Would you want your adult kids to inherit money?

[LoveBWVVBR]

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.

 

[Judique]

My folks are wanting to make a skip-generation trust for a lot of reasons, but mostly due to a sibling marrying into a really questionable family recently. 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.

Would you want your kids to inherit money at a relatively young age? Am I off base here? I've suggested to my parents that they leave my family's portion to charity instead, as I really think this is the choice least likely to cause issues. I doubt they will do this though. This is all stressing me out.

My children are all adults and I absolutely want them to inherit all that I have. I see no current problems with this in my family. They are all balanced individuals and capable of making adult decisions whether it would be to save or spend their inheritance on a larger home or whatever they choose.

Of course every family is different. So your thoughts are just as valid as mine or anybody elses.

When myself and my siblings received a small inheritance, we chose to take it in a not entirely 'everybody gets an equal share' way. A younger sibling needed more help than myself and 3 older siblings, so we signed off on most of it for him. We took a little as fun money - he got enough to provide a home for his family. (There was no will.) Twenty years later, we all know we made the best decision.

Good luck with it. I know that it can cause issues.

 

[LoveBWVVBR]

My children are all adults and I absolutely want them to inherit all that I have. I see no current problems with this in my family. They are all balanced individuals and capable of making adult decisions whether it would be to save or spend their inheritance on a larger home or whatever they choose.

Of course every family is different. So your thoughts are just as valid as mine or anybody elses.

When myself and my siblings received a small inheritance, we chose to take it in a not entirely 'everybody gets an equal share' way. A younger sibling needed more help than myself and 3 older siblings, so we signed off on most of it for him. We took a little as fun money - he got enough to provide a home for his family. (There was no will.) Twenty years later, we all know we made the best decision.

Good luck with it. I know that it can cause issues.

Ah, I should have added that my kids are currently 6 and 9. If they were already adults and had demonstrated their ability to manage money I would be worried
I feel like this would be something looming out there that could be a positive or a big negative, but that I had zero control over KWIM? It could end up being a great thing for them...or not. I've only seen one person inherit money in their 20's, and it was not a good thing for her at all. Maybe that's what scares me. I think what really scares me is just not having a say. I won't be able to determine whether or not my kids are ready for this because it's not coming from me.

 

[BellsFam]

DH and I have a plan if something should happen to both of us that DD would inherit our estate. The money she would get would be in a trust until she turned 25 with a provision she can use it earlier to pay for educational purposes.

We picked 25 because that's how old we were when we got married and deem that if we were responsible enough to be married she's responsible enough to manage the money.

 

[andiraye]

I think it depends on the age of inheritance, the amount and the personalities of the kids. Personally, I would want to wait until my kids were past the usual age of irrational decisions (30 or 35) before they could control a large sum. You can structure estate planning so that they don't control the assets well into adulthood. You should talk to a lawyer about your options. Also, you can use the long runway to adulthood to talk about the responsible, powerful and positive ways money can be used. For example, responsible financial planning, investment and philanthropy. I'm guessing based on your post that you believe in hard work, generosity and some measure of humility and if so there is a good chance your children will inherit those values even if they inherit money as long as they come into it when they are "fully formed."

 

[LoveBWVVBR]

I think it depends on the age of inheritance, the amount and the personalities of the kids. Personally, I would want to wait until my kids were past the usual age of irrational decisions (30 or 35) before they could control a large sum. You can structure estate planning so that they don't control the assets well into adulthood. You should talk to a lawyer about your options. Also, you can use the long runway to adulthood to talk about the responsible, powerful and positive ways money can be used. For example, responsible financial planning, investment and philanthropy. I'm guessing based on your post that you believe in hard work, generosity and some measure of humility and if so there is a good chance your children will inherit those values even if they inherit money as long as they come into it when they are "fully formed."

I agree with all of this. Inheritance is messy though. It can cause unintended problems. We structured our own trust as above, where they get the money at 25, 30, and 35 except for education. I feel strongly that I would prefer my kids not to inherit money, but my parents are not listening to me. I feel like this is an end-run around me as a parent if that makes sense, and that is tough to swallow. I really hate the way that money causes problems in families.

 

[lost*in*cyberspace]

My sister's daughter in law received a $120,000 life insurance policy at the age of 20 when her father died. She blew through the money in less than a year and has nothing to show for it. I would not turn over a large inheritance to someone in their 20s.

 

[LoveBWVVBR]

My sister's daughter in law received a $120,000 life insurance policy at the age of 20 when her father died. She blew through the money in less than a year and has nothing to show for it. I would not turn over a large inheritance to someone in their 20s.

