Adult children inheritance

[Texas Proud]

You can try to control from the grave. But it can be hard to do. It might not be your style. There is one case where I would try this. If a child had a large judgment against him/her. You could have the trust pay for living expenses directly and in such a way their creditors could not attach to the trust. In this case you would not be trying to change your child, but provide them with a reasonable living standard. Better than letting the $ get inherited and sucked by large obligations that might break the trust.

I might seem cruel, but it would make a big difference to me what that judgement was about.... and if I thought the behavior bad enough I would probably not leave anything to them anyhow....

As an example, I have a nephew who got into drugs when in college... he has been living on welfare almost his entire life and cheating the system by earning income on the side and not reporting it... he had to leave one country he was living in as they were about to go after him for this behavior... he is a Hari Krishna... if he were my child I would not leave him a dime... I would bypass him and leave whatever was 'his' share to his kids.... one has had a tough time as his mother died when he was young and my nephew did not want him.... if nephew did not have any kids they it goes to the other kids....

 

[pj.mask]

I've read every one of your comments and in fact I think you are PO'd because the "exceptional" advice and "stellar" advice you gave you son about money has not yet taken hold unlike his DSister who is perfect.

It seems your son is actually 26, has a good job,is probably a kind decent young person who doesn't spend his money the way you would spend your money. Many parents would be thrilled to have a child like this.

If you do a trust make it for both kids and on the same terms, they are the ones that have to live with each other after you are gone. How awkward for them to deal with the "Mom liked you best and liked the way you spend money, but me not so much. Now if your son has an issue like substance abuse that's another story. But nothing you said here has indicted that.

In fact you want to control how your money is spent after you're dead, by controlling your son from the grave because at 26 he makes "stupid money" mistakes. The Roth example, most mid-20s kids have a hard time placing value on retirement goals decades into the future, especially when they don't have families. The 20's is a time to get this out of your system. Don't let your feelings about your sister spill over to young guy working his was through adulthood.

If you don't think that treating your kids differently in your will, will be taken as a slam to your DS, you aren't being realistic.

Yea, if DD doesn’t have money issues and DS does, what would the problem in putting both in a trust until age 45 or 50 (maybe paying div distros out as they are otherwise taxes at a high rate. DD probably won’t need the money anyways and will view it as additional savings to reach her goals.

Hopefully DS matures enough by then to use it wisely and if not, will he really get much better between 45-60?

 

[growing_older]

I would have zero qualm leaving MY hard earned money to one sibling over the other. Or to neither if I thought neither deserved. Just because one or the other is responsible doesn't necessarily mean they deserve the money either. There are many reasons a child doesn't deserve an inheritance and financial responsibility is but one.

It is of course your right to do as you wish with your money, but beware the other effects it has. Children who think they are getting punished or their siblings are being unfairly rewarded can resent it and exacerbate any rifts in the family. Both of my parents siblings families harbor deep resentment over the way inheritances were handled, and none of them actually needed any of the money.

A sister who controls the purse strings of a brother's inheritance is being set up for tension and resentment. Brother will likely see it as "his" money and sister will likely see his demands as pestering or worse.

Personal standards, or worse undisclosed personal rules, for who gets what inheritance are practically guaranteed to damage sibling relationships as each resents the other: her poor life choices are rewarded, I'm being punished for my good life choices, she was always the favorite, you tricked him into this didn't you, and so on.

 

[Joylush]

I've read every one of your comments and in fact I think you are PO'd because the "exceptional" advice and "stellar" advice you gave you son about money has not yet taken hold unlike his DSister who is perfect.

It seems your son is actually 26, has a good job,is probably a kind decent young person who doesn't spend his money the way you would spend your money. Many parents would be thrilled to have a child like this.

If you do a trust make it for both kids and on the same terms, they are the ones that have to live with each other after you are gone. How awkward for them to deal with the "Mom liked you best and liked the way you spend money, but me not so much. Now if your son has an issue like substance abuse that's another story. But nothing you said here has indicted that.

