As financial advisors, we are often asked how old a child should be before he gains access to inherited money or receives significant financial gifts. We know, through experience, that age is a poor barometer of readiness.  

But what should parents and trustees look for?  How do they judge if funds will help launch a child into adulthood or delay the very maturation they are hoping to promote?  

Through interviews I conducted with successful inheritors—those who are self-motivated, productive and content—for my book Raised Healthy, Wealthy & Wise, I discovered that there are four fundamental characteristics children need to develop before they inherit or are given wealth.  

The inheritors I interviewed all shared these characteristics. Young people who haven’t yet launched successfully into a financially and emotionally self-sufficient adulthood typically lack one, if not more, of these qualities.

I have started to view this list as a powerful metric. I now tell clients that if their children can develop these characteristics, it’s likely they will be able to handle the money they are given. If they haven’t, no matter how old the children are, inheritances of any size may be very destabilizing.

(The following is an abridged excerpt from Raised Healthy, Wealthy & Wise.)

Core Markers
1. The ability to earn their own money.

For adult children, living off parental income can carry emotional freight that is rarely articulated but keenly felt. Tension about money is seldom about the money itself or the things money can buy, but about what the money symbolizes. When they are beholden to their parents for rent checks, spending money or clothing allowances, inheritors feel trapped in their parents’ clutches. We heard again and again in our interviews that adult children of the wealthy do not feel successful unless they are making their own money.

And it’s not enough to believe you can make money if you need to. We found that in order to launch successfully, inheritors needed to have demonstrated the ability to make money in the past (even if they were demonstrating this to no one but themselves). There is a significant difference between assuming you have earning power and actually experiencing getting paid for your skills. When inheritors have never been tested, the uncertainty about whether they could succeed can seriously undermine their confidence, and they often find that belief and reality do not match up.

We have learned that it is remarkable what children are capable of doing when parents simply present it to them as an expectation. The inheritors we interviewed all took for granted that they would earn their own money because their parents had encouraged them to do so from an early age.
2. Motivation toward a personal goal.

What does it take to be satisfied with the life you lead? Neurologist Viktor Frankl, a Holocaust survivor, determined that even in the most dire circumstances, people can persevere and at times even thrive when they are fueled by a sense of purpose. This led Frankl to conclude that humankind’s primary drive is not toward pleasure or happiness, but the discovery and pursuit of meaning. “What man actually needs is not a tensionless state but rather the striving and struggling for some goal worthy of him,” Frankl wrote.

Unfortunately, it’s common to see inheritors who seem stuck in the status quo. They have trouble engaging fully in everyday life and finding motivation to apply themselves consistently toward achieving a goal. These individuals end up lacking a sense of success. This can be tragically debilitating.

In contrast, the successful inheritors we interviewed all showed a remarkable ability to set explicit goals for themselves—whether it was running an art gallery, practicing medicine or heading the family retail chain—and to commit to working toward that goal. The factor that determined an individual’s sense of fulfillment and satisfaction was not necessarily achieving the goal, but successfully driving toward it. Each of them was motivated by some desire—whether it was making money, acknowledgment in a creative field or pursuing a deeply held interest—that drove them to apply themselves and to experience a sense of earned success that allowed them to lead productive and engaged lives.