Both of my daughters are still young (at the time of writing this article), 6 and 8 respectively, and their new favorite video game on the IPad is Animal Jam. Animal Jam is a simulation video game where the characters are animals that explore a virtual world. In this world, the animal characters can complete certain tasks and earn rubies. The rubies are a form of money which can be used to purchase upgrades to the characters or even houses (yes, the game involves real estate, crazy!). A character earns one ruby each day and can earn small amounts of rubies for completing special tasks. Of course, you can purchase rubies with real money, and I’ve had to say no to such purchases often, as the game constantly makes offers to the players to purchase rubies when the character in the game can’t afford a particular item.
One night my youngest daughter was playing the game, and she was “given” 5000 rubies, a tremendous sum for purposes of this game. She claims someone gave it to her, but she can’t recall who or why (according to my wife’s internet sleuthing, she thinks it was a virus or some weird game hack my daughter chanced upon while playing). It was all just so matter of fact in my daughter’s mind that she thought nothing of receiving such a large some of “money” in the game and promptly spent it, within an hour! (mind you it takes weeks, sometimes months, of game play to achieve what she did in an hour). She purchased many upgrades to her character and multiple houses (she says she likes houses; probably a future real estate investor? ;-). Needless to say, my daughter is super happy with her game now. Even though she is ruby-less, she loves showing off her many upgrades and her houses (much to my older daughter’s chagrin!).
While my wife and I were lying in bed discussing the “incident,” we couldn’t help but laugh about how quickly my daughter squandered her good fortune (even though she was now house rich but cash poor), and I jokingly commented that she would need a really good spendthrift trust when she was older.
Reflecting back on the “incident,” it was a great “eye opener” as to how my daughter perceives money. To a child money is good for buying stuff you want when you want it. This is obvious and not unexpected. However, what is she going to be like as an adult? This is something that needs attention now while she is a child, but it’s also something all parents should consider when planning their estate and contemplating how to hand down their wealth upon their passing. Certainly, respecting and managing money is something I need to teach my daughters, but if I pass before I’ve given them my knowledge, or they are just not good with money even after my counseling, then I will need to ensure that when they do receive an inheritance it’s managed for them to compensate for their present attitude and propensities towards money.
As an asset protection and estate planning counselor, I recognize that how my clients’ children handle money is an important element in planning an estate. This is an issue I raise during all my estate plan sessions, and I encourage my clients to be honest and frank about their children’s relationship with money. My kids are always surprising me with their abilities and creativity, but if I know they’re not good with money, then it’s best to structure my affairs so I can help them with this challenge even after my passing. I encourage my clients to do the same, and I look forward to helping you create your own estate plan or update an existing plan to take into account this important issue.