In fact you want to control how your money is spent after you're dead, by controlling your son from the grave because at 26 he makes "stupid money" mistakes. The Roth example, most mid-20s kids have a hard time placing value on retirement goals decades into the future, especially when they don't have families. The 20's is a time to get this out of your system. Don't let your feelings about your sister spill over to young guy working his was through adulthood.

If you don't think that treating your kids differently in your will, will be taken as a slam to your DS, you aren't being realistic.

Really, that's what you got from my question/concerns? I must not have explained things well. My son and daughter were both well educated in financial management. So it is disappointing to see one engaging in some poor or reckless choice decision making when it comes to finances. I make good investments and unfortunately at this point I don't believe giving him an outright inheritance would be a good use of my funds.

I had to chuckle as well over the "perfect daughter" comment which is something I never said. She is however quite financially responsible.

What I did say is my aim was equal treatment done in a responsible manner. My son has plenty of admirable traits. At this point in his life I simply can't say he's particularly smart with his money. I'm still smart with mine. That being said leaving it with someone who hasn't shown themselves to be a good steward of their own money wouldn't be a very smart move on my end.

 

[Yarnstormer]

I am very financially responsible now but I spent a small ira ($700) when I was in my 20s, instead of rolling it over when I left a job and have kicked myself a thousand times over it. Honestly It’s been great as a learning moment about regrettable decisions for every twenty something I give the “save your money” talk to!
Your son will be fine. Please please don’t pit them against each other which is what will happen if you treat them differently. It’s human nature. Hopefully we are talking about many years in the future and everyone will have matured a little.

 

[Joylush]

It is of course your right to do as you wish with your money, but beware the other effects it has. Children who think they are getting punished or their siblings are being unfairly rewarded can resent it and exacerbate any rifts in the family. Both of my parents siblings families harbor deep resentment over the way inheritances were handled, and none of them actually needed any of the money.

A sister who controls the purse strings of a brother's inheritance is being set up for tension and resentment. Brother will likely see it as "his" money and sister will likely see his demands as pestering or worse.

Personal standards, or worse undisclosed personal rules, for who gets what inheritance are practically guaranteed to damage sibling relationships as each resents the other: her poor life choices are rewarded, I'm being punished for my good life choices, she was always the favorite, you tricked him into this didn't you, and so on.

Very true. I've seen plenty of cases where poor life choices are rewarded and good ones punished. In my case I won't ever be accused of my daughter being my favorite because I've only ever been accused of the opposite no matter how equal I thought I was being. I'd have to say I don't really have any undisclosed personal rules as I've always been quite upfront as far as what I believe constitutes smart financial decision making goes. Just never been one to advocate rewarding bad or reckless behavior.

 

[harley]

Really, that's what you got from my question/concerns? I must not have explained things well. My son and daughter were both well educated in financial management. So it is disappointing to see one engaging in some poor or reckless choice decision making when it comes to finances. I make good investments and unfortunately at this point I don't believe giving him an outright inheritance would be a good use of my funds.

Just out of curiosity, where were you when you were 27? Married? Homeowner? Renter? In debt? Positive net worth? If you were like most people here as well as you DS, it would be somewhat hypocritical to be holding him to a much higher standard than you were held to. When I was 27 DW was pregnant, we were struggling to make our mortgage, we had maybe 10K savings (no investments), and were living pretty poor. I'd hate to have been cut off by being judged at that age. I turned out pretty well, and RE'd at age 50. Obviously you'll do what you want, but if I needed a will in your situation, I'd just do 50/50 in case I died young. Then revisit it in 10-20 years, see what's up. That's my free advice.

 

[Joylush]

I am very financially responsible now but I spent a small ira ($700) when I was in my 20s, instead of rolling it over when I left a job and have kicked myself a thousand times over it. Honestly It’s been great as a learning moment about regrettable decisions for every twenty something I give the “save your money” talk to!
Your son will be fine. Please please don’t pit them against each other which is what will happen if you treat them differently. It’s human nature. Hopefully we are talking about many years in the future and everyone will have matured a little.