Exactly. This is what I saw happen as well, only it was well more than 120K and it came in 2 chunks with the recipient managed to blow in short order with nothing to show for it. Then she continued living high off the hog and digging more and more into debt. This is what scares me.

Short of convincing my parents not to leave money to my kids, is there anything I can really do about this? I know that I can disclaim any inheritance as a legal adult, but I can't do that for my children can I? They are minors now, but wouldn't inherit it until adulthood.

 

[ruadisneyfan2]

I agree with the pp who said to make it so they're at least 30 to gain control of it.
Also why do your parents have to skip a generation for all of your siblings when it's really only one of you that should be skipped? The that sibling have children? Why not just let his share go to his children?

This is what my grandmother has chosen to do since she outlived my uncle and my cousin's wicked stepmother told her she'd get nothing when her father died.

 

[Colleen27]

It depends so much on personality and maturity and you can't know how that will go in advance. At 22 I was married and owned a home; I'd have been just fine managing any inheritance I might have received (though in my family that's not going to happen!). My brother, on the other hand, is 32 and can't even make good decisions with his paycheck; with a large sum he'd be a disaster.

I think making the money inaccessible until 25 is reasonable, especially if exceptions exist for educational spending. By then they've had a lot of years living with the lessons you're teaching about responsibility and frugality and a few years of adulthood and living with any mistakes they might make. And at that age they're likely to be reaching a stage where they are looking ahead to big adult expenses like a wedding, buying a home, and starting a family rather than still in the "live for today" mindset of a teen/early 20-something.

 

[Happyjen27]

I think that more money just makes one more of what they originally were. So, if one were thrifty and frugal, more money would be treated thriftily and frugally. If one is spendy and a big consumer of things, more money will make them more so.

So, the girl in her 20s who ran through that big inheritance might have still ended up in CC debt for living beyond her means, whether she got a big bolus of money or not.

That said, I would prefer my children come into their money at 25 than 20. I would also prefer they were utterly ignorant of what they might receive, so that they don't pre-spend it and wait for the clock to tick along until they arrive at 25.

 

[nugov2]

I don't see why it is a big deal for the kids to inherit money as adults. I'd request it to be when their older. My parents intend to leave a large sum of money to my kids and my brothers kids. It is now set up they have one trust they can use for school or if they do not go to school they will get that and the other inheritance when they are older. It is nice they will have the opportunity to begin their life with a house paid off and money in the bank or I guess they could blow it on a car and travel, but then they will have to live with that decision and it will be a life lesson.
They could live their life like that even without an inheritance. I think if it comes in their 20's it isn't a bad thing.

I keep telling my parents to enjoy the money now with everyone vs. leaving large sums of money, but obviously it is their decision. I think the kids would enjoy the memories of travel with them now more.

 

[Gumbo4x4]

If it's an issue, there could be stipulations.

Rather than a lump sum, make it a trust that doles it our a little at a time.

Stipulate how it can be used (mortgage, education, or other "responsible" manner)

Delay receipt until 30's, 40's, or even retirement age

Etc

 

[barkley]

Exactly. This is what I saw happen as well, only it was well more than 120K and it came in 2 chunks with the recipient managed to blow in short order with nothing to show for it. Then she continued living high off the hog and digging more and more into debt. This is what scares me.

Short of convincing my parents not to leave money to my kids, is there anything I can really do about this? I know that I can disclaim any inheritance as a legal adult, but I can't do that for my children can I? They are minors now, but wouldn't inherit it until adulthood.

there's really nothing you can do about it if your parents decide to do this-you can't choose for your kids to disclaim it while they are minors, and it's their decision when they become an adult (i have legal guardianship over one of my adult kids-the court would not permit me to do this either despite my legal standing).

i think i come to this situation from a different standpoint than most-i look at the situation from having been a trustee of a deceased person's trust.

as the trustee-the worst duty to ever be tasked with-there's always someone ticked off (and if someone's being disinherited it's a million times worse), so i wouldn't want to burden a trustee w/ something that might involve years and years of managing. we will have to set up a special needs trust for our child we have guardianship of, and believe me when i say that we will not skimp on getting the legal advice needed to set it up to be as easy for the trustee to administer w/in our goals as possible.

in any case-if my kids were in this situation i wouldn't want them to be aware of it until AFTER the family member passes. so much can change, wills and trusts notoriously get changed b/c of changes of mind/circumstances. heck-even if they don't get changed, a catastrophic event like an illness or disability can end up wiping out huge estates such that when the will/trust is looked to upon death the assets left no longer exist OR the debt of the deceased wipes it out.

 

[eliza61]

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.

.

After two horrendous experiences with large inheritances, my dh and I made the decision to not leave a substantial large (over 500K) inheritance to our kids.


