Got too much... do you employ a legacy strategy?

[RetireeRobert]

If I wait until I die for my kids to get everything, that will be their first big chance with a large wad of money. ...............
So I'm leaning towards giving progressively larger chunks. That way they get practice with smaller amounts before a probably large chunk at inheritance time. And I can be there to help them.......

Shrewd advice.

I am doing something similar with my three kids. They got their first bigger chunks when my DW passed. We had her (and my) IRAs set up so the kids would be the primary beneficiaries for the tIRAs. Since Oregon is a high estate tax state (if not "the" highest for estate tax), that move saved an eventual bundle from going into state coffers. Instead the kids get $1 for every dollar in the tIRA. And I am still here to help them with things like RMD's from inherited IRAs (Pre 1/1/2020).

Fortunately, my son seems to have inherited the "money handling" gene from me, and he is and will be a big help to his sisters.

 

[targatom2019]

I put 20x yearly expenses in fixed income and 56x in 100% equities. The 100% in equities is invested based on my daughter's age(25) until she turns 50 then I will add bonds. She will be making good money after her CRNA school, most likely don't need our money and we don't tell her what she will inherit.

 

[RobLJ]

Pay it Back

Last year's withdrawal was 4.5%, next year's (at today's portfolio level which won't be accurate) will be 4.2%. Those withdrawal rates are before SS, in 3.5 years and 8 years for DW, after which the withdrawal rate will probably be cut by 1/3 to 1/2.
Out of that, now we are contributing 7.5% of withdrawals to support my agedParental unit who is 88 and about 2% to the grandkids' college, which will go up after she passes.

And this year we contributed about 10k towards the Silverado we sold the winemaker and are allowing the yewt programmer to live rent free while he works at a company here and decides whether or not he wants to buy; I've advised him to wait a year or two as long as he can stand living with us. That could be bad advice, but he is contributing most of the savings to his investments and savings, so he'll be OK since he still has most of the earnings from the sale of his house in South Seattle when he was laid off.


The two yewts will get whatever is left over when we croak, but I'd prefer to contribute to needs or wants now and in coming years increase contributions to charity (what is now going to support my mother, for instance) rather than a legacy fund. I understand why others would do differently.The parental unit quit her job to take care for 30 years my twin, who had a debilitating progressive myclonic disease, which killed her retirement strategy; he pretty much needed 24hour care 7 days/week although they did get about 15 hours of help from the state in late years as they were in their 60s and Dad had heart issues and couldn't help as much. So I feel like we are paying her and my twin back (not enough to be sure) and I contribute more towards her emergencies when they arise.

This is not to boast but explain (everyone's circumstances are different); I'm pretty sure we can do a lot more good by spending now rather than later after I croak, but that is us, not necessarily y'all. I suspect a lot of you are doing similar things with your yearly withdrawals.
(Edit: the yewts have asked for nothing after they graduated and very little when they were in college. I don't think what we have given them has made them dependent, but this will vary, very widely, depending on the kid so the concerns expressed above are relevant, depending on the child/adult and their history. I don't have concerns about either of ours, luckily, even the one living with us. Reno is in a bubble so I don't think buying here now is wise, but he might decide to rent soon. We aren't needing the space, so it's not a concern to us, for now. Maybe in 2 years. )

 

[DrRoy]

I'm reluctant to give significant amounts of money to our grown kids. They are responsible adults but free money is a negative influence in anyone's life. There is a reason that "trust fund baby" is a pejorative description. They need the character building that living life on their own resources builds.

I agree with this in principle. The most help we give the kids is interest free car loans, which they do pay back. In fact, we have not shared the extent of our NW with them (2 sons in their early 30's). Their income is very modest. They will need some experience to handle 7 figures of $ (each). How do we manage the conflicting issues?

 

[DawgMan]

As it relates to how/what/when we give/leave the kids $$, DW & I still bang around what we want to do. We will probably adopt a little bit of all of the above. With 4 adult self sufficient kids, 2 married, and 3 grandkids under 3, we have definitely discovered a new expense category "G-Kids" we didn't necessarily think about earlier on. The easy move for us is funding the 529 plans for the G-Kids, but we do battle with the idea of just writing checks to all 4 kids each year. Our #1 priority is to take some the excess and create experiences with the family as opposed to just writing checks, but I suppose we will do a little of both from time to time. This year, and probably for the next few years (until the G-Kids are a little older and ready for Disney), the best trips are the beach, so the big trips will probably wait while the kids spend their time nesting & moving forward in their careers. DW & I discussed maybe gifting each kid $25K at the end of the year with some mommy/daddy preferred gift uses tailored to each kid. Eg. Two of the kids are buying family trucksters and have plans to take on a portion of car debt. For them, our note might say "We would like you to pay off your car note or further fund G-Kids 529". For the unmarried girls, maybe it's "Max out your 401k, save for house". In the end, it's still a gift they can do what they please, so no hard strings, but the thought is we would hopefully continue to perpetuate good money principles as the continue their life journeys.

