I think I have your attention. And that’s good because passing on wealth to your children is an extremely important issue that business founders should start thinking about sooner rather than later. It’s certainly a concern that I’ve been grappling with as my children graduate from college.

And after sitting through 300 meetings over a span of 19 years, I can confidently say that the number one question on the minds of most of our members is: How do I support my children without spoiling them or destroying their ambition?

Many members are willing to admit that they might not have been as present for their children as they would have liked when their children were growing up, but now they’re eager to do the right thing for their kids. What percentage of one’s wealth should they leave them, they ask, and at what age? Should it be left equally to each child? Or is there another more equitable basis on which the wealth might be distributed?

Love comes in many forms, and among a good deal of wealthy people I know, that form of love is tough love. Some people I know will insist on leaving only a small portion of their wealth to their children or delaying the process until after their own deaths, when their children might already be middle-aged or older. The motivation is all too frequently to toughen up the kids by forcing them to be successful on their own because “they’ve already received so many advantages from me” or to give them the experience of making it on their own, “just like I did.”

Of course, their kids cannot replicate the parent’s experience because they’ve already grown up in a wealthy family, or at least one in which their parent’s success likely far outstripped the levels of success the parent grew up with. Nor does this strategy take into account that leaving children less after raising them with more can be like pulling the rug out from under them at a critical time in their lives.

My own conclusion is that any will should generally treat children equally because an inheritance that is unequally shared has the potential to leave deep emotional scars in the children who inherit less, unless there are truly extenuating circumstances. I am not talking about children who have medical or developmental issues, which might require special trusts after a parent dies, though if the wealth is large enough, an equal share could still cover that kind of care. I am referring to situations such as the following:

• A family with a deep belief in public service creates a trust that provides additional support to children who work for the government, or as teachers, or in some other form of public service.
• A family with a farm that has been in the family for generations makes special accommodations to support those children who choose to keep it running.
• A family eager to encourage future generations to become members of the clergy provides additional financial support to those who choose that path.
• When one child goes bankrupt and is unable to fully provide for his or her own children while their other child is wildly successful, parents set up special trusts for the children of the struggling child.

There are endless variations of reasons to treat children equitably rather than equally, but I’ve learned that such approaches succeed (meaning that the children who receive less feel no less loved or appreciated) only if the parents make their case with clarity, well in advance, and base their decision on core values that have sustained the family over a long period of time.

We once did some role modeling in one of my groups featuring Betty, a 55-year old schoolteacher, and her 52-year-old sister, Susie, a successful investment banker, talking about their 49-year-old wastrel of a brother, Howard. The conversation begins when Susie the banker asks Betty the teacher if she has talked to their 90-year-old father about his will. Shocked, the teacher shoots back: “Susie, you are wealthy beyond belief. Were you expecting to get part of Pop’s money too?” That ticks off Susie, who mounts her own offensive: “For 30 years, you’ve come home from a stress-free school at three every afternoon. You’ve never worked a Saturday or Sunday in your life. I don’t remember you hopping on any red-eye flights to make an important morning meeting in Los Angeles, nor, frankly, have I ever heard that your job was at risk. I have earned every penny I have, and I don’t know why you wouldn’t think I was entitled to one-third of Pop’s money, just like you. And I’ll be damned if Howard is rewarded in any special way for being a lazy bum.” And we are off and running . . . toward years of family strife, expensive lawsuits, and psychotherapy.

Then there are the complications of your children’s lives after you’ve put the estate plan in place: the daughter with the big job on Wall Street at the time you drafted the will loses her job during the recession following your death; your son might have more children to educate than your daughter; one of your children or grandchildren could get ill or disabled. What seems fair now may not be truly equitable later.

Many members have set up trusts for the benefit of their children that will last well into the children’s forties, fifties, or even longer. The downside is that the children will spend much of their adult lives lobbying or negotiating with third parties (some might say “as supplicants”) about many different aspects of what is fundamentally their own wealth. I know I would resent that. Why would I expect my kids not to?

