Lessons From Sting’s Inheritance Strategy
One of the most challenging issues wealth creators and their advisors face is how much to pass on to adult children. Inheritance is a complicated subject, often more about emotions than about rational analysis. Unfortunately, an individual’s upbringing can cloud legacy decisions, particularly when wealth creators are self-made. Too often, wealth creators define success by their own achievements and hope to motivate their children to replicate them.
Sting, one of the most successful musicians of the past 40 years, might be one such wealth creator. The mega rocker recently told the British media he plans to leave his kids only a “small inheritance.” The product of a working-class background, Sting created his own wealth and believes giving too much money to his children would make them soft. He wants them to keep their strong “work ethic,” as he put it. Sting appears to assume inheriting a substantial amount of money would threaten that work ethic. Almost as an aside, he adds that his charitable commitments won’t leave much over anyway.
But from our point of view, there’s another way for clients and advisors to think about wealth transfer, and it’s much more holistic than simply how much or little money each child gets.
Sting’s wealth was fundamentally a byproduct of his creativity. We do not imagine that the young Sting (aka Gordon Sumner) began writing and playing music to get rich. His creative genius produced the wealth. In the process of becoming his best self, he sold 100 million records worldwide through his work as a solo artist and with The Police. To his great credit, he also turned his gift for entertaining into a platform for saving the world’s rainforests, which is now the focus of his philanthropy.
If wealth creators think more broadly about wealth transfer, the conversation about inheritance becomes quite different. An inheritance can provide adult children with the opportunity to pursue their passions. This may have little to do with making money — consider all the people in the world whose creativity does not lead to wealth. The key is that adult children have the financial security to realize their full potential as people. That self-actualization ultimately benefits the world, be it through music or a public cause.Adult children’s road to self-actualization will rarely be stunted by financial inheritance if they are raised to understand that the purpose of their wealth is to help them become their best selves. We’ve seen this positive outcome many, many times. We’ve also seen too many wealth creators make the mistake of depriving their adult children of money for fear it will ruin them.
Part of Sting’s personal dream is to help protect the rainforest. Surely that engagement is about making the world a better place for his children and everyone else. The disconnect in Sting’s public statement is that he appears to treat his philanthropy as unrelated to his children’s inheritance. Instead, these pieces should be put together.
A wealth creator’s commitment to philanthropy can enhance adult children’s inheritance by imbuing it with purpose, answering the most fundamental question about great wealth: What is it for? All too often, wealth creators never ask that question.
There are two steps to raising children who understand the connections between wealth and their passions. First, children should learn that wealth comes from passionate self-actualization — in Sting’s case, creativity. Second, children need time to discover their interests. It can’t be rushed, and wealth creators need to have patience.
The avoidable mistake is giving children too little. When children of wealth have the rug pulled out from underneath them, it’s more difficult to self-actualize. Financial security helps people make wiser decisions and ultimately succeed, whether they’re born rich or poor. Children need breathing space to pursue passions, even when the passions are not wealth-producing.
Declaring what children will receive in advance misses the point. A legacy is not money. It’s the inspiration a wealth creator leaves behind, along with the positive impact of that wealth. The money passed on will serve many wonderful, unexpected purposes and enable wealth inheritors to make the world a better place.