How much money would you leave to your children?
November 9, 2021 2:58 AM Subscribe
I am wealthy. My spouse and I made our wills years ago, splitting our estate equally among our children (who are now almost adults). But that was before we had much of an estate to leave, and now I wonder if we should still do that.
Would you leave all your money to your children, if you had a lot to leave? Or would you set a limit on how much they could inherit, and give the rest to other people and causes?
Would you leave all your money to your children, if you had a lot to leave? Or would you set a limit on how much they could inherit, and give the rest to other people and causes?
It's funny, my parents shared some similar thoughts.
Their money is absolutely theirs to distribute, but a chunk of it was both intergenerational wealth from one particular grandparent who molested me, and also winning real estate, which was largely funded by the same source. (And one reason they didn't take the few times I tried to get help seriously, can't offend the patriarch that is paying for things.)
Anyways, their way of putting it - that it was 'too much money' for my sibling and I - was actually really hurtful. It's not that it's not their money - it is legally and even though I do have Feelings about the one grandparent, morally it is too and I've always planned for my own retirement on that basis, like, I'm fine without any inheritance.
But the idea that they are fantastic stewards of their Boomer-era cash out but my sister and I somehow are not able to continue to manage or do good with it even thought we're both very responsible (she's c-suite of a company you would know) it was - really insulting. Like, really, really insulting. I didn't argue with them about it because - see above, it's their money and they've always been the way they've been about it. But it definitely added to the damage between us. My sister and I have done more fundraising, cause-supporting, and volunteering between us than they have.
If they had put it like "we would like XYZ to receive the money" rather than "we don't want to leave you too much money for you to handle" I don't think I'd've had a second thought about it. So I'd just say, if you're trying to keep money away from people, that seems suspect. But if you have places you want your money to do good other than your children, that's positive.
posted by warriorqueen at 3:44 AM on November 9, 2021 [48 favorites]
Their money is absolutely theirs to distribute, but a chunk of it was both intergenerational wealth from one particular grandparent who molested me, and also winning real estate, which was largely funded by the same source. (And one reason they didn't take the few times I tried to get help seriously, can't offend the patriarch that is paying for things.)
Anyways, their way of putting it - that it was 'too much money' for my sibling and I - was actually really hurtful. It's not that it's not their money - it is legally and even though I do have Feelings about the one grandparent, morally it is too and I've always planned for my own retirement on that basis, like, I'm fine without any inheritance.
But the idea that they are fantastic stewards of their Boomer-era cash out but my sister and I somehow are not able to continue to manage or do good with it even thought we're both very responsible (she's c-suite of a company you would know) it was - really insulting. Like, really, really insulting. I didn't argue with them about it because - see above, it's their money and they've always been the way they've been about it. But it definitely added to the damage between us. My sister and I have done more fundraising, cause-supporting, and volunteering between us than they have.
If they had put it like "we would like XYZ to receive the money" rather than "we don't want to leave you too much money for you to handle" I don't think I'd've had a second thought about it. So I'd just say, if you're trying to keep money away from people, that seems suspect. But if you have places you want your money to do good other than your children, that's positive.
posted by warriorqueen at 3:44 AM on November 9, 2021 [48 favorites]
If you have a huge amount of money, I would be explicit with your children about how much financial support they can expect from you in adulthood, make your will commensurate with that, and let them know how it's being organised. I think you neither want them to be cut off from financial support they have come to rely on when you die, nor do you really want them to be waiting for your death to be wealthy beyond their wildest dreams.
posted by plonkee at 4:08 AM on November 9, 2021 [7 favorites]
posted by plonkee at 4:08 AM on November 9, 2021 [7 favorites]
This is a tricky period--your children are "almost adults," meaning that right now, it's probably not a great idea to hand them a huge pile of cash, especially if they're grieving. That's what trusts are for, and if they were children who would need caretaking, I'd probably err on the side of leaving them as much as possible in this form.
But your will is presumably a long-term thing, and the question of how they as individuals are likely to handle it is important. Like, would they likely donate a bunch of money to causes you cared about, or to their own causes? Are they likely to spend till it's gone or use it as the basis to build something?
Here's my bias: there's no family money for us, but we're huge savers, to the point where I sometimes worried I should be donating more to charity (and we donate a decent amount to charity). And then we had a health crisis, my husband can't work (maybe never) and I am a full time caretaker, and those savings went from "more than a family really needs" to "all the money we have for a couple of years, and most of it for a lot longer."
I guess I'm saying that bootstraps are great, but this is a rough time to live in, and money is safety. I would give large allotments to charity and the rest to my kids, rather than the other way around.
posted by gideonfrog at 4:17 AM on November 9, 2021 [4 favorites]
But your will is presumably a long-term thing, and the question of how they as individuals are likely to handle it is important. Like, would they likely donate a bunch of money to causes you cared about, or to their own causes? Are they likely to spend till it's gone or use it as the basis to build something?
Here's my bias: there's no family money for us, but we're huge savers, to the point where I sometimes worried I should be donating more to charity (and we donate a decent amount to charity). And then we had a health crisis, my husband can't work (maybe never) and I am a full time caretaker, and those savings went from "more than a family really needs" to "all the money we have for a couple of years, and most of it for a lot longer."