You are right. That is something I'd prefer to avoid. At this point I may gift to my daughter now and set aside an equal amount to gift to him later. Different but equal.

 

[ivinsfan]

Very true. I've seen plenty of cases where poor life choices are rewarded and good ones punished. In my case I won't ever be accused of my daughter being my favorite because I've only ever been accused of the opposite no matter how equal I thought I was being. I'd have to say I don't really have any undisclosed personal rules as I've always been quite upfront as far as what I believe constitutes smart financial decision making goes. Just never been one to advocate rewarding bad or reckless behavior.

You do understand the view of bad or reckless behavior is a personal judgement, not set in stone?

At this stage in his young life your son does not have the same money values you do. Maybe he never will, but the term bad and reckless comes from you. People get tattoos and buy motorcycles and mess up insurance, cash out IRA's it happens. Maybe he's not prudent with his money, or has trouble managing day to day finance...calling this a "poor life choice" is a little over the top....using drugs, or ending up in prison or driving drunk is a "poor life choice"

 

[Joylush]

Just out of curiosity, where were you when you were 27? Married? Homeowner? Renter? In debt? Positive net worth? If you were like most people here as well as you DS, it would be somewhat hypocritical to be holding him to a much higher standard than you were held to. When I was 27 DW was pregnant, we were struggling to make our mortgage, we had maybe 10K savings (no investments), and were living pretty poor. I'd hate to have been cut off by being judged at that age. I turned out pretty well, and RE'd at age 50. Obviously you'll do what you want, but if I needed a will in your situation, I'd just do 50/50 in case I died young. Then revisit it in 10-20 years, see what's up. That's my free advice.

I've always been financially advanced. I had goals very early on. Heck, I opened an IRA during my first year out of college, age 22 (before most people had ever heard of them). Made about $13,000 that year and invested $600 in the IRA which I still have. Bought my first rental property at age 24, which I still own. Never have had any debt, no credit card, student loan or car loan debt (occasional mortgages although I never purchased a property with less than 20% down because my personal standard was anything less was not affordable). Just always been good at delaying gratification and valuing long term goals. Had student loans but paid them off during my military service because interest was suspended so they were paid off at zero percent.

So no, I couldn't possibly hold him to that standard. But he had the gift of a free college education, a paid off vehicle and graduated with a Roth IRA and other investments which had been established for him during childhood. He's quite high income compared to his peers and chooses to live paycheck to paycheck. Yes, chooses. He's setting himself up to struggle or not be able to retire like so many people do. I have a hard time respecting that behavior let alone rewarding it. Actions have consequences.

 

[Joylush]

You do understand the view of bad or reckless behavior is a personal judgement, not set in stone?

At this stage in his young life your son does not have the same money values you do. Maybe he never will, but the term bad and reckless comes from you. People get tattoos and buy motorcycles and mess up insurance, cash out IRA's it happens. Maybe he's not prudent with his money, or has trouble managing day to day finance...calling this a "poor life choice" is a little over the top....using drugs, or ending up in prison or driving drunk is a "poor life choice"

Bad or reckless financial choices. Putting your wants before your needs is a reckless financial choice. If you ever expect to retire, get ahead and/or avoid paying finance charges on your pizza for years. Bad financial choice. Might as well give a drunk a case of beer.

 

[Joylush]

Yea, if DD doesn’t have money issues and DS does, what would the problem in putting both in a trust until age 45 or 50 (maybe paying div distros out as they are otherwise taxes at a high rate. DD probably won’t need the money anyways and will view it as additional savings to reach her goals.

Hopefully DS matures enough by then to use it wisely and if not, will he really get much better between 45-60?

Because that would be essentially restricting her (and a trust costs more) because of her brother's poor financial skills. That would be more unfair.

