Those of us who are parents acknowledge that we’re blessed with, in equal measure, life’s greatest treasures and the biggest drain on finances. For parents fortunate to have wealth – however meagre and diminishing - to pass on to the next generation, we fret about how to do it responsibly. We don’t want to indulge but we’d quite like to ensure we’ll be remembered fondly by successive generations.
A report published by insurer LV= earlier this year, entitled Cost of a Child:From cradle to college 2012, pegged it at around £218,000 but that is just to the child’s 21st birthday.
While my children are younger than that presently, those parents I know with post-university age children would love to have stopped subsidising their children at 21 or at the £218,000 threshold, whichever came first.
So when consoling myself that Clan Mooney had failed to make it to the Sunday Times’s rich list again this year, I came across some words of wisdom from one of the world’s richest men: Warren Buffett is quoted as saying, on the matter of inheritance, “Leave your children enough to do what they want but not enough to do nothing.”
But what’s enough? And what’s considered doing nothing? Socialite, fashion designer and heiress Petra Ecclestone - one of Formula 1 supremo Bernie Ecclestone’s daughters - has complained in a published article that she feels she isn’t recognised enough for her hard work starting with the feat of getting up in the morning.
She’s been ridiculed but she does have a point. As the owner of a 14-bedroom mansion in Los Angeles and six storey mansion in Chelsea with attendant entourage to see to her every need, why should Petra bother doing anything at all?
None of Ecclestone’s children appear in the frame to take-up the family business of running the Formula 1 circus. This is entirely in keeping with the archetype of first generation entrepreneurship.
First generation entrepreneurs who create substantial business wealth for the first time in their family’s history, tend not to pass on their business unless there is a child who shows not just ability but exceptional ability. They are very protective of the business that has created the family wealth. The same kind of protective instinct means they want to cushion offspring from having to put in the hours of hard graft that were needed to make the business the success it has become.
Apparently by the time you get to the third generation and beyond of any inherited wealth which originated from entrepreneurship, capability has been succeeded by the need for equality when it comes to divvying up the spoils among the family and also the business itself – if it’s still going.
While living among entrepreneurs in Cambridge and being in a business which benefits directly from their wealth creation locally, I make no claim to be one. Also, having never been the heir to a substantial family fortune, I don’t seek recognition for getting up in the morning to earn a living.
Apologies to my children on these two counts.
Still, I’ll never have problem of selecting which one of them, if any, is capable enough of taking over the entrepreneurial reigns from me. They, in turn, will thank me that, unlike Petra Ecclestone, they won’t have to decommission a gift-wrapping room in one of their mansions because they were useless with ribbons.
Will Mooney MRICS
T: 01223 558032