I guess I'm saying that bootstraps are great, but this is a rough time to live in, and money is safety. I would give large allotments to charity and the rest to my kids, rather than the other way around.
posted by gideonfrog at 4:17 AM on November 9, 2021 [4 favorites]
I would have no problem leaving a large inheritance to my children. I would also support any charitable causes I wanted.
posted by LoveHam at 4:19 AM on November 9, 2021 [2 favorites]
posted by LoveHam at 4:19 AM on November 9, 2021 [2 favorites]
I would leave the money to my children. I don’t have children, so we’re leaving our money to our niece and nephews. I’m thrilled that someday we’ll be able to help make their lives easier. The world is hard. Money is security.
posted by something something at 5:03 AM on November 9, 2021 [8 favorites]
posted by something something at 5:03 AM on November 9, 2021 [8 favorites]
Especially if you live in a country where there isn't a functional social "safety net" I definitely would leave them at at a bare minimum enough to for them to live a modest lifestyle in perpetuity (living off the interest w/o needing to eat into the principal) without working.
posted by Larry David Syndrome at 5:10 AM on November 9, 2021 [14 favorites]
posted by Larry David Syndrome at 5:10 AM on November 9, 2021 [14 favorites]
I'd leave a sizeable chunk to causes, so some goes that way and my children don't have to decide the threshold, or decide to give none (the idea of giving none makes me sad). I am not religious at all but would want to give tithings to the world for being in it all this time.
I'd leave at least enough for my children to pay off a home and have a safety net.
I'd give a smaller portion to people I knew, particularly people who a smaller amount could mean a lot for (either materially or as a gesture for them to do something nice- my great aunt gave me exactly enough in her will to fix the old rotten staircase in the tumbledown house I bought but was a long way off affording to do up).
posted by hotcoroner at 5:12 AM on November 9, 2021 [1 favorite]
I'd leave at least enough for my children to pay off a home and have a safety net.
I'd give a smaller portion to people I knew, particularly people who a smaller amount could mean a lot for (either materially or as a gesture for them to do something nice- my great aunt gave me exactly enough in her will to fix the old rotten staircase in the tumbledown house I bought but was a long way off affording to do up).
posted by hotcoroner at 5:12 AM on November 9, 2021 [1 favorite]
We have currently arranged our wills to leave everything to our children. It's a significant amount of money/assets (e.g., could buy a very nice house outright, but not enough to mean they will never need to work). We do give to charity currently, but upon our death I want the kids to have maximum flexibility. They may choose to donate some, but they may genuinely need the help.
posted by Bebo at 5:13 AM on November 9, 2021 [1 favorite]
posted by Bebo at 5:13 AM on November 9, 2021 [1 favorite]
My paternal grandfather was wealthy when he died, and the money then became my grandmother's. She regularly donated to her charities of choice, helped fund my dad's research lab and a research library in my mom's academic department; she paid for her grandkids' education (grad school for two of us and medical school for a third); and she sent me a thousand dollars a month until she died in 2013. She told me once that I was the only grandkid who continued to receive money as an adult because I was the only one who sent thank-you cards.
There was a strategic element in some of this: by giving me a thousand dollars a month, it was under the maximum gift amount, and thereby wasn't taxed, unlike the large sums we all received from her estate when she died. She left 1/4 of the money to my uncle, 1/4 to my dad, and split the other 1/2 equally among the grandkids. Grandma also included an amusingly stern note in her will that although we could spend the money how we wished, we should still be productive members of society.
I used a good chunk to buy my home, which I would not have been able to do without this inheritance. I also went on some amazing international trips, helped multiple friends buy their own homes, and sponsor a cage in my grandparents' memory at the animal shelter where I used to volunteer. Unlike my cousins, I do not have children, so instead I consider my friends' kids my nieces and nephews, and intend to be financially generous to them as they grow up. I try to honor my grandparents and their wealth with these approaches to wealth redistribution. My parents do not have this approach; when I bought my home, which cost more than any homes where they have lived, they begrudgingly gave me $100 after I refused to accept any physical gifts.
All of this to say: I appreciated that Grandma did not cap what she gave us, and think it is worth considering what you want out of your financial legacy both while you're alive and after you pass.
posted by wicked_sassy at 6:21 AM on November 9, 2021 [3 favorites]
There was a strategic element in some of this: by giving me a thousand dollars a month, it was under the maximum gift amount, and thereby wasn't taxed, unlike the large sums we all received from her estate when she died. She left 1/4 of the money to my uncle, 1/4 to my dad, and split the other 1/2 equally among the grandkids. Grandma also included an amusingly stern note in her will that although we could spend the money how we wished, we should still be productive members of society.
I used a good chunk to buy my home, which I would not have been able to do without this inheritance. I also went on some amazing international trips, helped multiple friends buy their own homes, and sponsor a cage in my grandparents' memory at the animal shelter where I used to volunteer. Unlike my cousins, I do not have children, so instead I consider my friends' kids my nieces and nephews, and intend to be financially generous to them as they grow up. I try to honor my grandparents and their wealth with these approaches to wealth redistribution. My parents do not have this approach; when I bought my home, which cost more than any homes where they have lived, they begrudgingly gave me $100 after I refused to accept any physical gifts.
