Where's your money going after you're dead?

[Toejam]

I was talking to a friend the other day, and the subject of wills and trusts came up. Like him and a lot of my other friends, I am single and retired with no children. We're all either in our late 40's or early 50's and either retired already or close to it. I want to give the majority of my "left over" money to my 2 nephews and 2 nieces, with a smaller amount going to charitable organizations. Since I can live on my pension and rental income without, for the most part, touching my net worth of about $3 million (IRA, brokerage accounts, and equity in homes), I intend to let this net worth grow to (hopefully) a large sum over the next 25 to 30 years. I do not intend to tell my niece and nephews of my intentions for obvious reasons.

My friend, on the other hand, has already set up one of those educational accounts for his nephews and then intends to give whatever money is left over after his death to his alma mater and related educational organizations.

Some of my friends believe in keeping the money "in the family", while others believe in distributing the majority of their estate to charity.

I was just curious as to what other people on this forum plan to do with their estate and how they will set it up so that everything is done according to plan.

 

[AltaRed]

DW and I have set up wills that currently direct the estate to our 2 adult kids. That will probably remain that way subject to how they make out in life and who they marry. At some point in time, we'll probably form trusts for some of the funds to go to grandkids, particularly for education.

Should we have no grandkids and our own adult children don't really deserve it all, it will likely be our intent to allocate it to health care equipment in needy hospitals.

Thus, our estate plans will likely evolve as time goes on and circumstances change.

 

[retire@40]

If my plan works, there won't be any money left over when I die.

It's another worry I don't need to have.

 

[ESRBob]

ToeJam;
Ours goes to the kids, but if we didn't have kids, I would probably aim it toward a blend of next-of-kin family (if I were close to them) and favorite charities. My gold standard for charities is 3rd world orphanages -- talk about putting your money to work in a way that can make a difference... Giving more money to a U.S. college, at least the ones who already have big endowments, feels like gilding the lily to me, and frankly somewhat of a waste. Places like Princeton or Harvard could give away full tuition scholarships to every student in perpetuity and never come close to spending the earnings on their portfolios. What is the point of giving more there? (I know that not all colleges are in this position, of course.)

Ben Stein had a pretty interesting column recently about how giving money to an Ivy league or well-endowed college is like donating money to an investment bank.

 

[kat]

For now, it's going half to my siblings and half to charity. When they're much older I may change it to nieces and nephews for the siblings with children.

 

[Martha]

No children either. Some in trust for my sibs. Other money for education for neices and nephews. The rest to charity. Will need updating as we age. I even have a grandniece now.

 

[Spanky]

Like retire@40, my plan to use it all and leave the rest, if any, to my spouse and two children in equal amount.

 

[kz]

Hubby, sons and two charitible organizations.

 

[MooreBonds]

Current status: 28, single.

If I were married with children, then the situation would be a LOT different (most going to my wife/family, with a little to charity). But, pending finding the right one, here's the current breakdown:

NW approx $500k
15% to 3 siblings (5% each), all older than me.
80% to charities
5% (if applicable) to my 'significant other' (read: seriously dating, not married) at the time of my death

My charities are mostly Catholic-related ones, although one on the list is the annual Post Dispatch list of 100 neediest cases that they profile each year.

I do have some hesitations about my one sibling sister. Three kids, just divorced (bad ex-husband), and she spends like there's no tomorrow. Currently getting parental assistance...but the problem is that she just doesn't seem to care about saving money. Still lives in her big, pre-divorce house, just acquired a cell phone, has cable, real estate taxes something like $7,500/year...and only earns in the neighborhood of $30,000 working for a family business. She has no qualms using my parents as a one-way ATM with no plans on paying them back. Perhaps if she sold her house and downsized and lived her life like she should, I'd be more inclined to offer some assistance...

My brother has a good income, but also spends a lot of it. My other sister has her head on her shoulders and has good financial plans w/ her husband, so I'm not too worried about either her or my brother when it comes to an inheiritance. The way I look at it, I sacrificed and saved like crazy, while they (for the most part) spent like mad. If I had spent my money like them, I'd have little to show for it, so they shouldn't care if I 'spend' my money on charities like they spent theirs on having a good time.

 

[Nords]

Some of my friends believe in keeping the money "in the family", while others believe in distributing the majority of their estate to charity.

I was just curious as to what other people on this forum plan to do with their estate and how they will set it up so that everything is done according to plan.

We'll probably leave it to our kid or her descendents.

We saw an interesting inheritance a few years ago. Spouse was working at a command that was just a little too gung-ho, and part of the problem was that the XO was one of those single no-kids type-A people who devoted 100 hours/week of her life to working there. Of course the XO didn't want to be lonely, and no one wants their XO getting involved in their stuff while they're away on non-essential tasks like eating, sleeping, or spending time with family... anyway the XO was a single-minded PITA, everyone was working way too much, and life was not fun.

Then the XO's father died. (Her mother was already deceased.) The will established a charitable foundation with the XO as trustee. Presumably she was eligible to receive some sort of stipend or reimbursement for trustee services.

