Teaching Stewardship, Not Entitlement: How to prepare children for inheritance

When parents with more than $3 million share their biggest fear about passing down wealth, it’s rarely taxes or investment risk. It’s this: “I don’t want my kids or grandkids to be spoiled by this money.” They want to prepare their children for a healthy, beneficial inheritance.

I hear that concern constantly, especially from parents and grandparents who spent their lives working, saving, and sacrificing to build something meaningful. They want to leave their family secure, but not softened. Supported, but not dependent. They want their kids to succeed because of who they are, not because of inherited wealth. And they’re right to be thoughtful. Money can do strange things within a family. I’ve seen inheritances motivate responsibility, generosity, and independence, and I’ve watched wealth lead to resentment, poor choices, or family division—usually when expectations were never discussed.

In our Rock-Solid Family Wealth Plan, four Cornerstones are especially important when preparing heirs for a healthy, productive financial future:

• Communication – sharing your expectations and wishes for your wealth
• Values – what your wealth stands for
• Governance – the structures that protect your intentions
• Succession – preparing the next generation to step into responsibility

When families align on these four areas, stewardship becomes the natural outcome, and entitlement becomes far less of a concern.

Why inheritance goes wrong—and how to prevent it

Most families assume that the presence of wealth is what creates entitlement. In reality, the problem is the absence of three things:

1. Context — understanding how and why the wealth was built
2. Preparation— knowledge and experience to manage wealth in a healthy way
3. Structure — tools that support good decisions and prevent harmful ones

When any of those are missing, even a responsible adult can drift. I’ve watched inheritances become what I call “nuclear bomb wealth.” When large sums arrive with no roadmap, they can detonate a person’s work ethic, motivation, or decision-making. Not intentionally—but very predictably. One family in particular comes to mind. The father—let’s call him Richard—was a self-made man who spent his entire adult life working hard, saving diligently, and investing wisely. His children knew he was worth about $8 million but had no context about how he built that wealth or what it meant to him. When Richard passed, he left a sizable inheritance but no governance and no instructions beyond the legal minimum. He never prepared his children for the responsibility of his wealth.

The results were heartbreaking. Richard’s daughter had quietly struggled with addiction for years. The inheritance she received became fuel for her illness. Without any safeguards or trust provisions in place, she burned through the money quickly, and she spent years in and out of hospitals and rehabilitation centers. Richard’s son took a different path. Convinced he could “grow the money,” he poured his inheritance into speculative investments and gambling, hoping he could turn his father’s life-changing gift into an even bigger windfall. Instead, he lost nearly everything. He’s spent the last decade bouncing around low-wage jobs just trying to survive. And we’re not talking about teenagers here. Richard’s children were in their 40s at the time of his passing.

Both of Richard’s children inherited substantial wealth, but neither inherited the guidance to handle it. That’s the real risk to your family and your legacy.

4 Cornerstones that encourage stewardship and prevent entitlement

Communication: Giving context to your wealth

Your wealth didn’t show up by accident. It came from decades of discipline, sacrifice, and responsible decisions. When your children understand that, they see the inheritance differently. Your money becomes part of a story, not a windfall.

Sharing the story of how you built your wealth does three important things. First, it grounds your children in the reality that this money wasn’t luck—it was earned. Second, it sets the expectation that hard work, independence, and responsibility still matter even when resources are available. And third, it reframes inheritance as part of a larger legacy, not a lottery ticket.

When I encourage families to talk about money, this is what I mean. Not account balances or investment strategies, but meaning. How did you make decisions? What values guided you? What mattered most at each stage of your life?

Values: Teaching heirs what your wealth is meant to support

What matters most to you? Why did you make the decisions you made? What is your vision for your family’s future? Your values—whether that’s education, financial responsibility, community involvement, independence, or simply living within your means—are the foundation your heirs will stand on long after you’re gone.

Passing your values on to the next generation can be as simple as living them openly and speaking them out loud. When your kids understand what you value, they are better equipped to make decisions without you. And once you align your wealth with your values, you may find that making fulfilling decisions about your own life becomes easier, too.

