Would you want your adult kids to inherit money?

[elaine amj]

My mom wants to leave a trust she hope will carry on.Each generation getting help with education, a car,a house. And weddings and births and reunions until the money runs out.

 

[SirDuff]

We ended up with, essentially, a "skip generation" situation since my grandmother and mother died very close together (my grandfather had already died). My mother's portion of my grandmother's estate was split between my brother and I (so my aunt got 50% and my brother and I each got 25%). When the bulk of the estate was distributed, we were in our early 20s (and that disbursement was 6 figures each). Neither of us blew it. We both now have fully funded retirement accounts and healthy investment accounts. My brother did use a bunch of his money to buy a house - but it was years after he got it (and it was a sensible house for his family). Getting the inheritance set us up well for life (I view it as my "security blanket" and still save/invest/live as if I didn't have it) and was, in no way, a bad thing.

 

[Hisgirl]

Since no one really knows their length of life, telling someone to 'spend all their money' could potentially cause them to outlive their money. My sister tells my parents to do this all the time, but they could live an additional 15 to even 20 years, based on the lives of relatives. Those funds could be needed for care if Long term care insurance is not in place (and to offset any deficiencies even if it is).

People like to think their hard earned estate will go to those they love. I totally get that. You've gotten some good information regarding how a trust can stipulate how the funds are dispersed. I think a yearly dispersement as opposed to a lump sum sounds good. And I would make it small enough that the young adult couldn't leave employment to live off this sum.

 

[barkley]

Just because my mom feels like everything has to be done exactly the same so as not to create a problem between her kids. I really feel like changing her will/trust is a control thing right now as she is angry/hurt by the one child. I don't want to inherit anything either, as I don't need it or the drama that comes along with it. Inheritance just causes problems. I guarantee that my sibling would say the same if asked too honestly.

I guess I could ask my dad about doing it that way where the half goes to us to dole out to our kids when we see that they have reached financial maturity. He may see my point, but mom might override him. UGH, money causes too much drama in families. I just don't want it causing drama for my kids in the future.

if she's doing it b/c of current anger/hurt then the likelihood is there could be changes made many times before she passes.

the one thing i would ask of a family member in this situation-name an executor or trustee who is NOT a family member/friend-someone entirely neutral. i was trustee on my mom's, dh was executor on mil's. with neither we had any involvement w/how things were set up (and in one case knew nothing of how it was set up until death occurred). w/one a sibling (for a variety of reasons) it was disinheritance-worst thing ever to have to convey to one of your siblings, and since mom/dad is gone-anger and resentment ends up towards bearer of bad news along with those who did inherit so it can be an awful triple whammy if you inherit/your kids inherit/you are executor/trustee. with the other side of the family the person inherited but not what they felt was their due so when legal channels didn't work they resorted to a death threat towards other recipients. so in that case not only was a parent/grandparent lost-a sibling/uncle as well (i would like to think this is an isolated event, but our lawyers said it's MUCH more common than people would ever fathom).

 

[Minnesota!]

I inherited a decent sum of money when I was in my 20's. I did not go hog-wild. I paid off a car, some other bills, and got myself in a comfortable position.

I would hope that by their 20's, my kids would have the same fiscal responsibility I had...if not, I would feel I failed that aspect of parenting.

 

[bbarba]

Speaking on behalf of my parents (who are completely alive and well): we would be absolutely thrilled to leave our children their inheritance (well at least our son, his sister-not so much). We know it would be spent on well thought out investments and provide only improvements to their lives.

Back to reality, when my wife and I went through estate planning when our daughter was born, I had a discussion with my dad about this. (I am 38 now, this happened when I was 30). We talked about setting up trusts, he asked me why we needed one for our kid (and now kids). I explained that on just his side of the family, a lot of money would accumulate through lack of children and life insurance policies. I did not want my kids having too much money to spend all at once or more importantly, a guardian blowing the money. We put all sorts of safeguards in place.