As it relates to the big gift at the final dirt nap, honestly, at least at this point since there is no real "need", I don't really care whether they have to deal with an RMD issue or not... it's found money as far as I'm concerned, what's there to complain about?!

 

[tsoispf]

Our legacy will largely be the value of the house and cabin, if we still own them when we pass on. Our investments we hope to grow aggressively mainly for charities, large expenses, or any end of life needs. We let our parents know we didn't expect any inheritance and to spend it down. Knowing our kids, we'll mostly be hearing the same story from them.

 

[street]

^ I understand the concern but I think there is an argument for leaning the other way.

If I wait until I die for my kids to get everything, that will be their first big chance with a large wad of money. It's easy for me to imagine that they might not be very wise the first time being placed in that situation. Also, I wouldn't be around to help them with that process.

So I'm leaning towards giving progressively larger chunks. That way they get practice with smaller amounts before a probably large chunk at inheritance time. And I can be there to help them. Getting moderately large chunks of money gifted in your 20's is not exactly something that you can successfully handle via google, youtube, and asking your 20-something year old friends.

There are also the tax considerations that may apply and argue for some gifting depending on the circumstances.

I also feel that each child in any situation, when given large amounts of money are handled different because every person is different. One would blow it all the other would invest it. I do beleive it really depends on the child/person getting the money. I'm not totally against giving money while I'm alive to my son, but why should I, he needs to do it on his own.

 

[target2019]

We've constructed the family legacy account with some rules to head off problems that might develop. For example, free money, mentioned by steveark, can have negative influence. So the legacy will lend money now (and has), but should be paid back over time (and has), with a bit of interest, if possible. That also helps quash the question of "I'd like you to invest in X with me."

It's a slippery slope nonetheless, and I appreciate reading new perspective from folks. Whatever you decide to do with your excess, it's a teachable moment as they say.

BTW, ours is invested 70/30.

 

[SecondCor521]

^ I understand the concern but I think there is an argument for leaning the other way.

If I wait until I die for my kids to get everything, that will be their first big chance with a large wad of money. It's easy for me to imagine that they might not be very wise the first time being placed in that situation. Also, I wouldn't be around to help them with that process.

So I'm leaning towards giving progressively larger chunks. That way they get practice with smaller amounts before a probably large chunk at inheritance time. And I can be there to help them. Getting moderately large chunks of money gifted in your 20's is not exactly something that you can successfully handle via google, youtube, and asking your 20-something year old friends.

There are also the tax considerations that may apply and argue for some gifting depending on the circumstances.

Quoting myself, which is apparently gauche. Whatever.

The other thing that this does is let me adjust my will based on the earlier outcomes. I really doubt it will come to this and it would really be a last resort, but if one of my kids consistently screws up with the early chunks and doesn't seem to want to learn, I could put their share of my estate into a more restrictive trust, or a portion of their share to charity, or something.

 

[SecondCor521]

I agree with this in principle. The most help we give the kids is interest free car loans, which they do pay back. In fact, we have not shared the extent of our NW with them (2 sons in their early 30's). Their income is very modest. They will need some experience to handle 7 figures of $ (each). How do we manage the conflicting issues?

This brings up another thing.

I'm starting to be much more open and exact with my offspring, who are now 26DS, 21DS, and 19DD.

I used to be more general and vague, although I was honest: "I own my car." "I own my house." "I'll pay for your college." "I'm saving for retirement."

With them just out of college and two college sophomores, I'm now more exact: "A mechE makes, depending on multiple factors, $50K out of college." "My internet bill is $65 a month." "My paid off house has a market value of $XXXK." "My net worth is $Y." "Grandpa's net worth is $Z." "College is $W per year." "A used Prius costs about $6K" etc. We also talk about the many factors that affect each of these prices when those might come into play.

It has been very valuable in opening their eyes, especially the two younger ones. They're starting to make life plans and with the information I give them they can probably make better decisions about what they're going to do in the 5-10 years post graduation.

Depending on the numbers, it also I think can take a while for this to sink in. I can see value in that "sinking in" process starting sooner and taking longer. Inheriting a big chunk can be quite a shock, and not everyone is wise enough to take things slowly enough at that point in time.

 

[Nick12]

What a great problem to have!