Governance: Structures that encourage responsibility

Once your goals and expectations are clear, you can reinforce them with thoughtful structures that protect your heirs from missteps and protect your wealth from avoidable risk.

Families often lean on tools such as incentive trusts, age-based distributions, professional trustees, or co-trustees who can help guide decision-making. These structures don’t replace communication, and they don’t solve strained relationships, but they create a framework that prevents misunderstandings and limits the chances that an inheritance will cause harm.

One client I worked with designed a trust that paid his son an amount equal to whatever he earned on his own that year. If his son earned $60,000, the trust matched it. If he earned nothing, he received nothing. It wasn’t punitive—it was supportive. His goal was to encourage consistent effort, financial independence, and long-term stability for his child. The trust became a quiet partner in his son’s success rather than a shortcut around hard work.

This is governance in action: a structure that reinforces your values and removes ambiguity about your intentions. It gives your heirs guidance even when you’re not there to provide it directly.

Succession: Preparing the next generation before they inherit

Succession planning is about preparing the next generation to handle responsibility long before any money changes hands. Succession planning can be simple, but many adult children  still have no idea what their parents’ estate looks like or what role they might be expected to play in managing it. When heirs are unprepared, they find themselves making decisions emotionally and often without the information they need to succeed. They tend to spend wastefully or, sometimes, not at all.

Preparing your children for succession can be as easy as including them in your life. Explain how you evaluate financial decisions or major purchases. Talk about why you support certain charities. Share what you hope the inheritance will accomplish for the family—not just in dollars, but in opportunities, security, and legacy. This gives your heirs context and confidence long before they inherit, so they’re ready to be good stewards of your family’s legacy.

Touchstones: The questions that turn beliefs into behavior

Even the clearest values can get lost in day-to-day decisions. That’s where Touchstones come in. Touchstones are simple questions your family can use to test choices against shared values, for example:

• Am I helping or am I removing opportunities to grow?
• Would this strengthen our family long-term?
• Is this consistent with how we want to show up in our community?
• Does this choice reflect the work ethic that built this wealth?

Families who adopt Touchstones pass down more than money—they pass down a way of thinking. Stewardship becomes intuitive because heirs have a repeatable process for aligning decisions with values, even through major upheavals.

Before the Money Moves: How to know if your children are ready for inheritance

One of the most helpful things you can do to protect your children and your legacy is simply to evaluate whether they’re actually prepared to manage significant wealth. Most parents skip this part, often because it feels uncomfortable to judge. But I’ve seen inheritances undone in five years because the recipient treated the money like regular income instead of capital. Readiness isn’t about character. It’s about skill and behavior. Ask yourself:

• Do they budget or track their spending?
• Do they save regularly when they earn?
• How do they handle stress—by spending or problem-solving?
• Do they understand the basics of taxes, investing, risk, and compounding?
• Have they ever managed money beyond their own paycheck?
• Do they struggle with addiction or mental health issues?

Remember: the goal isn’t to criticize. It’s to understand where your kids are now so you can build a plan that supports them. Just because someone is old enough to be President of the United States doesn’t mean they’re prepared for a lump sum inheritance – readiness matters more than age.

Inheritance incentives that encourage responsibility – not dependency

Once you understand your heirs’ readiness, you can design your plan to reinforce responsibility, stability, and maturity. Not through control or micromanagement, but through guardrails that promote growth and independence.

1. Incentive-based trusts done right

Many people think of incentive trusts as restrictive or punitive. The problem isn’t the tool—it’s the design. When done well, incentive trusts support:

• Continued employment
• Education and skill-building
• Consistent saving
• Starting a business
• Charitable involvement
• Milestones like buying a home, raising children, or retirement planning

The key is flexibility. Incentive trusts should encourage your children to make good choices, not coerce them. A trust that feels like a time clock or a checklist often backfires, but a trust that rewards meaningful growth can make all the difference for your children and grandchildren.

2. Staged or “airlock” inheritances

Distributing assets gradually is one of the most powerful ways to prevent the “nuclear bomb” effect of sudden wealth. Staged distributions can allow heirs to practice managing their wealth before inheriting your full portfolio. It’s common to design this type of staged inheritance around specific life phases, especially when children or grandchildren will inherit at an early age.