 

[aaarcher86]

Would you want your kids to inherit money at a relatively young age, like mid 20's to mid 30's? My folks are wanting to make a skip-generation trust for a lot of reasons, but mostly due to a sibling's poor choices. I totally get why this sibling can't inherit anything due to the current circumstance, but I'm not really sure that I want my own kids inheriting anything substantial in young adulthood via a skip-generation trust either. I am really raising my kids to understand money and frugality, and I feel like an inheritance in their 20's or 30's could undermine what I am teaching them if that makes sense.

This is stressing me out. Ideally I'd love to see my parents spend every cent they have or else donate it to charity, but neither is likely. I don't even know how to deal with this with my parents at this point, or if I'm concerned for nothing.

Yes. If you teach them good money skills they'll make good choices with it.

Hell, I had **** money sense in my early 20s but still had the sense to use my money as a down payment on a house instead of an extravagant wedding!

They'll be fine.

 

[nugov2]

Since no one really knows their length of life, telling someone to 'spend all their money' could potentially cause them to outlive their money. My sister tells my parents to do this all the time, but they could live an additional 15 to even 20 years, based on the lives of relatives. Those funds could be needed for care if Long term care insurance is not in place (and to offset any deficiencies even if it is).

People like to think their hard earned estate will go to those they love. I totally get that. You've gotten some good information regarding how a trust can stipulate how the funds are dispersed. I think a yearly dispersement as opposed to a lump sum sounds good. And I would make it small enough that the young adult couldn't leave employment to live off this sum.

I think this is so true. You should never rely on that money. I also in our case hate how my dad views his money. He thinks it will give him comfort knowing his kids and grandkids and taken care of after they are gone. He doesn't take care of us now so why do we need it when he isn't here. Enjoy life IMO. He would have to go really crazy to blow it all, but I always tell him wouldn't it be better to take 30,000 a year and go on a vacation with his grandkids while they are young enough to travel (my parents). My brother and I don't need/want the money. It is nice my children will have a good start in life when they are adults, but I think the memories would be even more beneficial. He could easily spend that without touching the trust for college or any of his investments, but it is their money. I am just one who treasures memories and experiences over things. My dad just has an unhealthy fear of him being gone and tragedy striking and not being there to financially fix it. I think it is because her grew up very poor and doesn't want any of his kids or grandkids to ever experience that. The crazy thing is I never even realized my grandparents didn't have money until I was much older. I think they had a great life and my best memories are spending time with them. Luckily my parents are really involved with the kids too, but I just wish he'd get past those feelings.

 

[eliza61]

Just because my mom feels like everything has to be done exactly the same so as not to create a problem between her kids. I really feel like changing her will/trust is a control thing right now as she is angry/hurt by the one child. I don't want to inherit anything either, as I don't need it or the drama that comes along with it. Inheritance just causes problems. I guarantee that my sibling would say the same if asked too honestly.

I guess I could ask my dad about doing it that way where the half goes to us to dole out to our kids when we see that they have reached financial maturity. He may see my point, but mom might override him. UGH, money causes too much drama in families. I just don't want it causing drama for my kids in the future.

So don't let it.
there is a very popular saying "you can't control other peoples actions but you can control your reactions".

Your mom is going to do what she wants to do and truthfully why shouldn't she, it's her (and your dad's) dough. Maybe she is or isn't using an inheritance to exert some control, I mean in all honesty I probably do the same to my kids. for example, I'm paying their tuition bill, I tell them all the time, don't get good grades or play by my rules you don't get the money. so in reality I'm using money as a tool.

Simply tell your mother you'd rather not have an inheritance. I doubt if she'll listen but there is nothing you can do to control that. Maybe say to her that you don't believe in leaving large sums of money to folks and that if you do get an inheritance you will donate it to a charity.

Either way, in reality if she dies and lives your kids a bucket of money what are you going to do? she'll be dead.

I wouldn't stress about it.