You never saw a go-Navy attitude change as quickly as hers. She immediately filed for retirement ($35K/year + COLA & full medical) and started spending 100 hours/week on her executrix/trustee duties. At first the command heaved a huge sigh of relief at having her out of their hair, but inevitably the work began piling up in the wrong "IN" box and the CO started getting involved. The XO's new attitude was so poisonous that the CO expedited her retirement date to just four months' lead time instead of the usual 9-12 months. She didn't even have a ceremony because she was organizing a fact-finding trip to third-world spas countries to find worthy causes to fund.

While it'd be interesting to both establish a charitable trust AND to give my kid a lifetime income, I have to wonder if affluenza would create a toxic environment of entitlement. Since our kid would hopefully be in her 70s when we croaked, this discussion would hypothetically apply more to grandkids in their 40s.

I'm enamored of funding grandkids' college costs, and it'll be interesting to see what our kid's grandparents teach us during the next 10 years. But again I'm paranoid about sapping teenage motivation with excessive funding.

 

[MikeD]

We are going to leave it all to the Humane Society of the US.

Mike D.

 

[brewer12345]

Until our kids are adults, all the money is slated to go to them. Once they are adults making their way in the world, I probably will set things up to give them something, but the bulk will go to charities. I don't believe in spoiling someone's life with a large trust fund.

 

[Nords]

I don't believe in spoiling someone's life with a large trust fund.

Me either, but I'm sure that my life would prove to be an exception to that temptation...

 

[Momtwo]

I do believe in passing down our money to our children; hence a trust is in place.

 

[Toejam]

Interesting replies. Thanks for the feedback. After reading all your posts, I may have to rethink some of my intentions. And like many of you have alluded to, there will probably be some changes made based on what I observe and what happens in my life and the life of my nieces/nephews as time goes by. I may even decide to live it up and spend a little more on myself!

A longtime friend also had an interesting inheritance situation. After his mother's death recently, he received a call from an accountant that his parents had been using for many years. The accountant told him that his grandfather (his mother's father) had left him and his 2 sisters with an inheritance that included, in addition to some mutual funds, ongoing income derived from owning the mineral rights on large expanses of land. From what I understand, my friend's grandfather was a real "wheeler-dealer" at the turn of the century and bought up the mineral rights for large parcels of land in Texas, Oklahoma, and Florida(?). He did a lot of trading and also believed in oil. Before he died, he set up a large trust with his only child (my friend's mother) and his grandchildren (my friend and his 2 sisters) as the beneficiaries. (He never liked his son-in-law and made sure he was completely left out of the trust). Now that my friend's mother has died, all this stuff has passed on to my friend and his 2 sisters. But it is more complicated than inheriting the usual cash, stocks, real estate. From what I understand, when the large(and not so large) oil companies start drilling for oil, they have to pay my friend a certain amount of money because he owns the mineral rights on those grounds. I don't completely understand how this all works but, last month alone, my friend earned $17,000 from oil drilling/mineral rights thing. As a result of this inheritance, his net worth is now several million dollars.

My friend does not have an education beyond a 2-year Associate Degree from a community college. He makes about $35k per year in a blue-collar job, and has been living in a very cheap and cramped apartment for the last 20 years. He has been extremely frugal all his adult life and had managed to save close to $500K even before receiving the aforementioned inheritance. He has always been extremely frugal, still is, and will probably always be. It's awfully hard to change your spending habits after so many years . . .although he has "lightened up" a bit recently by turning in his old truck and buying a new one. (But he still leaves embarassingly low tips when dining out!!)

 

[Ed_The_Gypsy]

Education is about all our kids will get from us--if we can manage it.

However, I am establishing Roths for both of them as they start working and giving lectures with visual aids on saving for Financial Independence. It seems to be taking root.

I have learned a little from observing inheritances in our families. Simply passing on money to children--even adult children--has not been a very good idea. We will consider the alternatives at a later time, provided there is something left.

Having said that, at this time, our wills simply divide up our assets to the surviving kids.

Ed

 

[haha]

I am amazed at how many people feel negative about leaving money to their kids. Where else can your bequest do anywhere near as much good for your line?

I have seen very good results of inheritances many times. I have also seen the way institutions will high-handedly ignore the givers wishes and do whatever they want, more or less daring anyone to do anything about it.

About 10 or 15 years ago one of the Bass brothers I think gave a big wad to Yale, with certain restrictions on how it was to be used. I think he wanted it to go to beefing up departments and course that taught "Western Civilization". Seems innocuous enough to me, but not to Yale. Bass- I think it was Sid- eventually got the money back, and I am sure he will not make the same mistake in his post-mortem gifts.

If I have an estate, and I hope I do, my kids get it. If you can't love your own flesh and blood, who can you love?

Ha

 

[ProfHaroldHill]

"Every happy family is happy in the same way; but every unhappy family is unhappy in its own way"

HH

 

[haha]

"Every happy family is happy in the same way; but every unhappy family is unhappy in its own way"

HH

Sorry Prof, you are plagiarizing. That is Tolstoy, not Harold Hill. 