All of this to say: I appreciated that Grandma did not cap what she gave us, and think it is worth considering what you want out of your financial legacy both while you're alive and after you pass.
posted by wicked_sassy at 6:21 AM on November 9, 2021 [3 favorites]
There are some serious thoughts expressed here. I would suggest waiting to make the final decision until your children are about 35 years old, so that you will have a better sense of how responsible and well-grounded they are. It is difficult to make that prediction at ages 18-22.
posted by yclipse at 6:31 AM on November 9, 2021 [1 favorite]
posted by yclipse at 6:31 AM on November 9, 2021 [1 favorite]
There are firms who specialize in these decision, here's one such.
posted by stray at 6:33 AM on November 9, 2021
posted by stray at 6:33 AM on November 9, 2021
If you have enough wealth to provide your children a significant inheritance and leave money to a charitable cause, do both. I feel a tremendous responsibility to do everything I can to make my children’s future less bleak. Global warming, growing income inequality (I see the irony here), continued rise of fascist politics in the US, increasing cost of living, prohibitively expensive real estate…I could continue but I won’t because it is too depressing. I chose to bring these two kids into a world that is increasingly hostile to their existence. I will absolutely do what I can to make their lives easier.
But.
I also have a responsibility to the rest of humanity. I’m screwing things up for future generations too, just not as intentionally or significantly as a majority of people in my same stage of life. If I can I will leave some of my accumulated wealth to people who can use it to make the future a bit better for more people.
posted by teamnap at 7:06 AM on November 9, 2021
But.
I also have a responsibility to the rest of humanity. I’m screwing things up for future generations too, just not as intentionally or significantly as a majority of people in my same stage of life. If I can I will leave some of my accumulated wealth to people who can use it to make the future a bit better for more people.
posted by teamnap at 7:06 AM on November 9, 2021
It’s hard to say. Especially if you have children with varying incomes or number of children. I work for non profits and despite being the only sibling with a masters degree I don’t make much. My brother makes a lot of money but also has 4 kids and is I likely to ever really need outside financial support.
Would you want your children to be able pursue less prestigious or well paid careers like teaching?
I will say that I’m incredibly thankful that my parents were essentially able to buy us a house and that provides incredible stability.
posted by raccoon409 at 7:21 AM on November 9, 2021
Would you want your children to be able pursue less prestigious or well paid careers like teaching?
I will say that I’m incredibly thankful that my parents were essentially able to buy us a house and that provides incredible stability.
posted by raccoon409 at 7:21 AM on November 9, 2021
A lot of this depends on how much money you think makes you "wealthy" and how many children you have. If, for example, you have a net worth of around $9MM and three children, while a $3MM inheritance is by no means paltry it also isn't massive. It's "I don't have to be afraid of dying in penury and I now can afford to buy a house" money, not "lighting cigars with hundred dollar bills" money. If your net worth is $50MM and you have two children, there's enough there to make significant charitable donations and also leave your children a meaningful inheritance.
At this stage in the game, with children who are "almost adults," it seems premature to think about significant beneficiaries other than your children. You have no way of knowing what their lives will be like, whether they will have successful careers in remunerative fields, whether they might have children of their own that require expensive care/education/whatever, and so on. Assuming you (hopefully!) live to see your children into their own middle age, this calculus may change depending on their circumstances as well as yours.
posted by slkinsey at 7:24 AM on November 9, 2021 [4 favorites]
At this stage in the game, with children who are "almost adults," it seems premature to think about significant beneficiaries other than your children. You have no way of knowing what their lives will be like, whether they will have successful careers in remunerative fields, whether they might have children of their own that require expensive care/education/whatever, and so on. Assuming you (hopefully!) live to see your children into their own middle age, this calculus may change depending on their circumstances as well as yours.
posted by slkinsey at 7:24 AM on November 9, 2021 [4 favorites]
I don't know how wealthy you are, so if you are _beyond_ wealthy, this may not apply to you.
You describe your children as "almost adults." That can mean that they are late teens, or they are still in college, still finding their way. I believe that, as of now, you don't know enough about where they are going in their life to know whether to provide it all to them, or divide the funds in an equitable manner (If Jane is a doctor, has no loans, and is doing fine, but Ann is an artist, doing good work but will always struggle financially, I might decide to make an unequal distribution. This would also depend upon their particular attitudes towards money, and each other.).
I agree with everyone above that spreading wealth is good, and you may choose that route. At this point, however, I think it's too early to really make a decision. It's okay to re-write your will (or trust!!) several times. Attorneys who sell you such services will tell you to evaluate your situation every year. I think every couple of years is more reasonable, but I am a terrible salesman.
Whatever you decide, meet with a professional, and have your will prepared (and trust and other necessary documents if you don't have them already), and when circumstances change, feel free to adjust your distribution.
posted by China Grover at 7:24 AM on November 9, 2021 [1 favorite]
You describe your children as "almost adults." That can mean that they are late teens, or they are still in college, still finding their way. I believe that, as of now, you don't know enough about where they are going in their life to know whether to provide it all to them, or divide the funds in an equitable manner (If Jane is a doctor, has no loans, and is doing fine, but Ann is an artist, doing good work but will always struggle financially, I might decide to make an unequal distribution. This would also depend upon their particular attitudes towards money, and each other.).
I agree with everyone above that spreading wealth is good, and you may choose that route. At this point, however, I think it's too early to really make a decision. It's okay to re-write your will (or trust!!) several times. Attorneys who sell you such services will tell you to evaluate your situation every year. I think every couple of years is more reasonable, but I am a terrible salesman.
