Adult children inheritance

[scrabbler1]

Back in 2008, my dad's financial advisor mentioned to my dad (mom is deceased) that he makes sure he had an updated will along with other estate documents such as a health care proxy and a trust to put the house into.


My dad and I went to a local estate lawyer and we put the documents together. My brother lives out of state with his wife and young son (age 4 at the time) but was kept in the loop and had to sign off on all the documents.


The will had some boilerplate language about a beneficiary's inheritance being challenged if he were unemployed or otherwise a deadbeat. While I was still working at the time, my ER plans were moving ahead in full, as I expected to retire by the end of the year. I asked to have that language struck from the will to protect me from any possible challenge, even though I knew I wouldn't be a deadbeat or anything close. Nobody objected, thankfully.


My brother and I are both doing well (he is wealthier than me) and have never been a burden on my dad (or my parents, when she was still alive). Sometimes, when my dad incurs some unforeseen expenses such as some costly dental work, he kids my brother and me by saying, "There goes some more of your inheritance!" We enjoy the good laugh.

 

[Souschef]

Getting a big inheritance when you are in your 60s isn't going to change your life.

I agree, my late mother said she would rather give some of it now to l the receive the gratitude instead of after she was gone.
I take part of my RMD and divide it up among our 4 children, who are in their late 40's and early 50's.

 

[ivinsfan]

I hear what your're saying but I'm more in tune with Skipro33's sentiment. Some people are quite decent human beings but financially irresponsible. It's less about wanting to control them than it is about wanting to protect them from themselves or others who may take advantage of them. My adult sister being a prime example. My son, only time will tell. Giving vast sums of money to the irresponsible but good human being is enabling further bad decision making, and not a responsible use of the money.

Just as you can't control what they spend your money on from the grave you also can't protect them from themselves from the grave..it is about control IMO..

 

[Bestwifeever]

We can’t see the future, so our two kids will just be splitting everything equally. There are so many ways our good intentions could be disregarded down the road. We’ll let them make their own mistakes. If there were true special needs or criminal activities, yes, nail down that money, but to not treat our two equally because one might behave fiscally or otherwise more to our liking? No. But we all get to decide what we want to do.

 

[bingybear]

Just as you can't control what they spend your money on from the grave you also can't protect them from themselves from the grave..it is about control IMO..

Actually you can. You can write a spend thrift trust that doesn't hand the $ to the beneficiary, but pays the rent and utilities directly. The hard part is writing all the rules and contingencies. It is hard to control from the grave especially if you don't know what will get the desired response from the beneficiary. If you don't know how to motivate the beneficiary now, you likely don't know how to do it with a trust.

 

[Joylush]

Just as you can't control what they spend your money on from the grave you also can't protect them from themselves from the grave..it is about control IMO..

You are right. That's what's worrisome when they haven't demonstrated particularly responsible behavior. But I think you can take steps to protect your money from being used irresponsibly or to protect and assist the irresponsibly minded and your grandchildren. I still have faith with time will come maturity.

It's unfortunate but I'd like to give some now but it would cause me too much distress. Perhaps I could give to the daughter early and keep the sons' share for if/when the signs of financial responsibility come along. If they don't his share can be set aside for any future children's education or health care needs.

i want to keep things fair/equal. But I don't want them ever to be a disincentive to work and save or an excuse for bad decision making. I don't want to make a bad investment, children or not.

 

[ivinsfan]

Actually you can. You can write a spend thrift trust that doesn't hand the $ to the beneficiary, but pays the rent and utilities directly. The hard part is writing all the rules and contingencies. It is hard to control from the grave especially if you don't know what will get the desired response from the beneficiary. If you don't know how to motivate the beneficiary now, you likely don't know how to do it with a trust.

Well now that wouldn't be them spending your money would it, it would be you saying what bills you wanted to pay and not pay. You can never guarantee a "desired response" from anybody, unless you want to use a really big stick...not my style..

 

[ivinsfan]

You are right. That's what's worrisome when they haven't demonstrated particularly responsible behavior. But I think you can take steps to protect your money from being used irresponsibly or to protect and assist the irresponsibly minded and your grandchildren. I still have faith with time will come maturity.

It's unfortunate but I'd like to give some now but it would cause me too much distress. Perhaps I could give to the daughter early and keep the sons' share for if/when the signs of financial responsibility come along. If they don't his share can be set aside for any future children's education or health care needs.

i want to keep things fair/equal. But I don't want them ever to be a disincentive to work and save or an excuse for bad decision making. I don't want to make a bad investment, children or not.

Or you could just have a discussion with both children about money and gifting and things you value financially ,ironically your DD does not need cash because she knows how to handle it, it's your DS that could benefit from a do over with some adult guidance....

