What Should Children Be Told About Their Inheritance?
Shaquille O’Neal, legendary NBA star and successful entrepreneur, was asked by one of his children, “Daddy, are we rich?” He responded, “We ain’t rich; I am rich.” If the child finished college, started a business and made a good pitch, Shaq said he might invest in it. Otherwise, the child should not expect anything.
This story illustrates a problem that most affluent families face. What should children be told about family wealth and what they might inherit? There appear to be two leading schools of thought. One school, which is rooted deeply in the law of trusts and estates, is that children need information about family wealth and inheritance so that they can properly plan for it and take appropriate action to protect their interests. The other school of thought believes that knowledge of an inheritance, particularly a substantial one, will curtail the child’s interest in education and the hard work necessary for independent achievement. As jazz great Billie Holliday sang, “Mama may have, and Papa may have, but God bless the child that’s got his own.”
What Georgia Law Says
Traditionally, the law has been concerned with making sure that executors, trustees and other fiduciaries take proper care of the money and property entrusted to them. They are required to keep their accounts in a regular manner and to always be ready with them supported by vouchers, with penalties for failing to do so.1 The Georgia Probate Code provides a procedure by which an estate heir or beneficiary may petition the probate court for settlement of the accounts of the estate and the court may require the executor or administrator to appear at a hearing to provide the accounting.2 A will may relieve the executor of filing inventories and returns with the court, but the beneficiary still retains the right to obtain information about the estate from the executor.3 This duty to keep regular accounts and to provide information is part of the personal representative’s duty “to act in the best interests of all persons who are interested in the estate and with due regard for their respective rights.”4
The default rules in the Georgia Trust Code for keeping and disclosing information to trust beneficiaries are similar. The code incorporates the common-law duty that requires the trustee to keep the trust beneficiary reasonably informed.5 As of 2010, the code required the trustee to respond to reasonable requests for information and to render annual accountings, although the trust instrument could relieve the trustee of these specific duties.6 In 2020, the code was amended to provide that the settlor could also relieve the trustee of the common law duty to keep the beneficiary reasonably informed. This latest change gives Georgia settlors the option of creating a secret trust for their children, where even a fortune does not have to be disclosed. Is it a good idea for a trustee to hold money for a beneficiary, perhaps for decades, with no duty to account to anyone? Those who adhere to the traditional view that someone needs to watch the watchman have tried to keep nondisclosure provisions limited to beneficiaries under the age of 25, but as the Georgia law illustrates, that effort appears to be a losing legislative battle.5
What Should You Do?
At Watson Bonander, our strong bias is that families should talk about their money, that estate plans should be disclosed and explained and that children should be provided information about what they may inherit and what it means. Disclosure and accountability help protect beneficiaries from the human frailties of greed, treachery, disloyalty, corruption, and incompetence, all of which make regular appearances in Watson Bonander’s case files.
In our experience, surprise and disappointment are also great motivators for litigation. People who grow up in families of affluence and wealth sometimes believe that their surname alone entitles them to continue to enjoy those benefits, and the amount of wealth they imagine they should receive may far surpass the reality. On the other hand, the fear that otherwise talented capable children will become unmotivated if they learn of the family’s wealth and the amount set aside for them in a trust is a real fear, and one that warrants careful consideration.
What is the best way to make sure each child has “got their own”? Like most of life’s questions, there is no one answer that is best for everyone. Yet it is an important question for your consideration.
1 O.C.G.A. § 10-6-30.
2 O.C.G.A. § 53-7-62.
3 Bloodworth v. Bloodworth, 260 Ga. App. 466, 476, 579 S.E.2d 858, 862 (2003).
4 O.C.G.A. § 53-7-1(a).
5 Mary F. Radford, Georgia Trusts and Trustees, § 9:4 (2023-2024 ed.).
6 O.C.G.A. § 53-12-243.