Whatever you decide, meet with a professional, and have your will prepared (and trust and other necessary documents if you don't have them already), and when circumstances change, feel free to adjust your distribution.
posted by China Grover at 7:24 AM on November 9, 2021 [1 favorite]
One thing: any child of yours could become disabled. I have a disabled sibling who is unable to work. My partner has a sibling who is in the middle of a long recovery from a grave illness and who is likely to be unable to return to full time, demanding work. (And both my partner and I have medical limitations!) You would never have known this about us when we were twentyish - we all enjoyed rude good health, were academically successful and none of these conditions ran in the family.
For this reason if I had a lot of money and kids, I'd consult a lawyer about some kind of family trust, whether it would be wise to purchase a small house or condo for each child outright now as a backstop, etc. My first goal would be to protect my children from housing stress and inability to afford assistance/medical care should something bad happen. Once I'd established some kind of baseline there, then I would start looking at bequests to friends, charity, etc.
And again, it's easy to assume that your children will always be healthy and strong because you unconsciously assume that they have "good genes" and were "raised right". (This is probably particularly true for the wealthy.) Do not assume this.
posted by Frowner at 7:32 AM on November 9, 2021 [20 favorites]
For this reason if I had a lot of money and kids, I'd consult a lawyer about some kind of family trust, whether it would be wise to purchase a small house or condo for each child outright now as a backstop, etc. My first goal would be to protect my children from housing stress and inability to afford assistance/medical care should something bad happen. Once I'd established some kind of baseline there, then I would start looking at bequests to friends, charity, etc.
And again, it's easy to assume that your children will always be healthy and strong because you unconsciously assume that they have "good genes" and were "raised right". (This is probably particularly true for the wealthy.) Do not assume this.
posted by Frowner at 7:32 AM on November 9, 2021 [20 favorites]
It's okay to re-write your will (or trust!!) several times.
yes!
of course lots of this depends on actually how much money you have and the explicit and implicit promises you've made.
with that said, while your kids are young/proto-adults I would lean towards leaving more to them whether that it is outright or in trusts or whatever makes sense for your situation.
The needs of a 20ish year old are way different than say a 40ish year old. If you hopefully live a long life and you raised well adjusted, capable members of society, I think it is more than fine to change your allocations to give more towards causes, charities and the like.
Doing this of course requires solid emotional IQ to manage everyone's expectations (see above how other people's foamily members didn't do that).
posted by mmascolino at 7:41 AM on November 9, 2021
yes!
of course lots of this depends on actually how much money you have and the explicit and implicit promises you've made.
with that said, while your kids are young/proto-adults I would lean towards leaving more to them whether that it is outright or in trusts or whatever makes sense for your situation.
The needs of a 20ish year old are way different than say a 40ish year old. If you hopefully live a long life and you raised well adjusted, capable members of society, I think it is more than fine to change your allocations to give more towards causes, charities and the like.
Doing this of course requires solid emotional IQ to manage everyone's expectations (see above how other people's foamily members didn't do that).
posted by mmascolino at 7:41 AM on November 9, 2021
A different perspective: I have no children, but I do have a niece and nephew who are just recently out of college.
I have established trust funds for both of them, with a payment schedule based on age -- from 18-24 they receive funding for educational purposes (funds not spent are retained for future distribution). From 25-30 they receive unrestricted funds at a certain (supplementary living expenses) level adjusted for inflation, and at 31 they receive the full amount to do with as they see fit. They have been receiving the educational monies already. If I am dead, the payment scheme can be altered if certain designated persons agree (this is to, for example, pay for a surgery if need be, or to cash out if they believe the economic structure of the world is collapsing and thus money should be spent before it becomes worthless. Yes, really).
They know my charitable priorities. If they choose to support those same priorities they can. They can also decide not to; from my perspective the main thing is that they will have the ability to ensure a decent life for themselves and their children should they have any. If a charity mattered that much to me I will have supported it myself during my life, without recourse to their inheritance.
Life is, very likely, going to suck for them regardless of what I do but at least I can try to insulate them from the worst of the incoming damage -- that is, quite literally, the entire point of my money. I am considering acquiring climate change-resistant property in selected locations with an eye toward giving them the land as well but that starts to get tricky from a taxation perspective so I don't know what I'm going to do there (yet).
posted by aramaic at 7:47 AM on November 9, 2021 [3 favorites]
I have established trust funds for both of them, with a payment schedule based on age -- from 18-24 they receive funding for educational purposes (funds not spent are retained for future distribution). From 25-30 they receive unrestricted funds at a certain (supplementary living expenses) level adjusted for inflation, and at 31 they receive the full amount to do with as they see fit. They have been receiving the educational monies already. If I am dead, the payment scheme can be altered if certain designated persons agree (this is to, for example, pay for a surgery if need be, or to cash out if they believe the economic structure of the world is collapsing and thus money should be spent before it becomes worthless. Yes, really).
They know my charitable priorities. If they choose to support those same priorities they can. They can also decide not to; from my perspective the main thing is that they will have the ability to ensure a decent life for themselves and their children should they have any. If a charity mattered that much to me I will have supported it myself during my life, without recourse to their inheritance.
Life is, very likely, going to suck for them regardless of what I do but at least I can try to insulate them from the worst of the incoming damage -- that is, quite literally, the entire point of my money. I am considering acquiring climate change-resistant property in selected locations with an eye toward giving them the land as well but that starts to get tricky from a taxation perspective so I don't know what I'm going to do there (yet).
posted by aramaic at 7:47 AM on November 9, 2021 [3 favorites]
There are a lot of stops along the way from "I can afford a Tesla" rich to Bill Gates rich. And kids range from the totally responsible to the ne'er do well son that is a staple of literature.
