Estate planning: How should I prepare my child for inheritance?

Parents who fail to teach life skills, spoil, and over-protect their children keep them in infancy long beyond their time.

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Tuesday, June 25, 2024, will be forever etched into my memory. On that day I joined my 18-year-old daughter and thousands upon thousands of other young Kenyans as they fought for the democratic space in this land. Their voices would not be ignored and days later the highest office in the land capitulated to their demands.

I was privileged to be amongst these young people, to experience their passion, their commitment and most of all their fearlessness. It got me thinking about where else the power of youth can be harnessed.

When it comes to matters of inheritance, the message given to our young people over and over is wait. Words like ‘you are not ready’, ‘you are not mature enough’ ‘you lack experience’ and 'you have not earned your seat at the table’ are commonly used to hold them at bay. I ask myself, if these young people are ready to fight and die for our democracy, can we really say that they are not ready to participate in the management of family wealth? What does it really mean to be ready and what is the role of the older generations in ensuring that that they are ready?

In the recent weeks, this country has witnessed the power of youth. The positive energy of our youth resulted in a much-needed turnaround from our government. The power can be transformative when used appropriately. When it comes to family wealth, I believe the same principle applies. Are we using the youth resources in our families to effect transformation or are we frustrating and abusing it towards destruction? What practices in families promote the former and which practices lead to the latter?

In the traditional African community structure, there existed clearly defined roles and responsibilities for each generation. This structure allowed each generation to use its unique abilities to serve and contribute to the family and the community. A boy is born, and when about seven years old he leaves his mother and goes out each day with the goats and cows; at puberty, he would be initiated into becoming a young man and warrior—his role then would be to protect his family and community.

In his early 20s, he would seek a wife —his role transforming to that of husband, father and provider—securing his homestead and contributing to the wealth of his family and his community. Approximately 20 to 30 years later, his age group would transition to elders of the community as their own grown children married and started their own families. It was the job of elders to provide wisdom to the family and the community.

In the modern day, these traditional structures have been eroded and replaced with a capitalist society that prioritises economic power above all else. A man’s place in his family and his community is often determined by the strength of his wallet. Thus, to keep his place, a man will hang on to his economic power for as long as possible.

The natural transitions within families are impeded as young people are blocked from participating in family wealth by an older generation that is hanging on to capital for too long. Did you know that more than 70 percent of this nation's capital (land and money) is held by persons above the age of 60 years? How can we expect to grow as a nation when our productive resources are largely held by those with dwindling energy and productivity?

I believe the answer lies in looking to past practice to inform future actions. It begins by recognising that each generation can contribute positively but differently to family wealth. In an ideal scenario, the first generation acquires the wealth (land and capital) through enterprise and investment. The next generation safeguards that wealth, scaling up and/or diversifying the wealth to increase its benefit for the family and the community. So, what will help families achieve this scenario?

Keep an eye on the future

As we are busy acquiring wealth, we must also simultaneously educate our children in the necessary life skills of managing money, savings, investment, and risk management. In my practice, I often come across parents who are confounded that their highly educated children do not automatically grasp the practicalities of running their business, their farms, or their properties. My question to them is, 'Did you teach them?' Remember, schools don’t teach this stuff.

Share your journey

Include your children in your wealth acquisition process from an early age. This helps the younger generation to learn how wealth is made, to understand that it is not a straight line and how to navigate the ups and downs of wealth creation.

Be open about your successes and more importantly your failures as this creates generational trust. Remember, children learn from what we do more than what we say. Just as in traditional African society where each generation understood the role and contribution of the other, sharing the wealth creation journey helps each generation understand where they are on that journey.

Embrace diversity

We are all created unique and wonderful. One of the biggest threats to generational wealth is enforced standardisation. Just because wealth acquisition happened one way, it does not mean that is the only way that wealth can be acquired, preserved and nurtured. Coffee farms can become residential estates and residential estates can become share portfolios. The whole point of family wealth is for the benefit of the family and the community. For this benefit to be fully realised, families must embrace the different talents and view points that exist within each generation.

Embracing diversity is how we can fully harness the power of our young people. Families that are open to creating opportunities for their young people to contribute to wealth creation within the family are harnessing perhaps the most valuable resource they have – energy and creativity. Creating such opportunities requires that one generation be willing to let their young people have access to capital. So, let your 22-year-old daughter have a piece of land to farm on or lend your 25-year-old son some money to fund his digital business. Yes, there is risk that they will fail, but that failure is also a valuable lesson. You can mitigate the risk of failure by being the elder and providing wisdom and guidance.

Practices that hinder generational wealth also contribute to the destruction within families. It has been my experience that failure to nurture and educate our children, buying loyalty, wealth hoarding and secrecy are toxic habits that lead to alienation, mistrust and a breakdown of family unit. This happens when one generation remains stuck in a role and fails to move on to the next generational role.

Parents who fail to teach life skills, spoil, and over protect their children keep them in infancy long beyond their time. Wealth creators who hang to their wealth and use it to buy loyalty within the family remain stuck in the provider role when they should be transitioning to elders.

The month of June was such an opportunity for our country, to wake up and see the potential of our youth. Let us support our youth, mentor them, and trust them and in turn they will transform our families in way we cannot even imagine. The time for Gen Z is now.

The writer is a certified Trust and Estate Planner and advocate of the High Court of Kenya.

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