The headache of inheritance

The headlines last week revealed a bitter row at the heart of the Safra banking dynasty.?

Alberto Safra, son of Joseph Safra, previously Brazil’s richest man and the world’s wealthiest banker, has kicked off legal proceedings against his mother and brothers over his father’s will and $15 billion fortune. Evidence presented in court shows just how deeply the family has fallen apart over who got what when Joseph died in 2020.

It’s not often we see such large inheritances fought over in the public eye, but it’s sadly all too common that dividing up assets can divide up families. The legacy of inheritance, regardless of size, is not always beneficial; it is sometimes sour and can bring misunderstanding and recrimination.

Wills made without thought which impact on family dynamics…wills made without family discussions…wills amended late in the spur of the moment…we’ve seen them all over the years and their costly result.

The topic of inheritance seems to tie people up in knots, sometimes resulting in the worst of all worlds: people not making wills at all. Yet there seems to be such a stigma around inheritance, perhaps because of the effect that wealth can have on people who haven’t ‘earned’ it.?

“I don’t know if talking it through with them will have a good effect or bad,” said one client to me last week referring to his children.?

“I don’t want inheritance to mean they don’t have to stand on their own two feet and learn the realities of life and business like I have,” said another.?

It’s no surprise that increasing numbers of people?are turning their back on the idea of family inheritance altogether.?

Speaking to Candis Magazine, Daniel Craig, erstwhile James Bond, said he found the whole idea of passing on wealth from one generation to another “distasteful” and that his two children won’t be getting a chunk of his estimated ￡100m wealth upon his death.?

"Isn’t there an old adage that if you die a rich person, you’ve failed?” he posed.

He’s not alone. A string of public figures are increasingly saying the same.?

In 2017, Gordon Ramsay told The Telegraph that he won’t be leaving his estimated ￡63m wealth to his children.?

Rock legend, Sting, said the same to the Daily Mail in 2014: "I certainly don't want to leave them trust funds that are albatrosses round their necks. They have to work."

It’s not just those in the public eye who are coming to this view.?

We might be some way behind countries like the US, where shifts in wealth end-goals have long been noted, but in a survey of 2,000 people in the UK, Hargreaves Lansdown found that only 82% wanted to leave wealth to the next generation. Common reasons being, “it’ll do more good elsewhere,” “I want them to understand the value of hard work,” and “I don’t want them to be waiting for me to die.”

Instead of planning for inheritance, increasingly clients are wondering how their wealth can benefit the communities around them and the causes they care about while they’re alive rather than leave it until after they’re dead.

One client I met last week has, for instance, launched a scholarship for children from underprivileged backgrounds to get into private education. He spoke with real pride about seeing the positive impact this scholarship has given to a number of young people, an opportunity he never had himself.

Our wealth management industry has long talked of “the great wealth transfer”, but could the trustaferian generation’s days instead be numbered? Will the generation of the silver-spooned next of kin turn to burnished bronze?

Perhaps the question doesn’t need to be so black and white.?

One of the world’s wealthiest people, Warren Buffet, wrote in 2021 to shareholders “After much observation of super-wealthy families, here’s my recommendation: leave the children enough so that they can do anything, but not enough that they can do nothing.”??

Inheritance is fundamentally a conversation about the past: wealth made in the past and a legacy of past circumstances. Rather than financial, perhaps a better legacy to pass on is one of principles, values, attitudes, and life priorities. Perhaps this reflects something much more valuable than physical wealth ever could be on its own. Could passing these tools on help a future generation to stand stronger than ours has?

For all the legal disputes over inheritances, what is ultimately important in life far surpasses physical wealth.