I came in to note that some things are just stupid expensive. A college education starting this year could cost $200K. A not-very-big house in Santa Monica could cost $5 million. So what sounds like a ton of money by your standards may be the price of admission somewhere, sometime.
I'll point out the "big gifts incur taxes" worry is mostly a myth. In the short term, you merely file a form. In the long run, it may affect inheritance taxes.
You should ask a attorney who specializes in these things about trusts. They can do useful things like avoid taxes now and later, set aside money for grandchildren yet unborn, etc.
posted by SemiSalt at 7:50 AM on November 9, 2021
I came in to note that some things are just stupid expensive. A college education starting this year could cost $200K. A not-very-big house in Santa Monica could cost $5 million. So what sounds like a ton of money by your standards may be the price of admission somewhere, sometime.
I'll point out the "big gifts incur taxes" worry is mostly a myth. In the short term, you merely file a form. In the long run, it may affect inheritance taxes.
You should ask a attorney who specializes in these things about trusts. They can do useful things like avoid taxes now and later, set aside money for grandchildren yet unborn, etc.
posted by SemiSalt at 7:50 AM on November 9, 2021
As others have alluded to, and I am spelling out explicitly: write your will in a way that makes sense now, for your family situation and wealth as it currently is so that if something were to happen tomorrow approximately the right arrangements are in place. Do not second guess the future. Instead, you should amend your will when things change (and they will) and make sure that you remember to do that.
posted by plonkee at 7:53 AM on November 9, 2021 [4 favorites]
posted by plonkee at 7:53 AM on November 9, 2021 [4 favorites]
My parent with a fair amount of resources to distribute in their will has chosen to spend time talking about this kind of question with each of my siblings and me, and that's been very helpful - we essentially all contribute to the planning together based on our shared values and our various life choices. My parent started with a more simple version when we were younger (high school age) and in more depth now that we are adults. This has included giving each of us a certain amount of money each year (at or below the doesn't-need-paperwork gift limit) and discussing what to do with it (such as investing it, using it for education, etc), which sort of serves as practice for the bigger inheritance eventually. I really appreciate that we talk about this money together - that's more important to me than any specific individual decision with the money. I don't plan to have children, but that's how I'd do it too.
posted by dreamyshade at 8:04 AM on November 9, 2021 [2 favorites]
posted by dreamyshade at 8:04 AM on November 9, 2021 [2 favorites]
I think you should give most if not all of it to charity, and if possible, with no strings attached about what the receiving organization does with it.
If your kids need help now with paying off debt or something, do it now. But don't leave them much of your wealth. Generational wealth is the reason we have such income inequity.
In a better world, you'd be taxed enormously, if not 100%, upon your departure from this mortal coil.
posted by RajahKing at 8:05 AM on November 9, 2021 [4 favorites]
If your kids need help now with paying off debt or something, do it now. But don't leave them much of your wealth. Generational wealth is the reason we have such income inequity.
In a better world, you'd be taxed enormously, if not 100%, upon your departure from this mortal coil.
posted by RajahKing at 8:05 AM on November 9, 2021 [4 favorites]
while a $3MM inheritance is by no means paltry it also isn't massive.
$3m puts you in something like the top 2% of net worth in the US. The data is always a bit iffy but here is one source
So it absolutely is massive. The only reason one could conceive it not to be 'massive' is that between the top 2% and #1, the slope is insanely steep due to massive wealth inequality.
So yeah, if you are wealthy enough to give each of your kids $3m, you are giving them a lot of money.
posted by The_Vegetables at 8:46 AM on November 9, 2021 [7 favorites]
$3m puts you in something like the top 2% of net worth in the US. The data is always a bit iffy but here is one source
So it absolutely is massive. The only reason one could conceive it not to be 'massive' is that between the top 2% and #1, the slope is insanely steep due to massive wealth inequality.
So yeah, if you are wealthy enough to give each of your kids $3m, you are giving them a lot of money.
posted by The_Vegetables at 8:46 AM on November 9, 2021 [7 favorites]
Not only that, if you give it to them with time to grow it, they will be 1%ers by the time they are middle aged.
So I guess my only input is that I have some wealthy relatives who are touching 50 years old and their wealthy parents are still alive and haven't given them much of anything, even though they like most households could use it.
So think about time., and if they could use the money now for things like school and down payments for property and other things that help live a nice safe upper middle class lifestyle vs giving them $10million when they are 65 years old and spent 65 years in some version of economic struggle. Less money earlier can mean more than more money later.
posted by The_Vegetables at 8:54 AM on November 9, 2021 [2 favorites]
So I guess my only input is that I have some wealthy relatives who are touching 50 years old and their wealthy parents are still alive and haven't given them much of anything, even though they like most households could use it.
So think about time., and if they could use the money now for things like school and down payments for property and other things that help live a nice safe upper middle class lifestyle vs giving them $10million when they are 65 years old and spent 65 years in some version of economic struggle. Less money earlier can mean more than more money later.
posted by The_Vegetables at 8:54 AM on November 9, 2021 [2 favorites]
I am influenced by folks in the philanthropic/non-profit realm who are pushing for foundations to give more NOW.
