To Save Or Not To Save For Your Kids' Inheritance?

Until Gloria Vanderbilt passed away this past June, her son Anderson Cooper believed he would never receive an inheritance. Cooper was raised knowing that he could never depend on her financial support and would have to create his own wealth.

In an interview with Howard Stern posted in a Washington Post article, Cooper expressed support of his mother's choice. “I think it’s an initiative sucker," he said. "I think it’s a curse. Who’s inherited a lot of money that has gone on to do things in their own life? From the time I was growing up, if I felt like there was some pot of gold waiting for me, I don’t know that I would have been so motivated.”

In my own family, while we didn’t have even close to the same wealth, my parents always let me know that if I needed “help” they would be there for me. They also found pleasure in knowing that they would leave us a little something after they passed.

Of course, it’s one thing to leave your child "a little something" and another thing to leave an inheritance so large they could quit their jobs and travel the world for the rest of their. Boy does that sounds lovely!

Withholding inheritance money seems to be somewhat of a trend among the uber wealthy these days. Warren Buffet, Bill Gates and Sting have all said their kids would not receive an inheritance. But is this a good way to handle your money with your children?

I checked in with a few moms and experts to see what they thought about this policy:

Mom Jamie Beth Cohen Schindler felt that whether or not Cooper inherited money after Vanderbilt passed has always been irrelevant. "'Create his own wealth' is, I believe, a fallacy," she explained. "Who paid for his schooling? Was he able to take unpaid internships? What about extracurricular experiences that look good on college applications? Whether or not kids of wealthy families can expect a windfall, they generally have a leg-up financially."

Another mother Jennifer DiBara Crandell felt similarly. "It seems like a flashy statement for someone raising their children like this to then say 'no inheritance,'" she said. "What does that even mean? They of course will get fancy educations. Will they gift houses or down payments during their lifetimes? Either extreme seems bizarre to me. To provide such excess or to withhold support both seem unfortunate. But certainly I'll never be in a position to have to figure that out!"

I personally admire how Vanderbilt raised Cooper, and how she made it clear early on that he couldn't depend on those billions. It seemed to have worked for him!

Holly Reid Toodle, CPA and author of, "Teach Your Child to Fish: Five Money Habits Every Child Should Master" says, "We are all familiar with the Chinese proverb, 'Give a man a fish, and he'll eat for a day. Teach a man to fish and he'll eat for a lifetime.' All parents want the best for their children, so yes, parents should make plans to save and invest for the future of their children — that's how legacies are built. But legacies are sustained when you teach your child to fish by making sure they know how to create and build wealth from their own efforts."

Gail Perry Mason, who runs a Money Matters for Youth program added, "Parents should not give their kids a handout, but a hand-up. Love, guidance, support and wisdom are the most valuable assets. We must trust our kids to make financial choices without a trust fund as a safety net."

So maybe leaving an inheritance along with some important lessons about money is the way to go. Here are some tips from Paris Davis, senior vice president at Washington Federal Bank, to help get your kids on track for financial success — with or without an inheritance:

Have the Talk

For many adults, the money talk is a scary one to have with their children. Like with the "birds and bees" talk, it is best to talk first about where it comes from. It must be made clear that money neither grows on trees nor out of parents’ wallets. And, not all money is meant to be for “fun" things like going to the movies or buying a new iPhone.

Start Young

When do the money discussions happen? A basic introduction to money can begin as young as toddlers, when playing make-believe games and with toys. Also, make them aware of what is happening when Mommy and Daddy go to the bank or ATM.

More As They Grow

As soon as you start giving your child an allowance, which can happen at 5 or 6 for some and later for others, more lessons can be taught and discussions had. Once they are in school, there is a way to tie it into classes and work assignments. Then, in the teen years, start the discussion of things like the stock market and long-term savings.

Come Up With a Budget

Show your kids the value of money by putting a budget together. For example, if a child gets a $20 allowance each month, have them develop a budget to make that money last for an entire month. This means saying "no" to spending all the fun money at once. It also helps children understand how to prioritize. From this they learn the lesson that sometimes a lifestyle adjustment is required in order to ensure one does not exceed money going out versus money coming in.

Per a news update this month, it appears Vanderbilt did leave almost all of her estate to Cooper, which is worth about $200 million. Surprise! Either way, he was raised knowing he couldn't depend on her money, which made him more independent.

Money doesn't grow on trees or in wills for some these days, but with a few important lessons combined with a little luck, we can teach our kids to prosper on their own.

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