A relative has come up with an alternative approach that got me thinking: He intends to leave as many assets as possible directly to his children (rather than through trusts for the benefit of his children), who, luckily, are already in their late twenties and giving him a pretty clear sense of their trajectories in life. His objective is to empower his children to manage those assets responsibly as owners rather than becoming dependent on advisors and trustees.

This strategy is not without its risks. Direct ownership may subject those assets to be deemed common property in a divorce (potentially protected by a prenuptial agreement, bringing its own set of issues), or put them at risk in a bankruptcy or lawsuit of one type or another (although those assets could be placed in trusts controlled in whole or in part by the beneficiaries themselves). Nevertheless, it has the appeal of sidestepping the risk that the very wealth that was supposed to empower the children can end up creating a lifetime of dependency.

Not surprisingly, wealth managers see a promising market in helping families, as one put it, “manage the impact of their wealth.” Firms have set up new departments, wealth-dynamics coaches have been hired, classes are offered to help teenagers gain an understanding of finance and investing, psychologists are deployed, and, of course, hefty annual fees are charged. But for any advice to be useful, the investor must be clear about his mission.

Recently, I was at a meeting where a prospect was being considered for membership. He told us that one of his investments was about to yield a huge payday, and he was pondering all the issues his additional wealth was likely to create. As he talked about what his kids were up to, I asked whether he had considered including his children in the investment itself, when it was made only a few years back, so that if it was successful they would have earned the profits directly, thereby avoiding the estate tax on those profits. More broadly, I wanted to know how much he was thinking about leaving to his children. He replied: “I’m not planning on giving them anything. . .” Just as I was trying not to overreact to one more lecture on tough love, he surprised me by adding, “but I am prepared to invest everything in them.”

For me, it was a wow moment. In one simple sentence this successful entrepreneur had crystallized an issue that I had been thinking about for years. He had suddenly changed the paradigm from giving your assets to your kids to investing in their future. Investing implies a partnership and a purpose. It endows the assets that you turn over to them with the expectation of a return, whether emotional, physical, or financial. Suddenly, I saw graduate school costs as investments in the future rather than expenses. I had a new filter for evaluating potential business ventures that I might fund (a yoga studio, a company), or even certain lifestyle enhancements, such as a new condominium.

A recent conversation with some extremely successful friends came to mind. One shared his pride in the fact that his kids were all out of college and more or less supporting themselves, with some working in the nonprofit world and living modestly. Finally, they were “off the family dole.” Fair enough, but beginning at age 35 (or sooner, if the parents die), the children will each begin to inherit millions of dollars and may have little or no experience managing those resources and thinking about how best to use and invest them.

The second friend had a son who was grappling with what to do during an upcoming gap year created by a prestigious environmental internship that would only begin a year after he completed an environmental degree. The son was wrestling with what he should do in the meantime—work in a top consulting firm (where he might be working for the polluters) or volunteer at a world-class environmental nonprofit? The later might allow for four to six months to travel around the globe, which would give the future environmental consultant direct experience and unique insight into some of the issues he might be working on in future years, connecting him in a visceral way to his chosen path.

Having favored teaching his kids about being responsible stewards of their wealth, the second father had already transferred significant assets to his children. He had encouraged his son to use the benchmark of what would most enhance the trajectory of his career in the long term rather than being self-sufficient during the upcoming gap year.

For first-generation wealth creators who have little familiarity with inherited wealth, it is easier to fall back on the important and time-tested middle-class values that were the foundation of their own success: good work habits, personal discipline, and independence. No matter how many generations of wealth are in a family, parents should be fostering these values in their children. But the reality is that inherited wealth will burden children in relatively unique ways.

The goal should be to equip and train kids to understand the meaning of wealth and how to prudently manage it to allow for a productive and purposeful life, rather than letting it become a distraction or, worse, a force for self-destruction. It’s no easy task. But grappling early on with the tensions created by these somewhat competing values and being transparent with your children about your choices can save you years of heartache.

Don’t give your kids anything, but be willing to invest everything in them. See how that fits after trying it on for a while.