Ramifications of Revealing Wealth

[imoldernu]

We are well aware of the problems inherent with distribution of wealth/assets.
Prior to re-doing our will, we brought our four sons together for a discussion. We are incredibly fortunate that they have always been very close to each other, and supportive in highs and lows of their individual lives.
The decision was easy, as they made it, and also decided which one of them would be executor.
Total trust, total agreement. We also discussed the possible alternatives... illness, sudden death, division of major property, and subsequent possible decisions based on all of the eventualities they could imagine.
Not only did this give DW and I peace, but it allowed our sons to discuss the subject between themselves easily, and to make decisions for us, should it be necessary.
BTW... our sons are probably older than half of the ER members.

[robertf57]

I always find these discussions of inheritance and fairness somewhat disturbing. I taught my children the financial lessons they needed as children and young adults. I gave them the tools they needed to succeed if life through educaation and a supportive family. Any inheritancce they receive will be a gift; Plain and simple. No fairness about it,

Anyway, my plan is to leave as little as possible. We'd much rather gift while alive and we can see the impact, Fortunately all our kids are doing well. I am expecting nothing from my Father's estate at his death.

[Redbugdave]

Quote:

Originally Posted by robertf57 I always find these discussions of inheritance and fairness somewhat disturbing. I taught my children the financial lessons they needed as children and young adults. I gave them the tools they needed to succeed if life through educaation and a supportive family. Any inheritancce they receive will be a gift; Plain and simple. No fairness about it, Anyway, my plan is to leave as little as possible. We'd much rather gift while alive and we can see the impact, Fortunately all our kids are doing well. I am expecting nothing from my Father's estate at his death.

Robert...I agree with your approach to the inheritance issue.

Food for thought: Ancient Chinese proverb... "One does not know a person until he has shared an inheritance with him".

[nvestysly]

There are several things in the OP that are very interesting. I can imagine that I would do just as the OP indicated and follow the will/trust to the letter. Legally, there is no other way - the executor must do what the document delineates. But, like the OP, I would find it difficult to accept an unequal distribution of money.

I know a couple who is providing significant financial support to their youngest child. I don't know all the details but some of the support is in the form of purchasing a small house for the adult child to live in. In the past the support has come in the form of a hand-me-down vehicle and grocery and gasoline money. I've been told the will/estate for this couple indicates the child receiving the financial support will receive a prorated inheritance. Assuming there is money to be distributed at their death(s) the couple has made a record of all the support they've given their youngest child and this will be subtracted from the distribution. I like that approach.

In general, I like the idea of sharing equally in the distribution. Yes, I can imagine there are situations that arise that will make a person/couple make some form of unequal distribution and that makes sense. Hey, it's your money so do what you want.

So, to the OP... yes, it's a difficult thing to do but that's what she wants. You did your best to point out the possible downside. Maybe she'll have a change of heart and make another change to the documents.

[mpeirce]

Quote:

Originally Posted by robertf57 I always find these discussions of inheritance and fairness somewhat disturbing. I taught my children the financial lessons they needed as children and young adults. I gave them the tools they needed to succeed if life through educaation and a supportive family. Any inheritancce they receive will be a gift; Plain and simple. No fairness about it, Anyway, my plan is to leave as little as possible. We'd much rather gift while alive and we can see the impact, Fortunately all our kids are doing well. I am expecting nothing from my Father's estate at his death.

One of my grandfathers did something I admired:

He had built a successful highway construction business up over the years and in the 70's, when Carter basically stopped work on the interstates, he liquidated the business. At that point he set up an education trust for his grandchildren assuring that we all could go to the best college we could get admitted to.

For this I will be forever grateful.

It gave me a great start in life and made possible many of the things I achieved over the years. Same for my siblings and cousins - we all took advantage of this and inexplicably have all done well with the educations it provided.

I always though it'd be nice to set up something similar, but so far there aren't any grandchildren and no assurance there ever will be. I gave some thought to the nieces and nephews, but there are so many and they come in a wide variety of ages (some well past college age), so that idea isn't happening either.

So for now our will just simply divides our estate between the kids. Maybe we'll come up with a better idea in the next few decades (assuming we live that long).

