How to make inheritance an incentive

By Richard Davies

Every successful manager in the business world knows that money can help get things done: end-of-year bonuses can cheer the disgruntled, and targeted cash rewards can help direct effort to where it is most needed. Decisions on what to do about money at the end of a successful career are harder. When writing a will, how do you leave children money in a way that encourages them to work hard?

The number of parents facing this dilemma is growing. Take America. After falling between 1930 and 1980, the concentration of wealth at the top has been steadily rising. By 2012 the richest 1.6m families were worth $14m on average, according to research by Emmanuel Saez of the University of California at Berkeley. John Havens and Paul Schervish of Boston College estimate that by 2061 the baby-boom generation will have passed on $59 trillion – the biggest wealth transfer of all time. With the value of global wealth predicted to rise faster than income for the rest of the century, getting inheritance right is becoming more important.