- Actor Ashton Kutcher said in a recent podcast he’s not leaving a trust fund for his kids, reported Mitch Tuchman for MarketWatch.
- Kutcher isn’t the only high-profile person to take this approach – billionaires Bill Gates and Warren Buffett have both said they plan to leave their kids little to nothing of their own fortunes.
- The wealthy are approaching inheritances differently to teach their kids the value of hard work and prevent the cycle of dynastic wealth.
- Visit Business Insider’s homepage for more stories.
Ashton Kutcher’s kids aren’t getting his money.
In a recent episode of the Dax Shepard podcast “Armchair Expert,” he said he’s not creating trust funds for his two children with wife Mila Kunis, reported Mitch Tuchman for MarketWatch. He also said he’ll hear out their business ideas, but won’t give them special treatment.
“My kids are living a really privileged life, and they don’t even know it,” Kutcher, who has an estimated net worth of $US200 million, said.
Kutcher’s parenting approach isn’t unlike that of other well-known wealthy individuals. Elton John, Sting, and Simon Cowell have all said they don’t plan to leave their kids vast amounts of money and instead prioritise teaching them the value of hard work and a dollar earned.
Even billionaires aren’t leaving their kids much. Consider Bill Gates, who is leaving $US10 million to each of his three children – only a fraction of his $US108 billion net worth.
In a Reddit AMA, Gates said: “I definitely think leaving kids massive amounts of money is not a favour to them. Warren Buffett was part of an article in Fortune talking about this in 1986 before I met him and it made me think about it and decide he was right.”
Buffett plans on pledging 100% of his estimated $US87.3 billion fortune to various charities. And rather than giving each of his three children cash, Buffett has instead promised to give approximately $US2.1 billion of Berkshire Hathaway stock to each of his children’s charities.
Dynastic wealth and the “Great Wealth Transfer”
It’s estimated that $US68 trillion will be passed down from boomers within the next few decades – but it seems that Buffett, Gates, and the rest won’t be part of the anticipated “Great Wealth Transfer.” By 2030, millennials will hold five times as much wealth as they do today – and it might make them the richest generation ever.
Buffett’s decision might stem from his views on dynastic wealth – the pattern of families passing money down from one generation to the next. He’s been vocal about his efforts to reduce the vast wealth sitting in the hands of a few influential people.
“Dynastic wealth, the enemy of a meritocracy, is on the rise,”Buffett said in 2007. “Equality of opportunity has been on the decline.”
Dynastic wealth could be a factor in the widening gap between the rich and the poor. It’s also a cyclic process: Each generation can grow the previous generation’s money and leave it to the next generation, which then continues to grow it.
Some of the superrich are thinking twice about how they pass down wealth, Michael Rosen-Prinz, a partner in the Private Client Practice Group at McDermott, Will & Emery who works with ultra high net worth clients, previously told Business Insider. “The previous generation’s plan to just transfer as much money tax free down the family tree is being reconsidered in favour of a more nuanced approach based on the personalities and circumstances of the beneficiaries,” he said.
Older generations may think about limiting the access their children will have to family wealth thanks to highly visible heirs and “trust fund babies” flaunting their wealth on social media, he added, and might include provisions to ensure that the trust can be modified in the future.
Looks like Kutcher isn’t alone.