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What are your plans for your children's inheritance?
Old 09-12-2019, 09:49 PM   #1
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What are your plans for your children's inheritance?

Both my spouse and I are healthy and in our late 30, and our child is only 1, so hopefully we're a long way off about this.

But anyone can be hit by a bus, so...

In case of your sudden death, what do you guys plan to leave for your children?

I've read that Bill Gates and Warren Buffett do not intend to leave money for their children and have them make their own way. I definitely understand the argument for this, in terms of the valuable life lessons that the struggle can teach. On the other hand I wouldn't want my daughter to take on too much debt at a young age and struggle for her entire life.

There is always the trust method as well. Some money at age 20, 25, 35, 45, whenever you think they are mature enough to handle it. I think it's hard to say how people would react to sudden wealth in their early 20s. I think some would do very well; they might take the money and go all-in on education or philanthropy or research or entrepreneurship. Others might just go down the hookers and cocaine route. I think it would be tough to judge. Even among older adults, there are countless stories of lottery winners in their 40s and beyond blowing their wealth and committing suicide. Sudden wealth is a tough thing to handle for a lot of people and that scares me enough to think that maybe the "leave nothing" method is the way to go. But it of course goes against my very instinct as a father and provider.

So, what are your plans? Put them on Easy Street, or die with nothing? Or something in the middle?
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Old 09-12-2019, 10:00 PM   #2
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Not so fast my friend....Buffets 3 kids have a 2 Billion dollar trust. They may be going to DQ for ice cream, but they aren't ordering the $5 lunch because funds are tight that month. I believe they also run & and get paid for operating one or more of Warren's charitable arms

My goal is to teach our young adult son how to handle a fraction of Buffet's kids fortune. We've got a long way to go
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Old 09-12-2019, 10:06 PM   #3
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no kids, 1 sister, 2-BIL, 1 nephew, several close friends, a bunch of charities. all are getting a slice. no strings, no conditions, here it is...good luck.
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Old 09-12-2019, 10:33 PM   #4
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My children are grown at 30 and 35. They are established, have a good job, their own home, and their own savings (though I don't know how much).

When the last of us die, they will share 50/50 of what we have left, as we will be giving to charity along the way. If either of us has any longevity, my children will be in their 50s when it happens.

They don't really need the money, and they get along with each other, so I don't think there will be much drama when we pass.

When they were little, we thought about both of us dying in an accident. So, we had a will made, naming two siblings to be legal guardians and also custodians. That obsolete will is still in the safe. I may take it out tomorrow to read it for amusement.
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Old 09-12-2019, 10:45 PM   #5
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Something in the Middle was our plan in our 40's-early 50's, with graduated estate distributions in their late 20's to mid-30's. The kids were born in our early 40's.

DW died in her mid-50's, and I have vacillated between Easy Street and Something in the Middle since. It was easy to be generous in my thinking when I had no other heirs and they were young. Now that I have my own wedding on the horizon and I see the kids are on a good path, I'm thinking more toward Something in the Middle and Die With Nothing. It's clear the kids have a good shot at taking care of themselves, and the fiance could outlive me.

The Buffett and Gates plans don't makes sense in my situation-today there would only be enough money for my kids to live modestly without working. No boats (forget yachts), planes or large houses. Mine could probably work a job they really love and retire comfortably, but they wouldn't be able to do that at 30. Consequently, I don't have reservations about leaving everything to them after ensuring my widow is OK.

Pick your number, run it out with a reasonable return for the kids's ages and see what kind of life that would give them when they have access to the money in X years. If you're comfortable with that, it's probably Somewhere in the Middle.

IME, I don't think you'll find an easy plan, or any approach that will serve you well for a few decades. Be prepared to adjust as your circumstances change and your kids grow.
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Old 09-13-2019, 12:52 AM   #6
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I believe Bill Gates has backed off that original statement. It was naive of him at the time to think that his children could live a normal existence given that he is their father. The security alone to keep them safe probably costs a fortune.
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Old 09-13-2019, 05:50 AM   #7
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Quote:
Originally Posted by bunnybunny View Post
In case of your sudden death, what do you guys plan to leave for your children?
When my wife and I are gone, our two sons get everything.

Quote:
I've read that Bill Gates and Warren Buffett do not intend to leave money for their children and have them make their own way. I definitely understand the argument for this, in terms of the valuable life lessons that the struggle can teach.
The Gates and Buffet children will not have any struggle. At least not in any real sense of the word. They will each inherit more than most people make in a lifetime.

Quote:
So, what are your plans? Put them on Easy Street, or die with nothing? Or something in the middle?
They get everything, whatever that ends up being. It won't put them on easy street - just easier street.
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Old 09-13-2019, 06:16 AM   #8
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I'm 66 and widowed, one son who's happily married with a good job, 3 kids, and a wife who's the daughter I never had. They know that my priorities are, in this order, not to outlive my savings, to help with their kids' college education and to leave them a legacy. DDIL is a SAHM so I'd like to leave them $$ for a comfortable retirement but not at the expense of them taking me in if I become senile and incontinent.

What I struggle with is what they might donate to their church. I'm also a practicing Christian and I give generously, so no objection in principle, but I want to make sure they keep enough to enjoy their retirement. Right now I have a revocable trust which limits what DS gets over time and with my brother as trustee, but I need to get it updated. DH died 3 years ago and while there was a very orderly progression of what happened if I outlived him, I still need to re-examine it. Time to have a discussion with DS and DDIL and decide just how much I want to control "from beyond the grave".
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Old 09-13-2019, 06:36 AM   #9
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So, one of my tenets is to be worth more alive than dead. No sense in giving extra motivation where it isn’t helpful.