 

[Another Reader]

What concerns me is that this kid could be spending every dime because he is sure he is getting a nice inheritance. In your shoes, I might sit down with him and tell him of your disappointment in his financial behavior, and if he does not become more conservative over the next couple of years, there may not be an inheritance. No harm in telling him that you worked too hard for the money to see it disappear from spendthrift behavior. He is still your son and you love him, but he needs to change for money to pass to him.

It's much better to hear this directly from you than from his sister after you are gone.

The people that suggested giving this more time to play out have a point. My observation is that boys engage in more risk taking behavior of all types and take much longer to mature than do girls. Plenty of young men don't really settle down and become responsible adults until the first kid arrives.

 

[Dash man]

We set up separate trusts that will be funded upon our death. We are using USAA rather than a relative to ensure the intent and instructions of the trust will be followed to the letter. If one of our sons believes the trust funds are not being distributed according to our wishes, our attorney has the power to fire the Trustee and appoint a new one. Allowing family to administer a trust is just asking for problems.

 

[Joylush]

What concerns me is that this kid could be spending every dime because he is sure he is getting a nice inheritance. In your shoes, I might sit down with him and tell him of your disappointment in his financial behavior, and if he does not become more conservative over the next couple of years, there may not be an inheritance. No harm in telling him that you worked too hard for the money to see it disappear from spendthrift behavior. He is still your son and you love him, but he needs to change for money to pass to him.

It's much better to hear this directly from you than from his sister after you are gone.

The people that suggested giving this more time to play out have a point. My observation is that boys engage in more risk taking behavior of all types and take much longer to mature than do girls. Plenty of young men don't really settle down and become responsible adults until the first kid arrives.

I think you hit the nail on the head. Their father has told them he plans to die with no money but that he has a million dollar life insurance policy and named them beneficiaries. My daughter has repeatedly said she expects nothing, that our money is our money and she doesn't feel she has any claim to it. Now I've heard from her when she's questioned her brother about some of his choices he's said to her she worries too much that they'll be rich when we are dead.

Now, I realize this is coming from her and so I understand it may not have been relayed exactly how it was stated. But I can also imagine him saying that. Whether what he said is true or not it still doesn't excuse his choices, not in my mind.

I do intend to live awhile longer being only 56. So there is still hope of him maturing a bit more. I just don't think there is anything wrong to have hope that my life's work might last awhile after I'm gone.

This is the same kid who was put off that I helped my daughter's best friend pay down her student loans (great kid who never asked for help but who I saw as hard working, grateful and responsible and I hated to see with such a burden on her shoulders).....likely because he felt it meant he'd get less. So I guess he judges how I spend my money too.

 

[Joylush]

We set up separate trusts that will be funded upon our death. We are using USAA rather than a relative to ensure the intent and instructions of the trust will be followed to the letter. If one of our sons believes the trust funds are not being distributed according to our wishes, our attorney has the power to fire the Trustee and appoint a new one. Allowing family to administer a trust is just asking for problems.

Who did you contact at USAA to learn about this? Would this be their wealth management department?

 

[bclover]

Bad or reckless financial choices. Putting your wants before your needs is a reckless financial choice. If you ever expect to retire, get ahead and/or avoid paying finance charges on your pizza for years. Bad financial choice. Might as well give a drunk a case of beer.

I feel really bad for kids these days. 25 and if they make 1 mistake or go through a period where they don't look 50 years ahead they are forcast as losers.
Jeez give the kid a break. He's 27 not 57
Lol. Guess my 23 year old who is still in college and pumps gas p/t is reaaly doomed.
He's blowing his paycheck cheering for the Eagles at a superbowl party (we live in Philly)

I guess I just don't think your son is destined for a box under a bridge based on a very common 20 some thing scenario
Question? How do either of them know they are getting an inheritance??

 

[pj.mask]

Because that would be essentially restricting her (and a trust costs more) because of her brother's poor financial skills. That would be more unfair.