3. Governance structures

This is where wealth planning becomes legacy planning. To create continuity and consensus, some families create structures around decision making that include some or all of the following:

• Annual family meetings
• Shared philanthropic committees
• Family “boards” where each adult child holds a role
• Rotating leadership for decision-making

The role you play: modeling stewardship across generations

Despite popular belief, children aren’t spoiled by trust funds. Entitled “trust fund kids” are often born from receiving wealth without the wisdom of their elders attached to it. So, if you want your heirs to become good stewards of your wealth, let them see how you live out your values. Share the story behind your wealth. Share your early mistakes. Share what you hope for them.

No tool or trust can replace the influence you have as a parent and grandparent. Grandchildren, especially, learn by watching how you conduct yourself today. How you talk about work, how you handle successes and failures, what you prioritize in life, how you give back, and more. If you want to instill your values in the next generation, make sure they see you living them every day.

How to prepare your children for inheritance? Start building a family culture of stewardship now.

Stewardship is learned through context, structure, and preparation. If you want to prepare your children to handle your inheritance tomorrow, start by modeling values, shaping habits, and sharing expectations today – no matter how old your children are or how close you are to passing down your estate.

When you share the story behind your wealth, put supportive structures in place, and involve your children in meaningful ways long before they inherit, you create something far more durable than a financial plan. You build a family culture that takes responsibility, respects effort, and treats wealth as a tool instead of a free ride.

If you’re unsure where to begin, start small: share one story, set one expectation, or outline one hope you have for the future. Those simple steps often open the door to the bigger conversations your family has been quietly waiting for.

Frequently asked questions

1. How do I teach my children to be responsible with an inheritance?

Start with open, ongoing conversations about the values behind your wealth—discipline, work ethic, financial responsibility, and long-term thinking. Share how you earned and saved your money, involve them in age-appropriate financial decisions, and clearly explain what you hope the inheritance will support. Many families also use incentive-based trusts, matching provisions, or staged inheritances to add structure to their values and encourage good habits.

2. What’s the best way to structure an inheritance so it doesn’t become a “lottery win”?

The most effective way to keep your wealth from landing like a Powerball jackpot is a combination of governance and guardrails. This often includes:

• A revocable or irrevocable trust with clear purpose
• Age-based or milestone-based distributions
• Incentive provisions (employment, education, saving)
• A professional or co-trustee who provides oversight

These structures introduce pacing and accountability, reducing the risk that a sudden lump sum will lead to poor decisions.

3. How do I know if my children are actually ready to manage wealth?

Look for practical indicators: Do they budget? Save consistently? Handle debt responsibly? Manage stress without overspending? Understand basic investment and tax concepts? You can “test readiness” by giving them a small financial responsibility—such as managing a donor-advised fund grant or a portion of a trust distribution—and observing how they handle it.

4. What should I include in my estate plan if I’m concerned about my child’s judgment or stability?

Consider protections that allow you to support your child without giving them full, immediate control. These might include:

• A discretionary trust with a professional trustee
• Limitations on withdrawals
• Guardrails for heirs facing addiction, instability, or health concerns
• Provisions that allow trustees to pause or adjust distributions

These tools preserve your child’s long-term security while preventing their inheritance from enabling harmful behavior.

5. How can I communicate my intentions so my kids don’t misunderstand or argue about inheritance later?

Share your values and expectations before wealth transfers. This doesn’t require you to share account balances—just meaning and purpose. Explain what you hope your wealth will accomplish, how you expect decisions to be made, and why your estate plan is structured the way it is. Many families find it helpful to hold a simple family meeting or use a “family letter of intent” to clarify their wishes in writing.

Strengthen Your Family’s Approach to Wealth

Ready to start building your own Rock-Solid Family Wealth Plan? We created a legacy planning worksheet just for you! Start building a strong foundation with the 8 universal Cornerstones of family wealth and turn your values into unique family Touchstones with this straightforward guide.

Some of the names and details in this article have been modified to protect the privacy of the subjects.