 

[barkley]

I think this is so true. You should never rely on that money. I also in our case hate how my dad views his money. He thinks it will give him comfort knowing his kids and grandkids and taken care of after they are gone. He doesn't take care of us now so why do we need it when he isn't here. Enjoy life IMO. He would have to go really crazy to blow it all, but I always tell him wouldn't it be better to take 30,000 a year and go on a vacation with his grandkids while they are young enough to travel (my parents). My brother and I don't need/want the money. It is nice my children will have a good start in life when they are adults, but I think the memories would be even more beneficial. He could easily spend that without touching the trust for college or any of his investments, but it is their money. I am just one who treasures memories and experiences over things. My dad just has an unhealthy fear of him being gone and tragedy striking and not being there to financially fix it. I think it is because her grew up very poor and doesn't want any of his kids or grandkids to ever experience that. The crazy thing is I never even realized my grandparents didn't have money until I was much older. I think they had a great life and my best memories are spending time with them. Luckily my parents are really involved with the kids too, but I just wish he'd get past those feelings.

I absolutely understand your dad's mindset and it was the big topic of discussion at a training session I had to attend when I worked for social services. the training for staff was about how to read trusts to determine if they created ineligibility to our programs, but the elder law specialists gave so many examples of how an improperly set up will or trust could do the exact opposite of what the giver intended. the giver intends to have monies available in the event of a tragedy but it gets set up either too loosely and ends up wasted or there are too many restrictions and a beneficiary of it who has a true tragedy strike isn't allowed to access it for a needed purpose. same w/well meaning parents/grandparents and college trusts-if it's a significant chunk of change that could reasonably cover all a student's expenses it might not be an issue, but if it's a modest sum and the goal for it to supplement any other sources (need based for example) then if it's not structured right the kid might have to spend it in it's entirety before any need based can kick in. there's also situations where kids don't go to college or can't (b/c of a disability that's not apparent when the trust is set up)-are there provisions to allow for that money to go to another purpose, and are there provisions that prevent a kid from just opting NOT to go to college so they get access to the funds.

consulting an elder law attorney who specializes in wills and trusts is so vital-it's important for protecting and preserving assets , but also for ensuring what's put in place meets the intent for the lifetime of the giver as well as whomever they choose to gift.

 

[cadawson]

Just because my mom feels like everything has to be done exactly the same so as not to create a problem between her kids. I really feel like changing her will/trust is a control thing right now as she is angry/hurt by the one child. I don't want to inherit anything either, as I don't need it or the drama that comes along with it. Inheritance just causes problems. I guarantee that my sibling would say the same if asked too honestly.

I guess I could ask my dad about doing it that way where the half goes to us to dole out to our kids when we see that they have reached financial maturity. He may see my point, but mom might override him. UGH, money causes too much drama in families. I just don't want it causing drama for my kids in the future.

I would respectfully ask your parents to consult with a good attorney, CPA and/or estate planner to help them create any vehicles for distributing their estates. They need to consider the best treatment to carry out their wishes, including tax consequences and protecting the assets until the recipients are old enough to make wise decisions about the money. Trusts can be structured with provisions to address your concerns about a young person receiving an inheritance. Bringing in a trusted adviser should help you and them come to an agreeable solution.

 

[pryncess527]

Inheriting money at 18 was not great for me. Had my grandmother required I be 25, I think it would have been much better. I would have no qualms at all about my (hypothetical) child inheriting money in their late 20s or 30s. That is a FAR cry from inheriting money prior to 21, IMHE

 

[lost*in*cyberspace]

OP, I wouldn't spend too much time worrying about this; your kids are still very young. Plenty of time to teach them about managing finances. Besides, who knows what will happen in the coming years?

A bit OT, but please make sure that if you have life insurance for your children and they are minors, do NOT leave the insurance money directly to them. Set up a trust with someone trusted named to manage the money. If you don't, the court will have to appoint a guardian and it can be a real legal mess.

 

[jen7233]

Yes, I would. BUT, it depends on the child in question. However, I would think giving a small amount in early 20s is fine. And by 30s, if they still don't have it together, I don't know what to say. Each person matures at their own pace. Two of my brothers would have blown through the money at 20s, 30s, 40s, whenever. Well, one is passed away now, but the other one is still maturing at 49 years old. I think now it would finally be okay to get money given to him. He was a mess until about age 45. My third brother, however, would have been fine with a large amount at any age, be it 15, 20, whatever. He's in his 50s now. He's strict with his money, always been frugal with everything including his dealings with people, lol. I would have been okay after age 25. All just depends.