Assuming myself as a typical bogelhead - an inheritance just means higher net worth and won’t significantly impact my life (retire a year earlier or spend % of increase). If my parents chose to provide an inheritance for both of us in trust as opposed to outright because of the concern of a damaged sibling relationship - I’d accept that % cost on their money as it is their wish. Sure it may be unnecessary but if that’s what the parents believe is required to keep the peace - it’s their $$. I thought that’s the whole point of this discussion - provide options?

It’s hard to not let your personal bias and experience direct your opinion but not every child is like you or has your experiences growing up to shape them the same way. We all deal with our own shortcomings and to me, I’d take a 0.5% decrease for that peace of mind (Vanguard) over the risk of breaking my kids relationship and/or self destructive behavior of getting money before you are capable of management.

 

[Joylush]

I feel really bad for kids these days. 25 and if they make 1 mistake or go through a period where they don't look 50 years ahead they are forcast as losers.
Jeez give the kid a break. He's 27 not 57
Lol. Guess my 23 year old who is still in college and pumps gas p/t is reaaly doomed.
He's blowing his paycheck cheering for the Eagles at a superbowl party (we live in Philly)

I guess I just don't think your son is destined for a box under a bridge based on a very common 20 some thing scenario
Question? How do either of them know they are getting an inheritance??

They don't. They're assuming. My son is fairly high income for his age. Just not making smart financial choices. I don't see him living under a bridge either. Not sure where you got that from. At the rate he's going he may not be much better off at 57. That's my fear for him. The choices you make today affect your life tomorrow.

 

[Jerry1]

My motto is RIP. DW wants to control from the grave. I said that would be fine, but she'd have to outlive me. In my case, two DD's. DD1 has three Dear Grand Kids and is financially irresponsible (34yo). DD2 is financially responsible and has no kids and is insistent that she doesn't want to ever have any. DW wants provisions to ensure DGK's have money for college and that disbursement of money is controlled to DD1.

I will have none of that. Rest in Peace. When I'm gone, I'm quite certain that whatever happens will not affect me. We are in the process of getting our financial documents in order and it will be 50/50 at time of death. If they haven't learned by now/then, they won't. I agree with the best advice being to live a long enough life that your passing will be so late in the game, that it won't really matter. If it will make you feel better, give some of your money to a charity.

Also, while I do have some sense of being fair about what I do for each child and grand child while alive, I am not going to keep a ledger. If I help DGK's with college, I don't see that as something I need to square up with DD2. Heck, if you get into that line of thinking, shouldn't I also share some of that with DD1? Should I look at a 1/5th (all equal - daughters and DGK's) distribution? It's just a no win situation so I'm not going to play the game. In all sincerity, I know this is tough and I wish you well with your decision, but my choice is to not engage. Think about it. It's liberating.

 

[bclover]

My motto is RIP. DW wants to control from the grave. I said that would be fine, but she'd have to outlive me. In my case, two DD's. DD1 has three Dear Grand Kids and is financially irresponsible (34yo). DD2 is financially responsible and has no kids and is insistent that she doesn't want to ever have any. DW wants provisions to ensure DGK's have money for college and that disbursement of money is controlled to DD1.

I will have none of that. Rest in Peace. When I'm gone, I'm quite certain that whatever happens will not affect me. We are in the process of getting our financial documents in order and it will be 50/50 at time of death. If they haven't learned by now/then, they won't. I agree with the best advice being to live a long enough life that your passing will be so late in the game, that it won't really matter. If it will make you feel better, give some of your money to a charity.

Also, while I do have some sense of being fair about what I do for each child and grand child while alive, I am not going to keep a ledger. If I help DGK's with college, I don't see that as something I need to square up with DD2. Heck, if you get into that line of thinking, shouldn't I also share some of that with DD1? Should I look at a 1/5th (all equal - daughters and DGK's) distribution? It's just a no win situation so I'm not going to play the game. In all sincerity, I know this is tough and I wish you well with your decision, but my choice is to not engage. Think about it. It's liberating.