We’re doing our best to spend it now and leave little to the children, and I think we’ll accomplish this objective. I give them some now, usually year end gifts, but only in the form of contributions to Roth accounts. Should there be some money left over, the kids will get it, equal shares.
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Old 09-13-2019, 06:49 AM   #10
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Ditto what others have said about Gates and Buffet. They are leaving their kids what anyone would consider a fortune but they are dedicating the bulk of their massive estates to charity. Thus their call for other billionaires to make the 50% pledge (dedicate 50% of your estate to charity). As for us, we are in the same boat as NW-Bound - we give to charity as we see fit and whatever is left when we die goes to the two kids 50/50.

When we were OP's age, we handled the hit by a bus issue by carrying large term insurance policies. Our yardstick was that in the event that one of us died the other should get enough to assure modest FIRE status. In the event that both of us died, the kids should get enough to at least get through college and get a good start on life. As we grew older we rolled back the insurance until it we eventually dropped it entirely.
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Old 09-13-2019, 07:31 AM   #11
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Something in the Middle was our plan in our 40's-early 50's, with graduated estate distributions in their late 20's to mid-30's. The kids were born in our early 40's.

DW died in her mid-50's, and I have vacillated between Easy Street and Something in the Middle since. It was easy to be generous in my thinking when I had no other heirs and they were young. Now that I have my own wedding on the horizon and I see the kids are on a good path, I'm thinking more toward Something in the Middle and Die With Nothing. It's clear the kids have a good shot at taking care of themselves, and the fiance could outlive me.

The Buffett and Gates plans don't makes sense in my situation-today there would only be enough money for my kids to live modestly without working. No boats (forget yachts), planes or large houses. Mine could probably work a job they really love and retire comfortably, but they wouldn't be able to do that at 30. Consequently, I don't have reservations about leaving everything to them after ensuring my widow is OK.

Pick your number, run it out with a reasonable return for the kids's ages and see what kind of life that would give them when they have access to the money in X years. If you're comfortable with that, it's probably Somewhere in the Middle.

IME, I don't think you'll find an easy plan, or any approach that will serve you well for a few decades. Be prepared to adjust as your circumstances change and your kids grow.
Marriage in the fear future? Congratulations to you Is this the girl from HS that you reconnected with? Much Happiness to you both.
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Old 09-13-2019, 07:34 AM   #12
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Marriage in the fear future? Congratulations to you Is this the girl from HS that you reconnected with? Much Happiness to you both.
+1. You’re a good man, FlaGator.
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Old 09-13-2019, 07:42 AM   #13
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They may not want to set their kids up to fail because they wouldn't need to work for or want for anything, but even without an inheritance at all, don't forget that being raised in a billionaire household means you have lifelong advantages when it comes to education, contacts/networks, and influence. Even if they literally left them no money or real property, if their kids are fairly competent they would probably wind up better off than most of us here.

We're not the Buffets or Gateses (?), but we're trying to set up our child to succeed regardless of her inheritance. Of course we've taught her how to LBYM, but we've also started a Roth IRA for her and we will match whatever she makes at her summer job and after school/weekend work. We're also going to make sure she has no student loans. And we'll teach her to plan to retire as if we (her parents) are flat broke, as we are doing.

So, after all that, we won't if we Blow That Dough and don't leave her anything.
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Old 09-13-2019, 09:35 AM   #14
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Whatever is left over is split four ways.
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Old 09-13-2019, 09:42 AM   #15
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We had large life Insurance policies when raising our kids. When we die anything left gets split 5 ways to the kids. My parents spent their money but were never a burden. I am glad that my mom got to travel after my dad died. If we live long enough our money will be gone too.
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Old 09-13-2019, 09:43 AM   #16
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I gave each of my sons $50k each in 2009. I plan on giving them another $100k each in the next year or two. (Used to help them with second home costs.)

Each GC get $10k a year to help with four years of college. After that, it is 50% to charity and 25% each to them at the end.
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Old 09-13-2019, 09:53 AM   #17
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It has always been set up to be split evenly 50/50 to each. Now that they are older, it will go directly to them vs via a guardian when they were under age.
We do give some now also. I don't care how they use it after we are gone, but so far they both are good guardians of their own money, so I think we have taught them well :-)
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Old 09-13-2019, 10:11 AM   #18
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Two daughters.
Split even and no restrictions. No desire to nag from the grave. Hope they spend it all on nice vacations, expensive handbags, and ridicules cars.
However, one girl has a great job and is wealthy in her own right. The other has a learning disability and works hard but makes only a bit more than minimum wage. I'm trying to find a way to stack the deck to her advantage without creating jealousy issues. I may change the will to leave the house to the less fortunate one as the other has no desire to live near here and has her own house. I have it set now that she gets to live in my house until the dog and cat pass away. Kitty hates the wealthy kid so that is a non issue.
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Old 09-13-2019, 10:37 AM   #19
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Split equally, as mentioned by GravitySucks.
Gift now, perhaps to Roth(s) as mentioned by MichaelB.
Pay for some portion of Higher Education (that's us).
Make a will, and include a Personal Property Addendum (if State allows).

We have a brokerage set aside for Chip and Dale, which is about 15% of assets. I doubt it will be needed by us, but just in case it is in our names only, at least for now.
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Old 09-13-2019, 10:44 AM   #20
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We have 2 kids, both 40ish years of age and have their own families. When DW and I are gone, they will get everything that remains 50/50. Hopefully they will both be retired by then and they could "blow that dough". Maybe they could have bumper stickers made that says "WE ARE SPENDING OUR PARENTS INHERITANCE" I have no idea of what their inlaws are leaving, if anything, in their wills.
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