 

[target2019]

What a great problem to have!

It certainly is! How fortunate.

 

[rkser]

Interesting to read different ways the money gets transferred to the next generation.

We gift about $30k each/year to DS & DD without any tax forms to complete. Both are self sufficient & doing well on their own.

DS is unmarried & DD is married with 2 kids, so her $30k takes the form of gifts to her kids 529 etc.

We think keeping the gifts equal will help keep sibling misgivings away. They both graduated loan free from college & will inherit much much more than we did.

 

[ivinsfan]

Just spent the weekend at the lake with oldest DD..42 and talked about the stresses of the last year with 2 full time jobs and two young kids. She casually mentioned they had their fingers on the eject button as all their numbers looked good for ER.



Of course her Dad is still working at almost 73 so figure that one out!


All joking aside I think we need to buy a new bigger boat for up at the lake! It will be the "family" boat...

 

[bolt]

A few times i've watched children manipulate their own parents deaths in one way or the other in pursuit of their own self-enrichment vs their parents wellfare, wellbeing & life.
I would have testified as such, but there was no plaintiff (iykwim-died).
1) No other way to pragmatically catorgorize it.
2)Exceptionally SAD imo.

Good luck & Best & wishes...

 

[ivinsfan]

A few times i've watched children manipulate their own parents deaths in one way or the other in pursuit of their own self-enrichment vs their parents wellfare, wellbeing & life.
I would have testified as such, but there was no plaintiff (iykwim-died).
1) No other way to pragmatically catorgorize it.
2)Exceptionally SAD imo.

Good luck & Best & wishes...

Excuse me? What is this comment in reference to?

 

[bolt]

A few times i've watched children manipulate their own parents deaths in one way or the other in pursuit of their own self-enrichment vs their parents wellfare, wellbeing & life.
I would have testified as such, but there was no plaintiff (iykwim-died).
1) No other way to pragmatically catorgorize it.
2)Exceptionally SAD imo.
These individuals plans were superceded by family.
It really matters structuring what you can to have freedom.


Good luck & Best & wishes...

 

[RetireeRobert]

A few times i've watched children manipulate their own parents deaths in one way or the other in pursuit of their own self-enrichment vs their parents wellfare, wellbeing & life.
I would have testified as such, but there was no plaintiff (iykwim-died).
1) No other way to pragmatically catorgorize it.
2)Exceptionally SAD imo.
These individuals plans were superceded by family.
It really matters structuring what you can to have freedom.


Good luck & Best & wishes...

Sorry, I still don't get your post either.

 

[bolt]

Sorry, I still don't get your post either.

I know everyone has an excuse but ive a few unfortunately. I'm frequently misunderstood & its my fault.

I have: amongst other things a compromised spinal cord.
https://www.mayoclinic.org/diseases-conditions/aphasia/symptoms-causes/syc-20369518

I'va a medical condition that effects my cognitions articulation varying things sometimes.I try to reread it a few times myself.
Sometimes more than others.

Like now
I post rarely, theres always someone worse off.
Folks posting here seem of same mindset as in the saying.
1000 peoples a cult, 1,000,000,000,000 is a religion.

Good luck & best wishes....

 

[bolt]

Sorry, I still don't get your post either.

I'd been implying I'd seen numerous well planned will/trust/last wishes.death bed paperwork both disrupt & go south after a well laid out plan. Staying current helps immensely.
Try to make sure its adminstrators are funded.
Most people work for monetary incentines one way or the other.

I appreciate your insights and such RRobert, sincerely.
I hope I gramatized it better.
Good luck & Best wishes......

 

[RetireeRobert]

I know everyone has an excuse but ive a few unfortunately. I'm frequently misunderstood & its my fault.

Good luck & best wishes....

Goes to show, sometimes a smile conveys more than words ever can.

 

[gayl]

+1. With pensions and a small SWR we have “made it.” Our AA is 74/26 which, by traditional standards, would fit the kids’ horizons. I don’t see a need for separate AA’s.

Almost same here. I live off my pension and had taken out about 4k a yr in the past to give to IRS & FTB. No longer until required. I leave my brokerage account to the grandkids & my Roth to the kids. Have a few years to decide how to handle RMD from IRA

 

[imnontrad]

I live below my means. Even though I left the workforce 3 years ago, I have nottapped any retirement fund except to do Roth conversions - and I do not anticipate that changing for quite a while.
I have heard that wealth usually lasts 3 generations. the first generation starts it, the second, grows it, and the third blows it.
So I am working on pushing through that with my grandkids (4th gen). I hope to use my money to encourage them to save/invest and maybe even entrepreneurs.