school, go on a tri[, not worry about making next month’s rent.

    from the files: Sting was in court to testify against his former accountant who’s accused of embezzling 6 (m) million pounds of the singer’s money over a four-year period.

    The court heard how Sting – referred to throughout by his real name Gordon Matthew Sumner – did not realise what was going on because he was too busy to notice since his career, and that of his band, the Police, took off.

    • Lazy Man says:

      I don’t know if he was intending to give financial advice. It looked to me like the question came up in an interview and he went with it. I think he’s got a point about not spoiling the kids so that they never learn to survive on their own.

  5. jesus morales says:

    First of all,money is the greatest security of life. we all should think about our kids, and we all want a better future for them.So definitely we should leave money for our kids. Because we all care about our kids and it won’t be lost after our death.

  6. I read an article about how Bill Gates isn’t leaving much money to his kids ($10 million each) and he’s a billionaire. I think there’s wisdom in not leaving your kids everything as they need to figure out how to earn money for themselves and not become spoiled rich kids like Paris Hilton.

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