Today's ultra-wealthy are predominantly self-made innovators with strong values about health, education and philanthropy, but they're worried about whether their kids will become good stewards, according to a recent U.S. Trust survey.
More than 70 percent of well-to-do households with more than $10 million in assets have worked for rather than gained their fortunes from investments, said Scott A. Farber, senior vice president and wealth strategist for U.S. Trust.
The “U.S. Trust 2015 Insights on Wealth and Worth” survey found ultra-high net worth (UHNW) respondents are most focused on their health—63 percent are willing to hire a personal trainer, 56 percent would seek a therapist or counselor and 55 percent are willing to take advice from holistic or alternative providers. Nearly half are focused on sharing their wealth with the less fortunate and feel giving up some wealth is necessary for a more fulfilling life.
“The ultra-wealthy probably find it easier [to give] since they have more access to wealth,” said Miami-based Farber. “But there is desire across the net worth range. … We're a society of givers. But not all want their name on buildings.”
The ultra-wealthy are similarly worried about the issues raised by living longer: the staggering cost of healthcare, outrageous college tuition and the prospect of becoming dependent on children or losing most of their wealth to long-term care. Fourteen percent said they expect to spend 26 percent more on health when they grow older. And, 15 percent say there is no limit to what they would spend.
Researchers found UHNW parents reticent to discuss wealth with the heirs to their fortunes. Most respondents put the ideal age to start discussing wealth with children at 23 to 35. Some said children should be over 40.
Unlike sheltered trust fund babies of the past, many of these young inheritors are in the public spotlight, Farber noted.
“Thirty years ago you'd never have heard of Paris Hilton,” he said. “Now we hear it all. Everyone around them wants their two minutes of fame. Sometimes it's not the kids, but friends and spouses” parents have to consider.
UHNW parents say they want their children to inherit wealth in a responsible manner and many echo Bill and Melinda Gates and Warren Buffet, who have given their children a limited amount of money now, with no inheritance.
Farber said family benefactors alleviate some of their concerns by mandating that their children’s future spouses sign prenuptial agreements. They should also make use of trusts, he said, which can be structured to own assets while still dispensing benefits to heirs. For example, a daughter and her husband may enjoy beneficial use of a vacation house without the title being transferred to them.