+1
And here's the thingI don't get with trying to dictate someone's life when your dead, doesn't a trust simply say how or when a person gets the inheritance??
So once a person fufills whatever restrictions youve put in place, they can still "live la vida loco". So then what? You haunt them??

 

[bclover]

They don't. They're assuming. My son is fairly high income for his age. Just not making smart financial choices. I don't see him living under a bridge either. Not sure where you got that from. At the rate he's going he may not be much better off at 57. That's my fear for him. The choices you make today affect your life tomorrow.

So setting up this trust will that make your fears go away?
And what happens if at 57 he is not living his life as you deem acceptable what happens then? No inheritance ?? (Which is cool, no one is owed any thing)

 

[Helen]

After reading the OP, I'm surprised my parents didn't cut me out of their will. I didn't graduate college until I was 25 and was arrested once while in college for, "housing and allowing a loud and riotist party" .

I never had a debt problem but I wasn't a saver.

In my early 30s I started to mature, bought a house (paid it off in 12 years) and became laser focused on saving for retirement. Part of my motivation was my Dad asking me to learn about investing so that I could help my Mom understand their finances after he was gone. I panicked and started reading everything I could about investing. It turned out he had set up a trust in the early 70s, so I didn't have to do anything except assure my Mom she didn't have to worry about a thing.

I am posting from Australia where we will be for the next two months before embarking on a 40 day cruise back home. We are barely drawing down 1% of our portfolio. Basically we are living off our own investments and leaving our inheritances to grow.

I plan to help pay my great nieces college costs and leave my parent's money to my niece and nephew.

TL ; DR

In summary, some people just take longer to get things in focus.

 

[Joylush]

So setting up this trust will that make your fears go away?
And what happens if at 57 he is not living his life as you deem acceptable what happens then? No inheritance ?? (Which is cool, no one is owed any thing)

Let's assume you know the statistics on lottery winners and how many blow everything going right back to where they were. Let's assume you understand how a trust works. It's like winning the lottery but choosing not to take the lump sum but the annuity option instead. It helps protect you from yourself.

I support my needy adult sister. Oh my lord is she a story. Master's degree in special education. Works at a gas station but isn't a 23 year old college student. So much of her struggles are due to her own decision making. She can't be changed. The more that is done for her the worse she gets. There is a point where being an enabler isn't helping. But yet I help because she is my sister. I have to micromanage her of she could not survive. I hate it.

 

[Joylush]

My motto is RIP. DW wants to control from the grave. I said that would be fine, but she'd have to outlive me. In my case, two DD's. DD1 has three Dear Grand Kids and is financially irresponsible (34yo). DD2 is financially responsible and has no kids and is insistent that she doesn't want to ever have any. DW wants provisions to ensure DGK's have money for college and that disbursement of money is controlled to DD1.

I will have none of that. Rest in Peace. When I'm gone, I'm quite certain that whatever happens will not affect me. We are in the process of getting our financial documents in order and it will be 50/50 at time of death. If they haven't learned by now/then, they won't. I agree with the best advice being to live a long enough life that your passing will be so late in the game, that it won't really matter. If it will make you feel better, give some of your money to a charity.

Also, while I do have some sense of being fair about what I do for each child and grand child while alive, I am not going to keep a ledger. If I help DGK's with college, I don't see that as something I need to square up with DD2. Heck, if you get into that line of thinking, shouldn't I also share some of that with DD1? Should I look at a 1/5th (all equal - daughters and DGK's) distribution? It's just a no win situation so I'm not going to play the game. In all sincerity, I know this is tough and I wish you well with your decision, but my choice is to not engage. Think about it. It's liberating.

If one kid had three kids and the other had none I wouldn't give the one with the kids more. But I would certainly consider taking a portion of the one who had the kids' inheritance and setting it aside for the grandkids college especially if their parents couldn't be trusted to do it for them.