Money can make you happy, but it can also breed mistrust and conflict, according to new research by Barclays Wealth, which showed that more than one-third of the UK's rich do not trust the next generation to protect their inheritance.
As many as 40% of UK high net worth individuals (HNWIs) surveyed by Barclays said that they do not believe that their children are adequately prepared to take on the their wealth, with 37% also saying that they had experienced family conflict over money. Disinheritance has also become a trend, the research shows, with 13% of individuals with more than £10m in assets having cut family out of their wills. That number is lower - 5% - amongst HNWIs with between £1m and £2m in assets.
"A lot of it is concern about how the money is going to be spent," Catherine Grum, a director in Barclay's wealth advisory division, said. A lot of parents worry about "how to protect their children for themselves," she explained, citing concerns from a former client that his son would immediately buy a fast car and kill himself in a road accident.
However, there is a correlation between wealth and happiness, the report showed. There is a "steady increasing relationship that does not level off" between accumulating money and being happy, but those who have earned their wealth are happier than those have inherited it, Barclays' survey said.
The way that money is spent is also dependent on how it is passed down, according to Grum. HNWIs who inherit old money are liable to see themselves as custodians of that wealth, whereas those who have made it themselves are more likely to plan for retirement, rather than succession.
Many wealthy people struggle to balance the desire to pass on their wealth to their children with concerns about engendering in them a sense of entitlement, the report said. It is a sense of injustice over inheritance that often sparks conflict, particularly after the death of a family patriarch or matriarch, according to the survey. The incidence of conflict over wealth has gone up with the divorce rate, Grum said.
While there have always been disputes over inheritance and wealth, the proliferation of media stories on the subject have placed it firmly in the public consciousness. Beyond that, "the general demographics" have increased the risk, according to Sue Medder, a partner at the law firm Withers LLP.
"The rise of different and diverse family groupings… including second and third wives and children from different marriages, and cohabitation" have created more reasons for conflict to emerge, she said.
Normally called in once things have come to a head, Medder, an expert in contentious trusts and succession issues, says that she is increasingly becoming involved early on in a family's wealth planning.
A lack of communication and frankness around wealth and inheritance is at the core of a lot of conflicts, Medder added. "Money and the passing of wealth has always been a taboo subject," she said. "English people don't talk about money."