In an interview with yesterday’s Mail, world famous rock star Sting revealed that his children will not be inheriting his £180m fortune, as he doesn’t want to leave them ‘trust funds that are albatrosses around their necks.’ This echoes a number of celebrities who fear that inherited wealth will ruin their children’s lives. Sting seems to think that spending the cash as it comes in is the only way to avoid the trust funds: ‘What comes in, we spend, and there isn’t much left.’
However, if Sting is truly looking to what is best for his six children, he is much better off following three simple guidelines:
1. Don’t spend it all
Research by the Money Advice Service shows that parents’ financial behaviour is a hugely important factor for young people’s ability to manage their money. Being financially capable, independent of your income, means being able to make ends meet, plan ahead and make informed decisions—all of which helps you achieve a feeling of control and increases your well-being. If Sting teaches his children that you can spend millions every month and that you should not save for the future, they are going to have serious difficulties managing their own money once they are not supported by their rock star dad.
2. Give it away
Many of the philanthropists we work with are, like Sting, worried that their wealth will have a negative impact on their children’s lives by taking away the motivation to earn their own way. These people, however, show that there is another way to save your children’s future than to spend all your money on yourself—they set up a charitable foundation or trust. Some wealthy people, including Bill and Melinda Gates, even pledge to spend a certain proportion of their net worth on charitable causes either during their lifetime or in their will. All of the philanthropists we work with tell us about the joy of giving—and the satisfaction of knowing that you have an impact on people’s lives.
3. Make it a family business
Many foundations are run by families. This can prove a challenge sometimes but can also be the glue that holds a family together, as we talked about last week in this space. As the founding donor it gives you the opportunity to immerse yourself in common areas of interest with your children, and to have an important, mutual project with them—even as they lead their own lives and you don’t see them all the time. We recently worked with a family who said that one of their main reasons for giving was to teach their children the values of altruism and empathy—and to get the chance to talk to them about how people have very different opportunities in life. I don’t know about Sting, but I think that sounds like a pretty good legacy to leave your children.
Sting and his wife Trudie Styler do some charitable giving: the couple founded the Rainforest Foundation in 1989. This grant-making foundation has an annual income of about £1.9 million, to which Sting and Trudie Styler contributes an unknown amount (however no more than £156,000 in 2012). Neither is part of the foundation’s governance. Sting has contributed to a number of other campaigns and charities. See the list here.