 

[Joylush]

Or you could just have a discussion with both children about money and gifting and things you value financially ,ironically your DD does not need cash because she knows how to handle it, it's your DS that could benefit from a do over with some adult guidance....

My son and daughter have received exceptionally good guidance and have had awesome role models. They received exceptional financial management guidance, instruction and education. Their father and I made it a priority. They've been managing their own personal checking accounts since they were eight years old. Their own mutual funds since their first jobs, also at eight years old when they ran their first two businesses. That's why it's so disheartening to watch because there is no excuse for the behavior. You can give them all the tools in the world but ultimately it's up to them to use or ignore them.

I'm not one to offer unsolicited advice either because typically people don't care for that. Our mantra has always been you can learn from the stupid mistakes of others or you can be the one making the stupid mistakes that others learn from. My son simply chose to be the latter.

 

[Yarnstormer]

I expect people thought that about me. Never made much money, under 100k savings at age 50, did not own a home (tho I was a homeowner when I was married) but I can promise you that I protect my inheritance with extreme caution because I know it’s my only shot. It is a great comfort to know it’s there and I enjoy knowing I will never have to borrow money or be unable to pay bills.
I don’t have a history of questionable debts like your son but he is very young. Don’t compare him to his sister, compare him to the population at large.
I remember when my mom passed my accountant said “everyone” she knew that inherited money had spent it all in a few years. I mean to prove her wrong.

 

[CaliKid]

Set up discretionary trust with sole discretion in trustee. Sister would be ok but maybe a third party might be better. Perhaps another highly trusted family member!?

 

[harley]

Plus, if he cashed out his Roth and bought Bitcoin, he might easily be worth far more than his sister. Just not in a form you recognize.

 

[Joylush]

Plus, if he cashed out his Roth and bought Bitcoin, he might easily be worth far more than his sister. Just not in a form you recognize.

Yep, that sounds like him. I definitely wished him well.

 

[bclover]

+1

Do your kids get along? They won't if sister is the keeper of the money. It that what you really want for them? A lifetime of resentment?

At 27 we had a negative next worth and did stupid things.
.

+1

Sweet Lord. lol, I was in NYC and single with my 2 best friends in a walk up apartment. Zero savings for retirement (although we did have jobs with pensions and I did have a rainy day savings fund), think sex in the city waaaay before Sarah Jessica Parker. Man did I have a lot of fun and yes I had credit card debt.

and my parents were the king and queen of no credit cards.

Op my sons are 23 and 26. My 23 year old is finishing college, it took him a little longer than 4 years to finish. no he does not have 10K save, my oldest is an Asperger kid so he has difficulties he went to trade school and is doing well also but nope no thousands of dollars saved.

I will admit they don't have any credit cards but one is a saver, the other only saves because I have to pry money out of his hands. They are savings for their first apartment.

Now onto the inheritance. the way I have it set up they get a specific amount at various ages. I'm going to change it though and set it up as a match type of program.
They will get a match to their incomes. so if they make 40K they'll get 40K
Now hopefully I'll live long enough to spend down most of my wealth and it won't be an issue.

 

[bclover]

I'm not one to offer unsolicited advice either because typically people don't care for that. Our mantra has always been you can learn from the stupid mistakes of others or you can be the one making the stupid mistakes that others learn from. My son simply chose to be the latter.

But one can learn from your own mistakes and experience can be the best teachers.

I'm with the others, don't compare the two and get some one else to administer the trust.

 

[Joylush]

But one can learn from your own mistakes and experience can be the best teachers.

I'm with the others, don't compare the two and get some one else to administer the trust.

Yes, of course and hopefully he will learn from his own mistakes. Not everyone does, evident by those who have multiple bankruptcies. My daughter is the only family member I have who consistently has proven herself to be responsible in all areas of life. I'd be more inclined to trust her with my money, her money and pretty much anyone else's money....I don't have a "someone else" I can say the same about. Sounds like the Spendthrift Trust is what I need to look into. Guess I just have a real problem with the thought of rewarding the irresponsible. Reconciling that with wanting to be fair is the hard part.

 

[Joylush]

I expect people thought that about me. Never made much money, under 100k savings at age 50, did not own a home (tho I was a homeowner when I was married) but I can promise you that I protect my inheritance with extreme caution because I know it’s my only shot. It is a great comfort to know it’s there and I enjoy knowing I will never have to borrow money or be unable to pay bills.
I don’t have a history of questionable debts like your son but he is very young. Don’t compare him to his sister, compare him to the population at large.
I remember when my mom passed my accountant said “everyone” she knew that inherited money had spent it all in a few years. I mean to prove her wrong.

That is responsible behavior. I'd have no qualms leaving you an unrestricted inheritance.

 

[bclover]

Yes, of course and hopefully he will learn from his own mistakes. Not everyone does, evident by those who have multiple bankruptcies. My daughter is the only family member I have who consistently has proven herself to be responsible in all areas of life. I'd be more inclined to trust her with my money, her money and pretty much anyone else's money....I don't have a "someone else" I can say the same about. Sounds like the Spendthrift Trust is what I need to look into. Guess I just have a real problem with the thought of rewarding the irresponsible. Reconciling that with wanting to be fair is the hard part.

Hopefully you'll be around for a long time and it may not be an issue. He is still in his 20s. Believe me I was a waaay different person in my 20s then I was when my dad died thankfully in his late 80. I don't think your "rewarding" irresponsibility at all imo. Now the reality is that when this comes into play you'll be dead (pardon the bluntness). Even with a trust he can still be irresponsible just more slowly. What happens if sister deems he's a spendthrift?? Does she get vetoing powers??
Sounds like a sure fire way to tear two siblings apart.

 

[ivinsfan]

I hear what your're saying but I'm more in tune with Skipro33's sentiment. Some people are quite decent human beings but financially irresponsible. It's less about wanting to control them than it is about wanting to protect them from themselves or others who may take advantage of them. My adult sister being a prime example. My son, only time will tell. Giving vast sums of money to the irresponsible but good human being is enabling further bad decision making, and not a responsible use of the money.

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.

 

[hilltide]

I am the executor of my dads trust but everything is split evenly. If my sister is mad about that so be it. She knows she is terrible with money. At 27 i was responsible in a lot of ways but i did finance things. It took a while to click about being debt free. Just a guess but the fact that he did pay of the credit cards is a sign that some of your lessons are sticking.

 

[bingybear]

Well now that wouldn't be them spending your money would it, it would be you saying what bills you wanted to pay and not pay. You can never guarantee a "desired response" from anybody, unless you want to use a really big stick...not my style..

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.

 

[Danmar]

Actually the difference is how well they play along to your personal standards and arbitrary rule making. It's your money so there is no doubt you can do as you wish. Our standard is we did our best raising our 2 daughters to be decent human beings and they don't have to jump thru our hoops to prove they are worthy of our "Hard-earned".. leftover money.

Agree. Trying to impose your “arbitrary rules” on your kids to qualify for the inheritance seems wrong to me. Now if the rules are general and common sense maybe a little better. But still you shouldn’t try to control your kids this way.

Now if they are total losers, ie drug addicted felons, I can see the case for giving nothing, period.

 

[ivinsfan]

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.

Or if your child had a substance abuse problem and you worried access to money might lead to fatal consequences. Maybe your child has a spouse that is mentally ill or unstable, income from a trust could protect everyone.

These are different issues then you and your child not having the same money styles..

 

[Danmar]

My recommendation, and what I have advised DD, is to tell them that they will likely inherit a good sum of money - some day. But that I intend to live so long that by the time they get it they will be so old they won't really be able to enjoy it. Getting a big inheritance when you are in your 60s isn't going to change your life. So make your own money, save it, invest it, and enjoy your life just as if the money doesn't exist. What you eventually get from me will likely just be held in trust for the next generation.

This seems right to me. I have helped my 33 year old daughter extensively. She is a hard working intelligent young woman and will be our only heir. Her inheritance will likely be well into 8 figures but she won’t likely get it until her 60’s. At that point it may not change her life but should make it a lot easier for the next generation.

 

[MarieIG]

I have six kiddos. They all got a roof over their heads, food, education, tutors when they needed it,used car, college if they choose it. They are all different and I haven't been able to gift equally. Guess what, it's not their business.

So for one I may have spent more for college. Another got to live at home for a long period of time rent free. One of my sons put his life on hold to help take care of my father when my father was ill. He will get more, I going to put him on one of the accounts as a TOD. Anyone who doesn't like it - tough. I will never forget what he did for my father. Most don't want kids, but now the first GC is on the way and that couple will be getting more gifting directly or via the GC than the others, excepting the one that helped with my father.

For your DS, Spendthrift trust, with professional trustee (to spare DD). However, you can change your mind if DS shapes up before you shuffle off this mortal coil. I would tell DS that he is going to have to make his financial way in this world, don't count on an inheritance. In the meantime, you can give DD some extra funds to pad her retirement accounts - if you so choose. You don't have to be exactly equal, although I would not be obnoxious about it.

It's your money, you're the boss, and your feelings are important in this scenario as well.