Rich or poor, parents worry most about their children’s finances – but the reasons for the concern vary with wealth. Find out more.
Rich or poor, parents worry most about their children’s financial situation, but the reasons for this concern vary by wealth. Americans in the $25-million-plus club cite the financial “well-being” of their children and grandchildren as their top concern, according to a newly released study by Millionaire Corner.
Similarly, lower-income parents rank the financial security of their children as their number one concern, according to the Family Health Snapshot survey released in April by the YMCA. Financial worries surpassed concerns over health, education, moral and ethical values and peer relationships. Seventy percent of parents reported they did not have money for “extras” and nearly 30 percent said they have had to cut back on almost everything, including extracurricular activities for their children.
Financial concerns take a different shape for multi-millionaire parents, who ranked “raising financially responsible children” as their second greatest personal financial concern. Two-thirds said they were concerned with preventing their wealth from undermining the “work ethic, educational or career plans of their children or grandchildren.”
Multi-millionaires indicate that they worry more about the legacy they will leave for future generations (65 percent) than they do about maintaining their current financial position (64 percent) or having someone to take care of them in their old age (52 percent). These worries are most pronounced in the oldest Millionaires, those ages 66 and older.
The heightened concern may help explain why older Millionaires are most likely to hold assets in trust. Seventy-five percent of older Millionaires have created and funded trusts, compared to 53 percent of those ages 55 or less. Tellingly, a minority of millionaires (33 percent) have designated a child to act as trustee upon their death. Most (48 percent) have made their spouse trustee, and many have engaged an attorney, account or financial institution to also act as trustee.
More than two-thirds of the multi-millionaires have established a family partnership, a tool that provides family members shares of pooled assets and can allow for the tax-efficient transfer of wealth between generations. Forty-five percent of the partnerships cover two generations, and 40 percent cover three or more generations.