Accelerate Charitable Giving points out that "Currently, $1 trillion sits in private foundations and $120 billion sits in donor advised funds (DAFs) — money that could be used to support millions of people."
Obviously most people's assets aren't the Ford Foundation coffers.
But I do think about how climate change efforts need to happen now, not 20 years down the road, so for me, the impact of $$ today is bigger. I think of it like saving for retirement, but in reverse. (I'm not sure if that metaphor actually worked)
posted by spamandkimchi at 9:44 AM on November 9, 2021 [3 favorites]
Accelerate Charitable Giving points out that "Currently, $1 trillion sits in private foundations and $120 billion sits in donor advised funds (DAFs) — money that could be used to support millions of people."
Obviously most people's assets aren't the Ford Foundation coffers.
But I do think about how climate change efforts need to happen now, not 20 years down the road, so for me, the impact of $$ today is bigger. I think of it like saving for retirement, but in reverse. (I'm not sure if that metaphor actually worked)
posted by spamandkimchi at 9:44 AM on November 9, 2021 [3 favorites]
Having too much money is bad for people. I have seen this up close and personal. Too little is really bad, too. Warren Buffet's famous quote is that you should give your kids enough to do anything but not so much they can do nothing. In other words, enough to go to any college they want and buy a house, but not so much that they can just live off the income as a "trust fund kid".
posted by wnissen at 9:50 AM on November 9, 2021 [1 favorite]
posted by wnissen at 9:50 AM on November 9, 2021 [1 favorite]
Having too much money is bad for people. I have seen this up close and personal. Too little is really bad, too.
Weirdly, my parents inherited (at midlife, but younger than I am now) the equivalent of $1.5 million, then a further million, after receiving gifts that ended in a further $3 million in real estate including a 3-unit income property, and it did not ruin them. While I have read The Millionaire Next Door and I agree that setting kids up to expect a lifestyle solely through generational wealth is a bad idea - and it does depend on their ages - I sometimes think there's a weird bias around this.
posted by warriorqueen at 10:13 AM on November 9, 2021 [3 favorites]
Weirdly, my parents inherited (at midlife, but younger than I am now) the equivalent of $1.5 million, then a further million, after receiving gifts that ended in a further $3 million in real estate including a 3-unit income property, and it did not ruin them. While I have read The Millionaire Next Door and I agree that setting kids up to expect a lifestyle solely through generational wealth is a bad idea - and it does depend on their ages - I sometimes think there's a weird bias around this.
posted by warriorqueen at 10:13 AM on November 9, 2021 [3 favorites]
A vast majority of how people relate to and use money comes from how they were raised. So if you are concerned that they can’t handle it, you can educate them. You can instill the value of money, the privilege of it, how to do good with it. You’re wealthy. You can get them into financial planning classes and education around privilege and responsibility. In educating them, then ideally some of your money will go to good causes through them. Or at least has a better chance of being managed well. And +1 to not knowing their future such as disability status of them, their partners, or their kids. The vast majority of people will be disabled at some point in their life and the world doesn’t have good support. Nothing in life is guaranteed and I would feel immense relief to know I could support family. But I also grew up without a lot of money and am now disabled and don’t have kids.
posted by Crystalinne at 10:50 AM on November 9, 2021
posted by Crystalinne at 10:50 AM on November 9, 2021
Warren Buffet's famous quote is that you should give your kids enough to do anything but not so much they can do nothing. In other words, enough to go to any college they want and buy a house, but not so much that they can just live off the income as a "trust fund kid".
I'm a person with no kids and two dead parents who made the decision to leave what they had, for the most part, to my sister and me. I'm not quite at the "don't have to work" stage, but I'm closer to it than I used to be and probably could retire (I'm 53) if I made some changes to my lifestyle that I don't want to make. I still work, I like working. Here are some considerations from this side of the equation.
- How well do your kids get along? Leaving money to be split equally can sometimes be the right thing and sometimes be a problem. I have an uncle who was already wealthy when my grandmother (his mom) wrote her will. So she left more money to my mother than to him. They talked it out and everyone was fine with it but as your children age it may be that they have different needs financially. Wills can be changed. Also worth thinking about whether you want to give them more or less discretion in what they do with money you may leave to them.
- How well do your kids know how to manage and work with money? When my father died, we inherited his house and some money but also Calvin, the guy who managed my father's money. Now there are reasonable differences of opinion about how to manage money but at the time my father died I didn't really know much about managing investments other than my own IRA and having Calvin around was very very helpful. If you have a money manager, consider making that person into a money manager for your kids at least at first if you leave money to them.
- On the flip side, I have a foster brother who my mother was close to (I did not grow up with him) who is terrible with money and a bit of an opportunist/grifter. My mother chose to leave some money in trust for him with a person, my sister, who was responsible for meting it out to him along the lines she set up. He HATES this but my mother had a conversation with him about how this would happen before she died, and the fact that he hates it this much in some ways indicates that it's the right idea (otherwise he'd spend it all because he is not good with money). ymmv on whether this is the right thing to do
- When my mother died, she left some money to charity, forgave some debts to people she'd lent money to and left her house and some money to me and my sister. We decided to set up a charitable foundation and donate a lot of money to good causes. If you think your kids have a head for that kind of thing, you could also set up something like that in advance, and have your kids be part of the process.
