What to do with a 17 year old multi-millionaire...

Teens can be tough. It’s the age, the hormones, the culture, the stormy search for identity, squishy values not yet strong enough to reliably guide judgment and behavior, brains not fully developed, attention diffused by millions of digital interruptions.

Now add an awareness of seemingly unlimited personal funds to the mix and you see the dilemma faced by millions (yes, actually) of families who, with the best of intentions, made their children (or grandchildren) trust beneficiaries. Across the land, trusts funds ranging from just enough to cover college costs, to those worth hundreds of millions of dollars loom over the future of these kids (broadly considered, it’s actually a demographic slice of young people ranging from young children to young adults).

One can understand the reluctance grown-ups have in letting kids know they are wealthy. Authority issues are hard enough without letting little Sam or Sara know they indeed (as one 16 year-old put it) ‘have more money than Mom and Dad.’ Many parents feel the only leverage they have with their kids is financial (“you depend on me for food, shelter and clothing, you HAVE to respond to me”). Imagine the rebellious—or just the very independent child—who challenges that POV because they in fact DO have money of their own. (Trustees have more and less control over funds, but this generation is not averse to using lawsuits to gain access to ‘their money.’)

Right now, ‘boomers’ are discovering the unintended consequences of wanting children to be (fill in the blank): happy, safe, able to follow their bliss, set for life, etc. Faced with the question of how to inform and prepare their children for the responsibilities of wealth, grown-ups shudder. The notion of giving children raised in a hyped up, spend and consume culture the keys to the bank—even figuratively—feels like giving a 5-year old keys to the family car.

I spend a fair amount of time with families struggling to explain to kids on the cusp of adulthood those tax forms they’ve been signing without question for the last few years (because now they’re asking questions), which is one reason I’m on this tear today. Preparing children for wealth is hard work. And sure I know, “try poverty” is a fair response. But it turns out that providing the privilege of wealth works best when paired with the responsibilities of wealth. And while loving parents and grandparents have been generous with the former, too often they’re stingy with the latter.

Withholding information and expectations about a child’s level of wealth doesn’t make them less rich; but it can make them a lot more inept in the management of their resources and their lives. Much has been written and researched on the ‘dark side of wealth.’ Depression, substance abuse, and rampant materialism are often cited as consequences of wealth requiring parental vigilance. But I see something very different. Many young adults shrink from the lives that wealth implies: BIG decisions. BIG responsibilities. BIG awareness. Depression and substance abuse are just two of a number of vehicles kids use to escape from lives bestowed, not chosen (living geographically distant; abdicating responsibility to advisors and family office pros are others).

Poverty is grim. And that’s a another rant. But for many children, the responsibilities of wealth are terrifying. And they shrink from it, making their lives, their aspirations, and their visions small. Unfortunately this isn’t an issue just for these kids or their families. Today’s wealthy 12-year old is 2025’s wealthy adult. If they’re not taught how to use their resources thoughtfully, with courage and vision, the future will be robbed of leaders with the resources to make extraordinary impact.

Families and professionals are always reluctant to ‘put that burden on children.’ But we don’t withhold help from children with Olympic level skills—‘because the skills are a burden’. If the children are lucky, we nurture those gifts. When Tiger Woods’ dad recognized his son’s unique asset as a golfer, he set expectations, demanded discipline and practice, nurtured, loved, praised, and provided access to teachers, role models and experiences that helped the young golfer develop appreciation and respect for his own asset. This is the responsibility of families who have provided trust funds for future generations.

Obviously not all kids have Tiger level skills in golf or financial management. Seventeen year- old trust fund multi-millionaires don’t need to be exhorted to start the next Microsoft or run for president. That’s not the point. But helping children develop their social, intellectual and human capital assets—whatever they are-- requires at least as much time and effort as developing the financial assets with which they are stuck.

Expecting children to be responsible is not a form of punishment (though somehow we seem to feel that way I fear), rather it is a vote of confidence. The message caring adults must communicate is: “I require you to be responsible for the gifts you receive because I know you have the strength, competence, imagination and values required to receive these gifts.”

This is how children learn to be good stewards of their gifts—financial and human. Children required to handle an allowance at 8 can learn to manage a budget at 13 and will be ready to deal with the implications of a trust management at 17. 17 year-old multi-millionaires have the responsibility to become good stewards. We have the responsibility to coach these 21st century stewards-to-be.