Ha

 

[Sheryl]

I have been puzzling over this for a few years now.  

I'm 45, single, no kids.   I have two nephews, but my brother and their mother had a very toxic divorce, she is a nut case, I would never want any of my $ to fall into her hands, and the jury is still out on what sort of people the kids will turn out to be.

For now I am leaving about half my assets to my brother, the other half to a selection of 5 charities.   As the kids grow up, I may change my mind.  My brother is extremely well off, and doesn't really need my $, neither do his kids.  The house will go to a land trust for permenantly affordable housing.  

My SO has a son, but no grandkids (yet).  I assume he'll leave his assets to the son.  As time passes, if they have kids, and I become a doting step-grandmother, my plans may change.

As far as inheritances,  I think a lot depends on the individual circumstances.  I've seen both sides of the story.  My inheritance from my dad's life insurance trust will eventually cement my FIRE, but I have done well in getting 90% there on my own, not assuming anything from him.   He has always encouranged me to expect something from him, and that has probably changed the way I live, to some extent, but I'm still pretty frugal and independent IMNSHO  

 

[cj]

It's interesting to me to see how many of those responding have no kids. Guess it's easier to FIRE without 'em.

DH & I also have no kids. We also are hesitant about leaving a lot of $$ to family. We have provisions for our parents, should we die before they do. Otherwise, it goes 10% to each of my 3 brothers or their kids (depending if the brothers are still alive). They are all pretty responsible, none of them too well off. But that's more than enough for them; we don't want to mess them up by giving them too much. The rest goes to charity. DH has 2 brothers. One is so tight with a buck, it's scary. He works insane hours and we know he makes huge amounts of money, but lives in a dump in an unsafe neighborhood rather than spending anything. Never helps out the parents for anything. The other brother is 52 and never worked a day in his life. He's made a career out of sucking dry anyone who lets him get away with it. It's amazing. So he's not getting any of our hard earned moey either.

CJ

 

[Calgary_Girl]

Hopefully, we'll structure everything so that we die broke. But, in case we don't, the majority will go to our future children (and hopefully grandchildren). I also plan to leave a good chunk to the local SPCA/Humane Society.

 

[Nords]

I have been puzzling over this for a few years now.  

I'm 45, single, no kids.   I have two nephews, but my brother and their mother had a very toxic divorce, she is a nut case, I would never want any of my $ to fall into her hands, and the jury is still out on what sort of people the kids will turn out to be.

For now I am leaving about half my assets to my brother, the other half to a selection of 5 charities.   As the kids grow up, I may change my mind.  My brother is extremely well off, and doesn't really need my $, neither do his kids.  The house will go to a land trust for permenantly affordable housing.  

My SO has a son, but no grandkids (yet).  I assume he'll leave his assets to the son.  As time passes, if they have kids, and I become a doting step-grandmother, my plans may change.

Another option would be to set up a trust for the benefit of the minors and to make the trustee your brother. He gets to make the cash-dispensing decisions according to your guidelines and their mother is out of the picture. You can also dictate, to some extent, when the trustee steps aside and the beneficiaries take full control of the funds. It doesn't automatically have to be age 18 or 21.

But you're probably smarter to see what kind of adults they turn out to be... as long as you stay off runaway rollercoasters.

 

[brewer12345]

I am amazed at how many people feel negative about leaving money to their kids. Where else can your bequest do anywhere near as much good for your line?

I have seen very good results of inheritances many times. I have also seen the way institutions will high-handedly ignore the givers wishes and do whatever they want, more or less daring anyone to do anything about it.

About 10 or 15 years ago one of the Bass brothers I think gave a big wad to Yale, with certain restrictions on how it was to be used. I think he wanted it to go to beefing up departments and course that taught "Western Civilization". Seems innocuous enough to me, but not to Yale. Bass- I think it was Sid- eventually got the money back, and I am sure he will not make the same mistake in his post-mortem gifts.

If I have an estate, and I hope I do, my kids get it. If you can't love your own flesh and blood, who can you love?

Ha

Ha, I said what I said because I have seen more poor outcomes from large inheritances than good outcomes. In many of the cases, I think the problem was that the bequest was set aside while the recipient was very young and that they knew about it well in advance of actually receiving it. This tends to breed an attitude of eager anticipation to the exclusion of many other worthwhile things in life. I also think that the problems stem from the recipients not really understanding about money and how to handle it (aside from spending). I may well change how I feel about this as my kids get older and I see how they develop. Hopefully they won't be getting the money until they are well into adulthood.

I hear you on the charities. That is why I would not even consider leaving money to some, others I would probably try to put conditions on a large gift, and others I would happily give to my limits on an unrestricted basis (not to many of the latter).

 

[moghopper]

We are going to leave it all to the Humane Society of the US.

The Human Fund.

http://www.msgr.ca/msgr-2/festivus 05.htm