[nvestysly]

If there is a significant amount of money in an estate at death it may make sense to set up a foundation that keeps on giving. I suppose there are lots of ways to make this work - the foundation could be perpetual, spend it's money and be done in a matter of years, etc. It's a way to ensure your money keeps on giving.

$1million in a charitable foundation will provide approximately $20,000 per year that can be given to charities of your choice. I suspect there are people on the E-R forum that will find themselves in this situation. Some without children, some that don't want to give to children, or only want to give children a limited amount. I don't know how difficult it is to establish the paperwork for a foundation, set up a board, etc. but I know it's been done and you don't have to be a Rockefeller or Vanderbilt to make it work.

[BellBarbara]

Quote:

Originally Posted by robertf57 Anyway, my plan is to leave as little as possible. We'd much rather gift while alive and we can see the impact, Fortunately all our kids are doing well. I am expecting nothing from my Father's estate at his death.

This will be our approach as well. And our trust specifically calls for selling any real estate and dividing it equally so there will be no squabbling over who gets/wants to live in the house.

[jebmke]

Quote:

Originally Posted by nvestysly If there is a significant amount of money in an estate at death it may make sense to set up a foundation that keeps on giving. I suppose there are lots of ways to make this work - the foundation could be perpetual, spend it's money and be done in a matter of years, etc. It's a way to ensure your money keeps on giving. $1million in a charitable foundation will provide approximately $20,000 per year that can be given to charities of your choice. I suspect there are people on the E-R forum that will find themselves in this situation. Some without children, some that don't want to give to children, or only want to give children a limited amount. I don't know how difficult it is to establish the paperwork for a foundation, set up a board, etc. but I know it's been done and you don't have to be a Rockefeller or Vanderbilt to make it work.

A Donor Advised Fund of $1 million would have a fee of $5K for administration. The fees decline for subsequent donations. I've never priced out starting and maintaining a foundation but for smaller sums, A DAF is pretty convenient.

[Milton]

Donor advised funds are undoubtedly more convenient, but that comes at a high price: viz., substantially less control and relatively high fees.

By way of analogy: the foundation vs. donor-advised fund choice is somewhat similar to maintaining a portfolio of individual stocks vs. owning units in a mutual fund.

IMO, a $1 million endowment is large enough to warrant creating and administering a private foundation over a DAF.

Quote:

Originally Posted by nvestysly I don't know how difficult it is to establish the paperwork for a foundation, set up a board, etc. but I know it's been done and you don't have to be a Rockefeller or Vanderbilt to make it work.

Indeed, it is not terribly difficult.

[FIREd]

We have designated our donor-advised fund as one of the beneficiaries of our estate. What bugs me is that we have to name a successor advisor and that person will have free rein on making grants. So the money could end up being donated to organizations we would not have chosen to support.

Would a charitable foundation help us make sure the money goes where we want it to?

[MooreBonds]

Quote:

Originally Posted by FIREd We have designated our donor-advised fund as one of the beneficiaries of our estate. What bugs me is that we have to name a successor advisor and that person will have free rein on making grants. So the money could end up being donated to organizations we would not have chosen to support. Would a charitable foundation help us make sure the money goes where we want it to?

I can't speak for other DAFs, but I'm assuming they would be similar - for Vanguard Charitable, you can specify that upon your death, your list of charities are to receive a certain $ or a certain % each year for so many years, until the account balance is whittled down to their minimum level, then the account liquidates. You could have this provision enacted upon your death and upon creation of the DAF. I would probably want to talk with a DAF first to verify how to set up/pre-fill out the paperwork ahead of time to ensure that your wishes are followed, and all legal procedures are correct and the correct verbage is used in your estate documents.

But you are correct in your previous question - whomever you nominate as the successor advisor to provide the DAF with the "recommendations" for charities could pick ANY registered 501(c)(3) that they wish. Perhaps there is a way to tell the DAF you only would like certain charities to receive funds, and would like the successor advisor to merely suggest the $ or % - but with that, you would be better off simply having the DAF automatically sending a set $/% each year to your list of charities, since there's no real need to involve another outside advisor to merely select how much to give you your charities each year.

[yakers]

Hey, you have to trust someone, if I leave everything to DW and she decides to connect with some nice young fellow, what am I going to do about it? :cool smiley: