I think most parents want to leave an inheritance to give a better financial life to their children and grandchildren. But should that wealth transfer happen haphazardly? Or should there be some real forethought as far as how the inheritance should take place?
What I’m talking about here is how you should be training your children and grandchildren to inherit the wealth in your estate and not misuse or squander it.
I see this all the time. “Kids” will inherit multiple properties without understanding what to do with them or how to manage them. This leads to emotional and financial headaches that can cause division between the siblings.
Is that the legacy you want to leave?
I started thinking about this idea after reading a book by the founder and CEO of Hobby Lobby, David Green, called “Giving It All Away… And Getting It Back Again: The Way of Living Generously.”
David has an interesting philosophy when it comes to his company. He says it does not belong to him. Instead, the company belongs to Yahweh, and it’s just his to work. With that mindset he has put a lot of thought into how and if his children and grandchildren will get to inherit stock in the company. He calls this the succession plan.
Notice that I said, “If.”
David didn’t want his family to think they were entitled to the wealth the company has accrued. Instead, the kids have to work for a different company before they are even allowed to work at Hobby Lobby. Once that task is completed, they aren’t automatically given board seats. They must work their way up, immersing themselves in the culture David created inside Hobby Lobby. And once they’ve climbed the ladder, there is no guarantee the children or grandchildren will end up in executive roles. They’ve got to earn it.
To aid in that, David spends lots of time with his family planning the company’s future. He explains the culture he built and why. He even explains why it’s not “their” company and how they plan to make the world a better place through the contributions Hobby Lobby can make.
This is the succession plan. This is David training his child up in the way that they should go so that when they are old, they will not depart from it.
Last night, we were reading a story where one of the richest fathers who ever lived neglected to make a succession plan with his son, and it ended poorly. That father was none other than King Solomon.
The story takes place in 1Kings Chapter 12. Solomon died, and his son, Rehoboam, became king of both Israel and Judah. Rehoboam, who was a young man, was approached by his labor force and asked if he would lighten their workload. The king listened and then asked for three days to decide what to do.
During that time, Rehoboam asked Solomon’s counselors what he should do. They told him that if he would become a servant to the people, then the labor force would serve him faithfully and the kingdom would continue to prosper.
The king asked some young men, who the scripture points out grew up with the king (presumably in the palace with much wealth), what he should do. They told him he needed to act aggressively toward the people to show his dominance as king.
To make a long story short, Rehoboam took the advice of the young men, and it resulted in a revolt that lost him the throne in Israel.
As we talked through this story with my kids, I explained how this was a common thing. Parents will build up a great wealth like Solomon. But the children will come along and make bad decisions that destroy their family wealth quickly because neither they nor their friends who they get advice from have learned the lessons their parents did while building their family wealth.
I talked with my kids about how one day they would inherit the houses we have acquired. We talked about how it will be their jobs to take care of our people so that they have great places to live. And by doing this, we will be servants to our people, and our family will continue to prosper.
My kids understood. And at ages 6 and 7, we’ve begun training them for our succession plan.
Joe and Ashley English buy houses and mobile homes in Northwest Georgia. For more information or to ask a question, go to www.cashflowwithjoe.com or call Joe at 678-986-6813.