Hello again. In this episode we're going to address the question, "How do I not
ruin my children by just leaving them money? So, I've seen this a lot in my
career where very successful people have millions of dollars maybe and they... I
think, "Well, whatever my kids do with the money I leave behind when I die is their
problem." No, it's yours. It's like throwing a rock in a pond. What you choose to do
with what you leave behind will affect generations, it ripples for generations.
So, I'm going to share with you the secret to empower those that you care
about. So you don't ruin them by just living them money and dumping it in
their lap. By using equal opportunities instead of equal distribution of your
financial assets.
I'm Doug Andrew. And I've been very passionate about what I'm going to share
with you right now. As I use an example of 2 families that will contrast the
difference between just dumping money in your children or grandchildren your
posterity slap versus leaving behind a system that will foster responsibility
and accountability. If you've watched some of our other episodes. And if you
haven't had a chance when you get done. Watch this one where I talk about the
three dimensions of authentic wealth. This A stands for abundance. And we want
to be balanced between the financial, the foundational and intellectual assets. And
what I do to illustrate this is I share the story of the Vanderbilt family
versus the Rothschilds. Now, I don't endorse these families by any means but
they will illustrate my point. Cornelius Vanderbilt known as Commodore was like
the Bill Gates of his time. Richest man on earth when he died in 1877. Amassed a
$105,000,000 fortune, buy them steamships, railroad so forth. The
transportation industry. Now, he wasn't very philanthropic. In fact, he only left
behind a less than 1% of his wealth, a million bucks to Central University,
which became Vanderbilt University. Do you know it took 96 years until 1972
before a hundred and twenty of his descendants gathered together at
Vanderbilt University for their first family reunion. And there wasn't a
millionaire left in the bunch. It was all gone. I mean we call it, "Shirt sleeves to
shirt sleeves in 3 generations!" The third generation... I mean second
generation Vanderbilt they were okay but the third generation, "Oh, they were so
entitled." And by the end of the third generation going to the fourth they were
like, "What? It's all gone. We're not one of them. We have to work." It was unbelievable.
They were rolling up their shirtsleeves again, starting all over. Because he did
not set up a system to require some skin in the game is what I call it, to work.
They've just been sitting there. Collecting like a clam on the bottom of
the ocean, plankton floating to them. This is not
just unique to the Vanderbilts. In Asia, those wealthy families who just dumped
it in their kids lap it's, "Rice paddy back to rice paddy in 3
generations." In Europe it's, "Clogs the clogs in three generations." In fact
Cornelius Vanderbilt's grandson William K. Vanderbilt said, "It has left me with
nothing to hope for. Nothing definite to seek or strive for. Inherited wealth has
been a real handicap to happiness, "Whoa!" Now, I contrast the Vanderbilt family
with the Rothschilds. Now, Mayer Amschel Rothschild, he died in 1812. And he built
a banking dynasty in Europe. And he had several children among them 5 living
sons. And they assigned each of those sons to European capitals. And they would
communicate back and forth with homing pigeons when to buy and when to sell. The
point is when he died in 1812, he did not leave behind an inheritance or an
entitlement. He left behind a system, a repository where he captured the wisdom,
the knowledge, the attitude, the skills and the habits. And he left behind how to
fish instead of dumping fish in their lap. And he had 3 basic rules. Now, I
call this the "Family bank." This is not a chartered bank like down the street. This
is the conceptual bank, a repository for K-A-S-H, KASH. That's an acronym that
stands for knowledge, attitudes, skills and habits. He had 3 basic rules. They
loaned their heirs money and the loans had to be repaid or they went into the
joint ventures. If he needed help with a college education. You had to have good
grades. You have to apply just like any student loan. If you've got approved, you
borrowed and a nominal interest rate. And when you graduated, you paid that loan
back. So that your kids and grandkids would have the same wherewithal. Once
you've graduated, if you wanted to start a business. You could borrow and pay it
back or you went into a joint venture. And you gave the family bank that
percent of that business venture. It wasn't some special favor because you're
a family member. Other than the interest rate might be a little bit better than a
traditional banking institution. But see? This is where when I went to college. My
parents couldn't afford to pay for my college nor my wife. I came from a family
of 6 as did my wife Cherie. And so we didn't expect our parents to do that. I
got scholarships and grants and loans. I worked at Kentucky Fried Chicken 30 hours
a week in college. And my wife worked at a bookstore. We actually had better study
habits than many of our friends whose parents were just sort of shelling it
out. So when we had our 6 children, we didn't want any of them to ever think we
would just pay for their college. We didn't. We gave our children equal
opportunities not equal distribution. What do I mean? If they wanted a semester
abroad in Israel or Egypt or New Zealand, which many of them did. They had to come
in with a solution formulator. And they had to come up with skin in the game.