As you've probably surmised a lot of this is "There are many good things you can do. Talk to your kids" is the summary of my advice. I inherited some money. It has not ruined me. My life is more or less the same. My sister and I both still work. We both like to work. Are maybe a little more generous with our friends and families and communities. My parents set some things up for us--we both had undergraduate college paid for, we both paid for our own graduate school education--and left us to manage some things on our own. There are a lot of ways to manage money well, I think my only main advice is being open and above board about it. When both my parents died there was a lot of needless agita not really knowing what their wills said beforehand (would we have to share my mom's house with my foster brother for example). We had talked to each of my folks about how their money was theirs to do with what they wanted and that was how I felt at the time and still feel like it's fine for parents to make choices with their own money as they see fit.
posted by jessamyn at 10:55 AM on November 9, 2021 [2 favorites]
I'm a person with no kids and two dead parents who made the decision to leave what they had, for the most part, to my sister and me. I'm not quite at the "don't have to work" stage, but I'm closer to it than I used to be and probably could retire (I'm 53) if I made some changes to my lifestyle that I don't want to make. I still work, I like working. Here are some considerations from this side of the equation.
- How well do your kids get along? Leaving money to be split equally can sometimes be the right thing and sometimes be a problem. I have an uncle who was already wealthy when my grandmother (his mom) wrote her will. So she left more money to my mother than to him. They talked it out and everyone was fine with it but as your children age it may be that they have different needs financially. Wills can be changed. Also worth thinking about whether you want to give them more or less discretion in what they do with money you may leave to them.
- How well do your kids know how to manage and work with money? When my father died, we inherited his house and some money but also Calvin, the guy who managed my father's money. Now there are reasonable differences of opinion about how to manage money but at the time my father died I didn't really know much about managing investments other than my own IRA and having Calvin around was very very helpful. If you have a money manager, consider making that person into a money manager for your kids at least at first if you leave money to them.
- On the flip side, I have a foster brother who my mother was close to (I did not grow up with him) who is terrible with money and a bit of an opportunist/grifter. My mother chose to leave some money in trust for him with a person, my sister, who was responsible for meting it out to him along the lines she set up. He HATES this but my mother had a conversation with him about how this would happen before she died, and the fact that he hates it this much in some ways indicates that it's the right idea (otherwise he'd spend it all because he is not good with money). ymmv on whether this is the right thing to do
- When my mother died, she left some money to charity, forgave some debts to people she'd lent money to and left her house and some money to me and my sister. We decided to set up a charitable foundation and donate a lot of money to good causes. If you think your kids have a head for that kind of thing, you could also set up something like that in advance, and have your kids be part of the process.
As you've probably surmised a lot of this is "There are many good things you can do. Talk to your kids" is the summary of my advice. I inherited some money. It has not ruined me. My life is more or less the same. My sister and I both still work. We both like to work. Are maybe a little more generous with our friends and families and communities. My parents set some things up for us--we both had undergraduate college paid for, we both paid for our own graduate school education--and left us to manage some things on our own. There are a lot of ways to manage money well, I think my only main advice is being open and above board about it. When both my parents died there was a lot of needless agita not really knowing what their wills said beforehand (would we have to share my mom's house with my foster brother for example). We had talked to each of my folks about how their money was theirs to do with what they wanted and that was how I felt at the time and still feel like it's fine for parents to make choices with their own money as they see fit.
posted by jessamyn at 10:55 AM on November 9, 2021 [2 favorites]
This will sound silly but I mean it: I really like Janet's take on this from The Good Place, which is basically the same as Warren Buffet's suggestion. She's preparing to send an immortal to earth to live as a human, and in a characteristically thoughtful bit of preparation, she says: "I set up a bank account for you. There's enough money in there so that you don't starve, but not so much that you become an entitled jerk." That is exactly the needle I'll want to thread if I'm ever in a position to leave anything more than a nominal amount of financial support to my kids.
posted by miles per flower at 11:21 AM on November 9, 2021 [2 favorites]
posted by miles per flower at 11:21 AM on November 9, 2021 [2 favorites]
This answer comes from a country with an enormous housing boom—in my society there’s now really no way to own one’s own house without being born into housing, it simply can’t be done on wages in one lifetime. If your society is anything like that, in thinking of limits, you should consider your children’s ability to house themselves into their old age.
posted by Fiasco da Gama at 1:09 PM on November 9, 2021 [1 favorite]
posted by Fiasco da Gama at 1:09 PM on November 9, 2021 [1 favorite]
To quantify, $3 million would indefinitely throw off an income greater than the median household income in the U.S. A million would let you go to private college and go a long way toward housing in all but the highest cost parts of the highest cost regions. Anything over that amount per person I would for sure give to charity.
posted by wnissen at 2:12 PM on November 9, 2021
posted by wnissen at 2:12 PM on November 9, 2021
My parents are wealthy - not "private island" wealthy but have a net worth in the high seven figures, as a result of my father making some very wise career and investment choices, and riding the postwar economic boom. Three observations from our family experience:
1. My sibling and I knew nothing of our parents' net worth until we were well established in our careers and families (so, mid to late thirties). We asked a few times, being curious, but were told not to. We had our educations paid for, but otherwise received no material help. My parents wanted to be sure we were responsible adults in careers that could support our families before they opened up the books to discuss how to handle this wealth.
2. My parents are strong believers in giving with a "warm hand" - that is, transferring sums before they pass instead of leaving a large estate afterwards. They've got a fairly detailed plan that respects the various wealth transfer, taxes, and gift limits, and of course it's dependent on their health and quality of life as they age, but ideally they will continue to transfer sums until there is just enough in the bank to pay for the surviving parent's funeral (a little exaggerated but you get the point).
