The Barefoot Investor Scott Pape has given some hard truths to a wealthy business owner planning to leave his kids $80 million. (Source: Jason Edwards/Getty)
An Australian father has been advised not to give his kids his entire $80 million inheritance when he dies after he expressed concerns they would “blow it all within a few years”. Baby Boomers are expected to hand over trillions to younger generations over the coming decades, and some fear their “hard-won” cash may ultimately be squandered away.
The Barefoot Investor has warned a wealthy business owner that unearned wealth can often “destroy” the people who inherit it. The advice came as the 72-year-old wrote to the finance expert for help and shared his fears that his adult kids would blow his fortune.
“I’ve got four adult kids aged between 23 and 35. They’ll inherit around $80 million when I die, but none of them are serious about money,” he said.
“My son lost $100,000-plus on crypto. My eldest has been in and out of rehab. My daughter wants me to fund a fashion label, despite having zero business experience.”
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The man said he loved his kids, but he was “too busy making money” and hadn’t taken the time to actually teach them about money.
“I don’t want to rule from the grave, but I’m terrified they’ll blow it all within a few years of me being gone. Yet, if they could be convinced, they could grow the pie and live off it forever,” he said.
Pape said kids who inherit a large sum were like lotto winners and needed to learn how to keep the money they didn’t earn – which can prove easier said than done for some who receive the sudden windfall.
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As evidence, he pointed to the rather famous example of Cornelius Vanderbilt, who built a fortune of roughly $200 billion and warned his kids not to blow it.
“Within a few generations they’d built mansions bigger than hotels and couldn’t afford the plumbing bills. By their 1973 family reunion, not one was even a millionaire,” Pape wrote in his weekly newsletter.
“That’s the curse of unearned wealth. It doesn’t just get spent badly, it often destroys the people who inherit it.”
While the man’s kids could go on to build a successful fashion label and may have learned their lessons around crypto, Pape said history showed “the odds aren’t good”.
He also cautioned that handing the cash to advisers to manage now, could mean they are simply “sacked” after his funeral.
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