Now I have trust set up currently for my two sons (now 21 and 23). I'm not sure inheriting money in your twenties discounts lessons learned. My birth mother died when I was young and I was able to draw down on my inheritance (not a large sum by any means) after h.s. lol, I definitely did not go "living la vida" loca. pretty much did normal 20 something things. brought a new car, a chevy nova (hardly wild), paid for my life at college, and paid toward my rent when I decided to live off campus.

My sons have pretty much lived an upper middle class/wealthy upbringing simply due to the fact that dh and I worked in fields that were high paying. I'd like to think that we've raised them to be responsible with money. Will they do stupid things and make mistakes?? sure. will they have to live with the consequences of their mistakes? again definitely.

Since I'm not a grandparent yet, there is no skipping a generation yet. If I die today both kids would get a paid for house, their college tuition and living expenses. the rest would go into various trust to support organizations I believe in. when they hit 30, they would get an additional gift and the remaining again would go to charities I support.

As Barkley suggested, every year when I go through my financial papers I update as needed or let it ride.

 

[aprilchem]

This is been an issue DH and I have thought about a lot, as his parents have set my kids up to each inherit a lot of money when he dies. FIL is 70 and doesn't have a history of longevity in his family so it's likely this will happen before my kids are adults. The money that they'll inherit from that, plus the UTM accounts we've been funding to them, will be in excess of 7 figures for each child. So it's a lot of money to worry about.

At this point there's really nothing we can do to prevent them from getting this money when they turn 18 (none of it is in trust and the ILs can't put it in trust). So we've been focusing on teaching them to be frugal, responsible, and live by the spend/save/give way of life. We also focus on not having debt and setting a budget for purchases. And we've made a point to tell them that the UTM accounts (which they know about, they don't know about the other money) are for things like paying for a house, paying for college expenses above tuition, etc. - not for toys or frivolity. And finally, we generally don't give them (or have ourselves) a lot of "stuff" - I don't want them to be in the habit of having excess so they think there are no limits once they inherit the money. We're hoping all of these things help them become responsible, frugal adults.

 

[LoveBWVVBR]

I agree with the pp who said to make it so they're at least 30 to gain control of it.
Also why do your parents have to skip a generation for all of your siblings when it's really only one of you that should be skipped? The that sibling have children? Why not just let his share go to his children?

This is what my grandmother has chosen to do since she outlived my uncle and my cousin's wicked stepmother told her she'd get nothing when her father died.

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.

 

[NewRVLady]

My sons are early 30's and I KNOW they would buy a house(the one who owns would upgrade) if they got a substantial amount of $$

OP-are the parents planning to do this WAYYY before they die? I have found living a lONNNG life takes a lot more $$ than not retired people realize

 

[LoveBWVVBR]

This is been an issue DH and I have thought about a lot, as his parents have set my kids up to each inherit a lot of money when he dies. FIL is 70 and doesn't have a history of longevity in his family so it's likely this will happen before my kids are adults. The money that they'll inherit from that, plus the UTM accounts we've been funding to them, will be in excess of 7 figures for each child. So it's a lot of money to worry about.

At this point there's really nothing we can do to prevent them from getting this money when they turn 18 (none of it is in trust and the ILs can't put it in trust). So we've been focusing on teaching them to be frugal, responsible, and live by the spend/save/give way of life. We also focus on not having debt and setting a budget for purchases. And we've made a point to tell them that the UTM accounts (which they know about, they don't know about the other money) are for things like paying for a house, paying for college expenses above tuition, etc. - not for toys or frivolity. And finally, we generally don't give them (or have ourselves) a lot of "stuff" - I don't want them to be in the habit of having excess so they think there are no limits once they inherit the money. We're hoping all of these things help them become responsible, frugal adults.

It sounds like you have thought this through, and also that your kids could be in this situation much younger than my kids. I talk about all the same things with my kids, frugality, responsibility, no debt. Clearly the 6 year-old doesn't really get much of this yet, but my 9 year-old does. That money could set them up for a great life provided that they are mature with it...I just have seen it go to the other way, and that worries me so much!

 

[LoveBWVVBR]

My sons are early 30's and I KNOW they would buy a house(the one who owns would upgrade) if they got a substantial amount of $$

OP-are the parents planning to do this WAYYY before they die? I have found living a lONNNG life takes a lot more $$ than not retired people realize

No, they were older when they had me and I was older when I had my kids, so not way before. My dad has zero longevity in is family and is already in his mid-70's. His oldest relative lived to 80, but most died in their 50's and 60's I have a living grandmother who is dying right now, and her estate is also going to be in the mix which makes it doubly difficult in my mind.