More than half of American business owners do not want their children to inherit their business, according to a survey by Versta Research for Wells Fargo. The study involved over 1,000 “wealth creators”, defined as U.S. adults aged 50 or older with at least $1 million in investable assets.
Reasons given for this reluctance range from doubts about their children’s ability to successfully run the business, to concerns that a substantial inheritance could discourage their children from pursuing their own financial achievements. An overwhelming majority of the parents (94%) expressed a desire for their children to carve out their own paths instead of following in their footsteps.
The survey found that nine out of ten wealth creators credited their financial success to hard work and determination, while two-thirds emphasized the benefits of a good education. Yet, nearly half of these wealth creators worry about their offspring’s capacity to accumulate wealth.
A considerable number of the surveyed parents provide significant financial support to their adult children. As many as 81% said they would help their children out of financial difficulties. Despite this, nearly half of the parents worry about their children’s ability to build wealth independently.
“More parents are recognizing their children simply are not interested in joining the family business and are not pressuring them to do so. Knowing what your children are interested in and where their strengths lie is key to effective succession planning,” said Michael Liersch, head of Advice & Planning for Wells Fargo Wealth & Investment Management.
The results underline the importance of having open and thoughtful conversations about estate planning and business succession to ensure that everyone in the family is on the same page and to prevent potential disruption to family dynamics.