Why you might want to disinherit your kids

[googily]

It is a source of great pride to my father thatn even given his decent cushion in his retirement, that both of his kids are better off than he is, and don't "need" his money.

 

[Music Lover]

I was all proud thinking we would leave him a 5 million dollar plus estate(todays value)Till a few months ago he said something about wanting to retire in 1 or 2 years with 6 million in the bank. He wanted my thought on it. After the initial shock wore off I told him I thought 7 million was more secure. He said "OK a cushion is not a bad idea, Ill stay a little longer".

So, you don't think your son can live off $6 million??

 

[Blue Collar Guy]

So, you don't think your son can live off $6 million??

I didnt know what to say,I was in total shock. When I look at my son I see an 8 year year old boy that I took for father and son haircuts. We had the time of our lives playing with toy trains in the apt at Christmas time. Hearing my boy talking about the word millions and retirement at the age of thirty something threw me for a loop. Guess he is a grown man now(but in my minds eye he will always be my little boy). Whether or not anyone can live off of 6 million is the topic for another thread.

 

[akck]

It's our intention to leave our kids an inheritance, even though they've said we should spend it all. Yes, we know what problems an inheritance can cause (DW and sister no longer talk). While an inheritance was never part of our retirement plan, control and money can bring out the worst in some. All we can do is hope we raised our kids well enough that an inheritance doesn't come between them.

 

[Danmar]

I can speak from some experience. I inherited a significant amount of wealth, but have always had my own goals and followed them through. Dad was a blue collar guy who worked hard and built a very successful construction company that did work all over the world. Parents instilled that there would be no free ride. I knew we had money growing up, but parents always insisted that we find our own way and work for what we wanted. When they passed, the inheritance gave me the opportunity to ER, but I was already doing very well, and happy in my career (architect). Taking ER at a relatively early age (52) was still a difficult choice, as I always felt I should be working. The wealth itself is not the single factor in determining how kids manage it - it's the way they were raised.

Good insight. I totally agree that it's how the kids are raised and perhaps what kind of personality they have. By the time most parents pass away, they have a very good idea as to how their kids will manage any inheritance. Obviously, they can act accordingly.

In my case I have no concern about how my daughter will manage it.

 

[Sunset]

.....
And Buffet has already generously funded his kids' respective charitable foundations, which provide secure, lifetime employment for them (& likely their descendants.)

So you think it's great that he has told his kids they have to WORK I'm glad my parents didn't give me a job obligation. Note his kids IF they get paid for running the foundation probably don't get paid when they quit.
Warren has already given over $27 Billion to charities over the past 10 years.
Since he currently is worth $77 Billion, that amounts to 35% of his current wealth,

Anyone who has publicly given more than 35% of their highest wealth amount in the last 10 years, over a 10 year span can feel free to not be a hypocrite.

 

[GravitySucks]

Some folks on ER.org seem to have elevated doing nothing to an art form, and might disagree.

I resemble this remark!

 

[Dancfo]

Every situation is different. I'm sure there are plenty of people that spend their inheritances responsibly. However, in the 30 plus years that I've working in the trust business, I can tell you there are also plenty of people that would not spend their inheritance responsibly, and a lot of instances where it has caused considerable family discord. And, just because someone is 50 years old, doesn't mean they have the ability to spend wisely.

If you wish to leave $5,000,000 of your hard-earned money to your children, and don't care what they do with it or how it may affect them, then it doesn't matter much, does it? If you do care, then maybe consider a different plan. And for heaven's sake, as the author says, don't put family members in-between other family member's money (that they think is "theirs") and the other family members. Disaster waiting to happen.

 

[Blue Collar Guy]

Every situation is different. I'm sure there are plenty of people that spend their inheritances responsibly. However, in the 30 plus years that I've working in the trust business, I can tell you there are also plenty of people that would not spend their inheritance responsibly, and a lot of instances where it has caused considerable family discord. And, just because someone is 50 years old, doesn't mean they have the ability to spend wisely.

If you wish to leave $5,000,000 of your hard-earned money to your children, and don't care what they do with it or how it may affect them, then it doesn't matter much, does it? If you do care, then maybe consider a different plan. And for heaven's sake, as the author says, don't put family members in-between other family member's money (that they think is "theirs") and the other family members. Disaster waiting to happen.

+1, 30 years in the business,seems like great credentials for me

 

[candrew]

I've heard often that it's not wise to try to manage things from the grave
DD's favorite saying when it came to the inheritance subject

but . . .I really never felt my parents owed me anything after I turned 18. If they'd given it all to my sis, that would have been okay. It was their money.

+1 All that parents "owe" their kids is a start in life and a decent upbringing.

 

[Tadpole]

I don't have any children but, if I did, I don't think I would feel any different. I don't care what is done with my money after I can't even know what happened to what was once my money.

 

[candrew]

One downside of a large inheritance - as we see with athletes, stare, lottery winners, and others that suddenly receive large amounts of cash, if they don't know how to manage money and are not financially disciplined, that money may not help them at all.

+1

Keith Kellogg - founder of the cereal empire - expressed concern about inherited, unearned wealth by stating that he wanted his sons to develop into "conscientious and truthful young men".

There is something to be said for merit and the manner in which it builds character.

 

[Al in Ohio]

There's no reason it can't be done this way.

This is true. My guess is that some heirs spend their lives figuring out how to get around the limitations of the trust, and spend lots of money on advisors doing so.



+1



On this last point DM and I don't agree on how to dispose of her assets. My view is those that need help should get it, she has always felt an even split is best, regardless of need. It's her money, so her wishes will be respected. In the case of my family, though, I think helping my children while we are all still alive is a better approach.