 

[Madteaparty001]

I understand the worry, but in my opinion it's not your money to dictate. If they want to leave it to the grandchildren, let them. It's your job as a parent to teach your children to have a good head on their shoulders so they can handle the potential money well. Trying to prevent your parents from leaving your children money because you fear you might fail is a disservice to your kids. You have to trust they'll make the right decisions. Plus you never know what can happen between now and then, medical bills, a dream job in another country, marriage, university, all cost a nice chunk of money.

 

[GrnMtnMan]

I would hope that by their 20's, my kids would have the same fiscal responsibility I had...if not, I would feel I failed that aspect of parenting.

Bingo.

 

[PlutoPony]

Have a little experience with this. Starting to educate kids as young as possible can help avert some of the problems you are concerned about.

One thing that younger people don't understand or appreciate is the compounding effect of money invested at an early age. Once they see and get that, it becomes easier to resist spending for short term gratification and hold on for longer term benefit. As soon as my son had a summer job, we invested in a Roth for him and continue to do that every year. It's not a lot of money - because he doesn't make a lot in the summer when he's off school - but it IS starting to mount up. We are hopeful that by the time he finishes college and is working full time, he will see how much he's made with the IRA and will want to continue investing in it on his own as opposed to spending whatever $ he has. And when other money comes to him, we hope that he will be comfortable with the concept of investing and managing what he's saved, making it easier for him to continue doing that.

We also take every opportunity we can to show him how small amounts of money saved for a while can amount to quite a lot. Just had him cash in some savings bonds his grandmother added his name to when he was born. $2k investment was worth $14K. THAT made a big impression.

 

[disykat]

My kids are now in their 20's and I would be okay with them getting a large sum of money. However, if you'd have asked me that question 10 years ago I would have been adamantly against it. There's no way to know if they will have the necessary abilities to handle it until they're older.

I'd worry most if they KNEW that they were going to be getting the inheritance. I really believe that has the possibility of handicapping them.

 

[amylevan]

My mother-in-law passed away when we were 27. Nine years later and the majority of our inherited money is in mutual funds and other long term investment with goals to help us in retirement and our kids in college. We did spend some on a motorcycle and a downpayment on a house, but all-in-all I feel we made responsible choices with it. My 2 brother-in-laws also made equally responsible choices (although 1 of them had to use it to supplement his own living due to losing his job...). So, just because someone is in their 20s when they inherit money does not mean they are going to be irresponsible with it.

But, (1) it's your parents money, so you really have no say in what they want to do with it and (2) you are talking about when your kids are adults and you really have no say in how they live their life. So, I would say this is something you really don't have any control over and just need to let what will happen, happen.

 

[barkley]

OP, I wouldn't spend too much time worrying about this; your kids are still very young. Plenty of time to teach them about managing finances. Besides, who knows what will happen in the coming years?

A bit OT, but please make sure that if you have life insurance for your children and they are minors, do NOT leave the insurance money directly to them. Set up a trust with someone trusted named to manage the money. If you don't, the court will have to appoint a guardian and it can be a real legal mess.

if parents pass leaving minor children unless/until they get adopted by someone they will have to have a legal guardian appointed regardless of any money in their name or a trust. in some states it's an all in one guardianship (of the person and their estate), in others it's separate (my state is this way). different states have different laws but most are VERY particular on how any monies a minor parentless child is handled, preserved and protected-in mine whomever was the trustee for a trust would have to have an arm's length relationship from the minor child to protect against conflict of interest or they will be looking at court costs to get approval for any and every financial decision and disbursement (which can eat up a trust really fast). heck-here during the period of time guardianship is being applied for and the minor has a guardian ad litem-the guardian ad litem would look at all the assets and despite who someone named to oversee a trust might get the court to put it into the hands of a neutral impartial professional.