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) <\/p>\n
An Australian father has been advised not to give his kids his entire $80 million inheritance<\/a> when he dies after he expressed concerns they would \u201cblow it all within a few years\u201d. Baby Boomers<\/a> are expected to hand over trillions to younger generations<\/a> over the coming decades, and some fear their \u201chard-won\u201d cash may ultimately be squandered away.<\/p>\n The Barefoot Investor has warned a wealthy business owner that unearned wealth<\/a> can often \u201cdestroy\u201d 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<\/a>.<\/p>\n \u201cI\u2019ve got four adult kids aged between 23 and 35. They\u2019ll inherit around $80 million when I die, but none of them are serious about money,\u201d he said.<\/p>\n \u201cMy son lost $100,000-plus on crypto<\/a>. My eldest has been in and out of rehab. My daughter wants me to fund a fashion label, despite having zero business experience.\u201d<\/p>\n RELATED<\/strong><\/p>\n The man said he loved his kids, but he was \u201ctoo busy making money\u201d and hadn\u2019t taken the time to actually teach them about money<\/a>.<\/p>\n \u201cI don\u2019t want to rule from the grave, but I\u2019m terrified they\u2019ll 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,\u201d he said.<\/p>\n Pape said kids who inherit a large sum<\/a> were like lotto winners and needed to learn how to keep the money they didn\u2019t earn \u2013 which can prove easier said than done for some who receive the sudden windfall.<\/p>\n Do you have a story to share? <\/strong>Contact tamika.seeto@yahooinc.com<\/strong><\/a><\/p>\n As evidence, he pointed to the rather famous example of Cornelius Vanderbilt, who built a fortune<\/a> of roughly $200 billion and warned his kids not to blow it.<\/p>\n \u201cWithin a few generations they\u2019d built mansions bigger than hotels and couldn\u2019t afford the plumbing bills. By their 1973 family reunion, not one was even a millionaire,\u201d Pape wrote in his weekly newsletter.<\/p>\n \u201cThat\u2019s the curse of unearned wealth. It doesn\u2019t just get spent badly, it often destroys the people who inherit it.\u201d<\/p>\n While the man\u2019s kids could go on to build a successful fashion label and may have learned their lessons around crypto, Pape said history showed \u201cthe odds aren\u2019t good\u201d.<\/p>\n He also cautioned that handing the cash to advisers to manage now, could mean they are simply “sacked” after his funeral.<\/p>\n Story Continues <\/p>\n Instead of giving them the entire $80 million inheritance, Pape suggested he should buy each child a modest home of up to $1.25 million<\/a>, including stamp duty.<\/p>\n \u201cThat gives them security, but they still have to get out of bed to pay the rates. That\u2019s $5 million total [among four kids], which is life changing, but not life ruining,\u201d he said.<\/p>\n \u201cThen I\u2019d make your real legacy the next decade. Spend time mentoring them. Get them involved in your business, fund their study, have them run small charitable projects, maybe even that fashion label, but with you watching closely.\u201d<\/p>\n After that, Pape said the man could leave the rest to a cause he cared about. He warned the man to \u201ctread carefully\u201d if he wanted to involve his kids in this decision<\/a>, as they may view him as giving away “their money\u201d.<\/p>\n Pape said: \u201cWarren Buffett put it best: \u2018A very rich person should leave his kids enough to do anything, but not enough to do nothing.\u2019<\/p>\n \u201cThe hardest financial lesson for your kids isn\u2019t learning about compound interest. It\u2019s that choices have consequences. And that\u2019s a lesson money can\u2019t buy.\u201d<\/p>\n While most Aussies won\u2019t be in line for an $80 million inheritance, at a society level there is a major inheritance transfer<\/a> coming for younger generations.<\/p>\n The Productivity Commission previously estimated that $3.5 trillion would be passed on from Aussies aged 60 and over by 2050. More recent JBWere figures put the figure at $5.4 trillion over the next 20 years.<\/p>\n Finder research found 41 per cent of Aussies – equivalent to 8.8 million people – expected to receive an inheritance.<\/p>\n One in 10 said they were depending on an inheritance to achieve major financial goals like buying a house or retiring, while one in five said it will significantly improve their financial standing but they weren\u2019t solely dependent on it.<\/p>\n Finder personal finance expert Sarah Megginson echoed the importance of having people proactively build their own financial security. \u201cA sudden influx of money, even a substantial one, can quickly disappear without a clear financial strategy in place,\u201d she said.<\/p>\n Get the latest Yahoo Finance news – follow us on <\/strong>Facebook<\/strong><\/a>, <\/strong>LinkedIn<\/strong><\/a> and <\/strong>Instagram<\/strong><\/a>.<\/strong><\/p>\n The anonymous man said he was worried his hard-earned fortune would be blown by his kids within a few years. (Source: Getty) <\/p>\n