One downside of a large inheritance - as we see with athletes, stare, lottery winners, and others that suddenly receive large amounts of cash, if they don't know how to manage money and are not financially disciplined, that money may not help them at all.

I could never consider anything other than an even split myself regardless of circumstance. My parents make it clear they would not either. I cannot believe anything less would be fair. Why punish the wise.

 

[MarieIG]

I will not disinherit her because often in our society people equate money with love, and I do not want her to think that for some unknown reason I withdrew my love for her. That would be devastating.[/QUOTE]

There is this. I would have been heart broken had my parents done that to me. (It's been six years now. I didn't touch the money at all except to spend a small life insurance policy to help fund sons' education, and a wedding gift to one of my sons from their grandparents.) It will help me retire a few years earlier. I have no desire to disinherit my children.

 

[jollystomper]

Right now we are fortunate that our kids are more concerned with us staying alive that with an inheritance .

We will leave some to charity but the majority of whatever we have left we will leave to them. I really do not care what they do with whatever that is. It feels creepy trying to control things from the grave.

 

[bclover]

If you don't leave your kids any money as an inheritance ( "we don't plan on leaving them anything"), how will you "we do plan on helping them throughout their lives" ?

They went to college debt free. one is going to law school, no loans. We will gift them with down payments for their house. If they have children, they will go to college debt free.

 

[Cayman]

This is an imbecilic article. If our own children can't make better use of a bequest than some charity we have real problems.

Also, I would feel like a fraud if I said to my kids, "I will want and need your help as I get old and perhaps sick. But as to your needs, handle them yourselves you lazy good for nothings!"

I don't think so.


Ha

+1

We plan to leave our child whatever is left. If she continues to demonstrate a good work ethic and spends her earnings thoughtfully, she'll inheirit it lump sum. If anything comes up to indicate her inheiritance would be best parceled out, we'll arrange a trust or something similar. There is no other person or entity we'd rather entrust those funds to.

Regarding donations to charities --- if you care whether the funds you donate are spent efficiently and effectively, you may want to look hard at how your donated funds will be spent. I've worked in higher ed and the NP sector for very respected institutions and can't believe the wasteful practices of many NPs. That is a topic for another post.

 

[Mdlerth]

How often do "kids" actually inherit while they're young enough for this to be a concern? My parents were each over 60 before their last living parents died. DH and I are in our 50s

I fear my family is about to run the test. Mom and Dad, mid-80s, are rapidly crumbling, physically and mentally. Both likely heading for the last roundup.

The will says to divide their estate among the five of us, who range from 50-60. My two sisters still rely on monthly supplements from M&D; this has been going on for decades. If the girls were disinherited to any extent, they'd be crushed emotionally AND financially.

 

[OddGuy]

Twenty years ago, my parents assembled us together and revealed their plans for passing on their estate. We were all in our 30's at the time.

The intervening years have been that much easier, psychologically, knowing that this financial windfall is on the horizon. For me, personally, I've been able to take reasoned business risks I might otherwise have avoided. Nothing crazy, just standing my ground at times (and being rewarded for it) when I might have otherwise been super-conservative, as well as weathering lean times in starting up my own business.

We now receive monthly statements, and my sister and I are named as executors. We will also handle disbursement of the other 3rd of the estate to two grandchildren and act as their trustees - children of our sibling who passed.

 

[CaliKid]

Generally speaking it's not good to generalize. Each situation is different and each person unique. Do what works for you.

 

[kcowan]

I was all proud thinking we would leave him a 5 million dollar plus estate(todays value)Till a few months ago he said something about wanting to retire in 1 or 2 years with 6 million in the bank. He wanted my thought on it. After the initial shock wore off I told him I thought 7 million was more secure. He said "OK a cushion is not a bad idea, Ill stay a little longer"...

If he lives in NYC, that might be a little marginal. If you could leave him half, then you will feel good about your charitable work and cover him off.

 

[rodi]

On this last point DM and I don't agree on how to dispose of her assets. My view is those that need help should get it, she has always felt an even split is best, regardless of need. It's her money, so her wishes will be respected. In the case of my family, though, I think helping my children while we are all still alive is a better approach.

What we've done in our family and what DH and his sister plan in their family is to change what they *do* with the money once received.

My dad had disinherited my brother (for a variety of legitimate/emotional reasons). My brother and dad both had a terminal disease and died within a few months of other. My sister and I used some of our inheritance from dad to make sure that my brother's debt was reduced and medical bills paid. We didn't have to... but it seemed right to use some of our inheritance to do this.

My grandfather died and his will left my dad (who had died a few months previously) some money... which poured through to us. He also left some money to my aunt. My sister and I both chose to take our inheritance from our grandfather and gift it to my aunt. She is retired without a big nest egg and this gave her more of a safety net. Again - grandpa's will was honored... and we were able to help a family member who needed it more.

DH has a brother who will likely need cash infusions throughout his life. (He's on disability). DH and his sister have both agreed that any inheritance they receive for themselves will be used to provide these cash infusions as needed. MIL has divided things even, despite a significant difference in needs.

 

[RunningBum]

How about what this Michigan lumber baron did, he split it among heirs, 21 years after the last grandchild died.


Millionaire's heirs get inheritance after 92 yrs - CBS News

 

[Blue Collar Guy]

How about what this Michigan lumber baron did, he split it among heirs, 21 years after the last grandchild died.


Millionaire's heirs get inheritance after 92 yrs - CBS News

I wonder how it was invested for the past 92 years?

 

[meierlde]

How about what this Michigan lumber baron did, he split it among heirs, 21 years after the last grandchild died.


Millionaire's heirs get inheritance after 92 yrs - CBS News

Or perhaps set up a trust that pays out at age 50 or more, before that provides for paying tutition health expenses etc. (at the discretion of the trustee, a good lawyer can write this up correctly)