Jim Duffy: How much should you pass on when you pass on?

It seems a simple question: how much money should you leave your kids?

How much is enough and what seems fair when handing down cash in the event of death? Picture: John Devlin
How much is enough and what seems fair when handing down cash in the event of death? Picture: John Devlin

In the 1990s I was a big fan of The Verve. This band had some great tunes and the lyrics made me think hard about life. But one lyric stood out for me and still does to this day: “You’re a slave to the money, then you die.” That is what it feels like for many of us.

It didn’t help that my teenage pop idol, Paul Weller of The Jam also wrote a song – Pretty Green – which again espoused just how insulated and confined we ­actually become because of money and wealth. Having spent a lifetime working, saving, amassing, squandering, winning, losing, banking and investing our hard earned cash, how much should we leave to the kids?

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It is a question that popped up recently at a barbecue I attended. One couple who were there have “cashed out”. In short, they worked their socks off, built a great business and sold it for good money. In effect, this is their pension or premium on 30 years of hard work and grind. Yes, they are now enjoying the lifestyle that it afforded them, with a fancy car and no expense spared on their new house. But, even as they spend, there is still going to be plenty of cash left. So, I asked the question that they had not considered. Are you going to keep spending and treat yourselves after decades of hard work, sweat, VAT returns and dealing with staff or are you going to leave it all to the weans?

Duffy asks: Are you going to treat yourself after decades of hard work, or leave it all to the weans? Picture: Contributed

How much is enough?

I think it stopped them in their tracks. While life was good and they were in good health, they had not considered what ­percentage or quantum of their significant wealth they would gift to loved ones. The discussion moved on and it seems that the weans will get enough, but our couple had to work hard to earn their cash, so the kids should do the same. It doesn’t look like mum and dad here are handing down millions, then? The question remains the same for those with millions and those with a few thousand. How much is enough and what seems fair when handing down cash in the event of death?

Many of you will take the stance that it is family money and as such will go to ­family. After all, the aristocracies have built wealth this way for generations. Whether it be properties or trust funds or businesses, these assets have been handed down and passed along, so the children benefit, invest themselves and in turn leave more for their kids. On the other side of the coin, many of you will take the stance that each member of the family has to earn their own way in life. They have to build their own wealth. This way they will appreciate it and understand the value of a pound.

A small sum can be meaningful

Is there a middle ground, or is it simply down to how you feel about money, wealth and offspring? Leaving a child £10,000 or £1 million presents problems. Sometimes it is not the will of the deceased parent that causes the problems but the expectation of the child.

If you know your folks have a right few bob tucked away and you are het to get it, then maybe you feel a right to this cash and all the joys it will bring. On this perspective, the child may also deem the windfall as family money that ought to remain so. Believe it or not, there are others who would rather it was not.

If parents leave a small sum to their ­children this can also be meaningful. And this is where I sit in this debate. Leaving a meaningful amount of cash that is manageable and ­relevant can sometimes be just enough to give the child a step up, while driving home the message that money doesn’t grow on trees. This could be enough to buy a car, a first flat, pay off a mortgage or buy a holiday home. Something tangible that has meaning and doesn’t put their heads in a spin.

Wherever you sit on this spectrum of ­gifting and inheritance, it certainly takes a bit of thought. Up until that moment, my couple at the barbecue are spending as if there’s no tomorrow.

Then again, it’s their cash and they can do what they want with it – right?

Jim Duffy MBE, Create Special.