3. Much of this wealth transfer is actually not going to my sibling and I but indirectly to the grandchildren in the form of trusts and education savings, the idea being that we (the children) can focus on building a nest egg and paying off our mortgages without having to also save for launching the grandchildren.
So, to sum up, my advice would be:
1. Help your kids with the important items, but don't let them into the books until they have shown they're responsible adults;
2. Done correctly, it's far more satisfying to help your kids while you are still around to enjoy the results;
3. It may be prudent to build a solid foundation for the grandchildren, not the children, if there are any.
posted by fortitude25 at 2:28 PM on November 9, 2021
1. My sibling and I knew nothing of our parents' net worth until we were well established in our careers and families (so, mid to late thirties). We asked a few times, being curious, but were told not to. We had our educations paid for, but otherwise received no material help. My parents wanted to be sure we were responsible adults in careers that could support our families before they opened up the books to discuss how to handle this wealth.
2. My parents are strong believers in giving with a "warm hand" - that is, transferring sums before they pass instead of leaving a large estate afterwards. They've got a fairly detailed plan that respects the various wealth transfer, taxes, and gift limits, and of course it's dependent on their health and quality of life as they age, but ideally they will continue to transfer sums until there is just enough in the bank to pay for the surviving parent's funeral (a little exaggerated but you get the point).
3. Much of this wealth transfer is actually not going to my sibling and I but indirectly to the grandchildren in the form of trusts and education savings, the idea being that we (the children) can focus on building a nest egg and paying off our mortgages without having to also save for launching the grandchildren.
So, to sum up, my advice would be:
1. Help your kids with the important items, but don't let them into the books until they have shown they're responsible adults;
2. Done correctly, it's far more satisfying to help your kids while you are still around to enjoy the results;
3. It may be prudent to build a solid foundation for the grandchildren, not the children, if there are any.
posted by fortitude25 at 2:28 PM on November 9, 2021
I worked for a major bank, in their Private Banking division. The questions you have are ones that they were dealing with regularly. There were wealthy clients who were concerned with the implications of the effect of their money on the next generations. One specific question regarded the Paris Hilton problem. She, as you may remember, was a scion of the family who behaved in an extremely interesting fashion. These clients were concerned about how to raise children who were not too comfortable with their status. One benefit the bank offered, in this case, was officers who had dealt with that specific person, and her family.
I am suggesting that if your wealth is at a level where you can benefit from professional management, you should talk to some people in the Private Banking business. They may have family advice to go along with their wealth management advice.
posted by Midnight Skulker at 4:06 PM on November 9, 2021
I am suggesting that if your wealth is at a level where you can benefit from professional management, you should talk to some people in the Private Banking business. They may have family advice to go along with their wealth management advice.
posted by Midnight Skulker at 4:06 PM on November 9, 2021
You may find the work of the Resource Generation an interesting perspective.
posted by oceano at 8:22 PM on November 9, 2021 [1 favorite]
posted by oceano at 8:22 PM on November 9, 2021 [1 favorite]
A very experienced estate attorney would help discuss both your present and future circumstances. I have a recommendation if you are in the state of Minnesota, FWIW. Anyway, my observations working in a state office that dealt with murky estate situations is that you need to plan for YOUR circumstances dealing with you and your spouse's health circumstances first and then figure out the disbursement/distribution of your estate. Again, a good estate attorney will help you plan for possibilities, including advice on trusts and taxes.
You will give significant advantages to your children perpetuating generational wealth by ensuring that they are debt-free in both education and housing. If you can provide that for your grandchildren as well, that would be fantastic. If you are very passionate about certain charities then of course put together a plan. Your descendants and charitable drives don't need to be in a zero-sum game with your estate.
posted by jadepearl at 12:14 AM on November 10, 2021 [1 favorite]
You will give significant advantages to your children perpetuating generational wealth by ensuring that they are debt-free in both education and housing. If you can provide that for your grandchildren as well, that would be fantastic. If you are very passionate about certain charities then of course put together a plan. Your descendants and charitable drives don't need to be in a zero-sum game with your estate.
posted by jadepearl at 12:14 AM on November 10, 2021 [1 favorite]
Depending on the ages of your kids and their needs, I'd probably put whatever you leave them in a trust - or even a series of trusts. I have a friend who got a significant trust paid when he was 20 or 21. He ended up spending a big chunk of the trust on a car.
However, I received an inheritance when I was 36 and spent it all trying to start a failed business.
Chunks of cash can lead to failure but different types of failure.
posted by bendy at 8:22 PM on November 10, 2021
However, I received an inheritance when I was 36 and spent it all trying to start a failed business.
Chunks of cash can lead to failure but different types of failure.
posted by bendy at 8:22 PM on November 10, 2021
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The only thing that I would recommend against for a middling sized pot, is giving someone else a percentage share of the estate. One of the challenges of executing a will is getting everyone to agree to sell an asset for a specific price. For most people, a significant chunk of their estate is in the form of their primary home, and the value of that is dependent on finding someone to buy it. The more people involved in deciding whether to accept an offer the harder it is, and this can be particularly the case if one party is a charity, because they have a duty to extract the most value possible, which may be at odds with your children's objectives.
posted by plonkee at 3:23 AM on November 9, 2021