Aug 16, 2019
"Giving too much is oftentimes an affliction of the wealthy, but taking away the struggle is a problem with everybody."
"Palm trees, in that process of growing, what's actually happening in the wind is they're actually cracking and they're breaking. And when the skin breaks, they scar. And when they scar, they become stronger. And as they get older and older, they get to the point where they have so much scarring that they can withstand almost any storm. And what we do with our kids, it's almost like taking a palm tree indoors. We want to grow them and nurture them in a greenhouse..."
Back in April, when Sara Kuljis and I spoke at Pegasus School, parents there told me about Richard Watts, who had spoken at the school earlier in the year. We were introduced, and he then sent me a copy of his book Entitlemania. In this episode, we talk about the book and Richard's ideas about what to do and what not to do when it comes to passing along your family business, planning for your estate, and giving your kids big gifts.
Richard: "The entitlement issue brings on two different components. One, giving too much, and two, taking away the struggle. Giving too much is oftentimes an affliction of the wealthy, but taking away the struggle is a problem with everybody."
Audrey: "It's so true that in nature we have a great example of what we need to do for our kids, which is to allow them to get blown around a little when they're small, more and more as they get older, and help them, be there for them, but not stop them from bending and going through those difficult, challenging circumstances."
Richard: "By getting it wrong, they will learn to get it right.
Richard: "The reason that I generally believe that family businesses create conflict is that it starts a child on a path of a career choice and a passion that's not being found or directed by the child. And oftentimes, it causes a lot of family disharmony."
Richard: "You can never outrun someone who's being fueled by passion. Never. The person with a passion can live it all day long, they can sleep it all night long, they can get up in the morning and do it, but they're so passionate because they built it and they own it, that they go 100%. Well, when you do that kind of a job, it's oftentimes very difficult for a child to follow and not feel like they have this unspoken criticism of never measuring up to what Mom and Dad did."
Richard: "If I were doing it the right way, I would have the daughter go and work for a competitor, and say, 'Here, go get a job over there, and look around and spend two to three years working there and see if you like it, without having the nepotism of everyone knowing that you had the right last name, and so everyone's going to treat you special. You need to go over there and learn the hard way. And then, if you really like it, let's talk'."
Richard: "I believe that it's not good to bring your kids in at early stages to your wealth, to your estate planning, because the truth is that it's part of giving too much. It's part of ensuring their future and it takes away the opportunities for them to go out and to have the incentive to go forward and do their own thing. When they know there's a safety net, they tend not to grapple with their own future quite as seriously."
Richard: "'How much is too much to give our kids?' is the wrong question. The right question is, 'How little is too little?' So I tell my clients to begin by giving them nothing."
Richard: "I tell my clients that I would rather see them secure their kids' future than to spoil their future. And securing might mean giving them money so that if they have hospital problems, and medical problems, and children that have got deficits, education that you want to pay for, for your grandkids--all of those things are really great ways to secure their future. And you can do that with simple trusts."
Richard: "My overview is that you just need to make sure that however you give them the money, you don't change their current lifestyle. You don't want them to start buying material things. You want to just ensure the wellbeing of their future."
Richard: "In giving our kids all the things we didn't have, we forget to give them what we did have."
Richard Watts is the founder and president of Family Business office, a legal and consulting firm in Orange County, California. He is a published author of “Fables of Fortune: What Rich People Have That You Don’t Want,” and “Entitlemania: How Not to Spoil Your Kids, and What to Do If You Have.” Richard writes for and contributes to numerous publications including Newsweek, Forbes, CNBC, Variety Magazine, and The Washington Times, among others. And has appeared on Fox Nation, NPR, NBC, and CBS. Richard speaks internationally on the effects of wealth on parenting and the American family. Variety Magazine calls Richard, “one of the nation’s leading experts on the issues of child entitlement and family wealth.
If you liked this episode, listen to Ep.100: Teen's Advice for Raising Responsible, Independent Kids