The notion of affluenza came into the public spotlight last year after a teenager in Texas was involved in a drunk driving collision that resulted in the death of several people. One of the witnesses raised the notion of affluenza to explain the teen’s actions. In this context, affluenza was used to show that a person raised in an affluent environment might have a diminished ability to understand the consequences of his or her actions.
Even though the attorney in the affluenza case never used that term in the defense of his client and the court did not take it into account when it made its ruling, the term gained public notoriety. While most reject the notion that affluenza should have a role in the criminal justice process, it is a real phenomena, one to be aware of when you craft an estate plan. Let’s look at why this might be true.
Sudden Wealth, Trust Funds, and Affluenza
The notion that money can lead to happiness is both supported by evidence and problematic at the same time. All the research shows it takes a basic amount of money to have the best chance to live a happy life. It also shows that extra money doesn’t necessarily make a person happy.
We have seen that people who aren’t suited to managing money are at a disadvantage after receiving sudden wealth. Many professional athletes squander their earnings soon after they retire from their chosen sports. The vast majority of lottery winners have squandered their windfalls within five years of winning.
There’s also a well-known phenomenon in financial planning circles that family wealth doesn’t last longer than three generations. A lot of people, such as actor Philip Seymour Hoffman, have worried that by providing their children with all their financial needs, they will raise children who are unhappy or who are unable to have productive, purposeful lives.
Inheritances and Legacy Wealth Plans
If inheriting or receiving a lot of wealth makes someone less likely to be happy or less capable of dealing with financial issues, what does that mean for someone who wants to craft an inheritance plan that will leave his or her loved ones large sums of money? Should you forgo your choices and instead leave your wealth to charities, religious organizations, or someone else?
Not necessarily. Many people confronting the reality of squandered wealth and unhappy lives due to large inheritances choose to craft a legacy wealth plan instead. A legacy wealth plan focuses on more than financial or tax concerns. It is designed to keep your wealth around for as long as possible, while ensuring your loved ones have the chance at a productive, purposeful life. A legacy wealth plan is more complicated than a simple inheritance plan. It is something you should speak to your attorney about if you would like more information.
Since founding Parman & Easterday in 1985, Larry has led over 1,000 free, community-service education programs and helped more than 10,000 Oklahoma families go from putting off their estate plan to getting it done. His goal for every client is the same: to become the person their family calls "the one who took care of everything."
Larry is the author of three books: The Straight Shooter's Guide to Estate Planning; Estate Planning Basics; and Guiding Those Left Behind in Oklahoma. He served as Oklahoma's Secretary of State and Secretary of Commerce, and his firm is the only member of the American Academy of Estate Planning Attorneys in the state.
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