They had to sell their motorcycle, their car or do something. And if they didn't
have enough resources themselves then they might borrow. But they never asked,
"Mom, dad will you pay for? Can I have?" No, "Would you loan me 15 hundred dollar out of
the family bank? And I will pay it back in three months." And I'd say, "Oh, I take
the pressure off. You need a new car when you get back just pay 300 a month in
5 months. And if you can't earn the money then you can paint or shampoo
carpets or mow lawns. They all directly or indirectly paid for their college
education. And so that's the concept in number 1. Number 2, the knowledge and
experiences those heirs gain had to be shared with other family members
horizontally not just vertically. This wasn't a family secrets, "Parents to kiss
the grandkids." This was aunts, uncles, nieces, nephews
sharing is having more. And so you had to share your wisdom, your bad and good
experiences. So everybody else could learn. And this was put into the family
archive or record. If this were the United States of America this would be
the constitution. These are the rules of governance on how your you're going to
allow your children to have access to the knowledge, attitudes, skills and
habits and the money. So, I'm going to give you an example of how to do this
under equal opportunity. So, again this would be like the constitution.
These are your family rules of governance. And I'm going to give you
example of how we do this in workshops that we do with couples who want to set
up their trust to be under these equal opportunities rather than equal
distribution. Because most estate planning attorneys, once they find out
your net worth. What's the first question they ask you? How many kids have you got?
Because what are they going to start doing? Dividing it up. That's the number 1
rule if you want to destroy, divide and conquer. No, united we stand, divided we
fall. And so, they usually take your assets and put it in a boilerplate trust
document. And then they take your assets and your kids names. and when you die
chunk, chunk, chunk, chunk, gets divided up and dumped in their laps, ruining half of
the kids in this country. And they sit around, "Oh, when do I get my share?" Well,
instead of that, a lot of people change from equal distribution to equal
opportunity. Because I teach them that there's nothing more unequal than the
equal distribution to unequals. And they go, "Say again." There's nothing more
unequal than the equal distribution to unequal. Our Creator does not give equal
distribution of blessings, let's say of health to all of us. Regardless of how
some of us may choose to abuse our bodies. Our Creator gives us equal
opportunities. But he doesn't say, "Oh, even though you've been abusing your body. I'm
going to give you the same health as this person over here who's working out and
eating right and everything like that." No equal opportunities. So, then they want to
change their trust by doing that. So, before I show you that. Let me show you
the third rule. And the family gathered at least once a year to reaffirm its
virtues and intentions. Or they couldn't participate in the perpetual family fund,
what I call the family bank. So, this is the concept where you had to constantly
gather together and agree... At least for the United States of America this would
be the Declaration of Independence. It's a values and vision document, it's a
motto, a slogan, a manifesto I have all of them.
And I have certain laws of abundance that we abide by in our family and
they're posted. And we also have a values and vision document in all 3
dimensions. But it's really understanding here that this false belief pattern that
equal distribution is the fairest way to treat those you care about. No, it's
equal opportunities. But you have to have rules of governance. And so for example
when people come through a workshop. I give them this little worksheet and they
talk as partners about the perpetual cash fund.
Now, remember KASH is knowledge, attitude, skills and habits. And we're talking
about all 3 dimensions. But as they go through, I'm just going to read to you
some of the categories that they want to talk about. How we going to empower our
posterity with business loans or ventures, charitable contributions,
community service, education. Many people say, "Well, for every dollar their
posterity earns towards college. Or in a scholarship they'll match dollar for
dollar up to one Ph.D." Maybe for the purchase of your first home, I have some
that say, "We'll match dollar for dollar up to a $100,000 for the
purchase of your first home. But then they're on their own." But they have to
read my books on how to not use that in an unnecessary down payment, that's
illiquid. That's some of the stipulations some of them choose. But health and
medical, we use proactive things like, "If you want to join a health center or a
gym or hire a nutritionist. I would rather prevent the disease. And so we'll
match dollar for dollar for a membership at a gym or with a personal trainer."
Rather than have to pay for rehab to correct or cure the disease. Whether it's
physical or mental or emotional or what-have-you.
Military service, personal loans, religious service, humanitarian retreats,
family vacations, weddings. I have one client who filled this out. And they
believe in significant honeymoons rather than lavish weddings. And so if they use
it for a significant honeymoon. Then they get $5,000 as a wedding gift but they
cannot use it for a wedding. So, those are called rules of
governance. And when you do that, you are then empowering your children that they
have to have skin in the game. You can have this, you can borrow, you can't have
matching funds, you must pay it back through either money or working. And that
way they have skin in the game. And you will not ruin your children by just
leaving behind a bunch of money and they get this entitlement mindset. I would
recommend that you watch this video if this is resonating with you to
understand how to abolish entitlement mindset. And get a free copy of my book
"Entitlement Abolition" I'll just fire it out to you absolutely free. You just
pay a nominal shipping and handling fee. And you'll understand how to do this
even better. This is to your brighter future because I know you care about
your children and grandchildren. But that doesn't mean you're always bailing them
out and rescuing them. You want to give them a hand up never and hand out