Over the last few months, I have started to re-think this as well.
I'm 57 and my kids are currently 16/13. My estate is set up to get them launched, but no significant money would pass to them until they are in their late 20's-early 30's. By then, they will have had to fend for themselves long enough to figure out how to have a decent life with their own earnings.
Barring an extend run with boats, hookers and blow, it's likely there will be a not-insignificant amount of money left behind, no matter when that is. If it's tomorrow, I will have missed out on a lot of hookers and blow, and they won't have to work very hard past their 30's
Having thought about different scenarios, I'm beginning to think it will be better for them if I draw down the IRAs (Trad primarily) and preserve the taxable account (~40% of investments).
My concerns are:
1. While they are showing good money sense for their ages, I don't know how they will handle a regular paycheck. Lot of reasons to be hopeful, but can't be certain.
2. If I expire in less than 10-ish years, the RMDs they are forced to take will be helpful, but the amounts could be low enough they consider it nice and spend it instead of investing it. No way to know now.
3. If my demise is after RMDs start for me, they will both be independent. The money habits will be clear before then, and if they are not to my liking, I can change the estate plan along the way. Either way, they have to take RMDs from whatever is left.
My current thought is to do Roth conversions when I can at lower tax rates, consider drawing SS at 62, and draw down the tIRA otherwise. All with the goal of preserving the taxable account assets.
At this point, I think it's better for them to be staring at a bigger pile with plans in place to manage that money than to have it dribble out at a rate that's enough to buy a new car every few years. Think it's a way to make a meaningful amount of money "meaningful" as opposed to being used to pay off the monthly credit card bill of a free-spending spouse (should that happen
)
I'm not completely satisfied with this approach, but it will work until I come up with a better one
. Fortunately, I'm happy with the current estate plan, can't tap the IRA without penalty yet, and the SS decision is a few years away.
In my case, no decisions to make now, and I'm glad for that.