My father inherited a lot of money (millions) when he was about 60 and I was about 30. He was already comfortable and thought inheriting large sums of money was bad for people (he might have been right). As a result, he gave almost all way to a university and received a lifetime income stream in return. He let us know not to expect anything, and when he died, we got very little from his estate. While I would have loved to have more money, I never felt entitled to any of it and had no resentment.
That’s what we did with our will, all our money is evenly distributed to our siblings. We felt that was easier and simpler than trying to deal directly with all the nieces and nephews. If our sibling has passed, their share is divided among their children.
My gf’s aunt had no children and never married. She was a compulsive saver and would convert her savings to life insurance policies with her siblings, niece, and nephews as beneficiaries. She played the lottery on occasion and had one large win and one moderate win.
She left a substantial estate. My gf was named executrix and has been working with a lawyer to do what executrixes do. She is at the point where the state has to look everything over, take their cut, and proclaim all kosher.
Keeping it in the family is fine - my grandfather wanted to keep it in the family as well. ( She wanted to find a way to keep anyone from ever selling the house and was disappointed to find out it wasn’t possible). She could have done exactly as he did - he was going to leave her 50% and my uncles would split the other 50% so he sold it to her for $75K which was half the market value at the time and my uncles each got half of that $75K. Or she could have done what my aunt did , which was sell the house to her daughter with an agreement as part of the sale that her daughter would pay her brothers for what would have been their share. Instead, she gave one sister a million dollar gift (literally) and probably won’t leave enough money to pay for the sort of funeral she wants.
It was my mother’s house and it’s my mother’s money and she’s perfectly free to do what she wants with it - but she doesn’t get to act surprised when giving one child a million dollar gift affects relationships between her children and with her.
The only problem I’ve seen with this (in Pennsylvania) is tax consequences. IANAAccountant, but …My gf’s two aunts were in their 90s. Their wills left all to their siblings (three elderly women in total). One aunt died and her sisters inherited, with the state taking their 12% tax. One of the remaining sisters died a very short time later and the state again was happy to take some.
Oddly, I don’t see this as a problem. I’m not a fan of folks figuring out how to pass on huge wealth without paying taxes that leads to that wealth just growing over time for one family. I’m not a fan of “legacy”. Of course, it is different if the 12% is out of $100,000 versus out of $10,000,000. I guess you can say I am in favor of an estate tax (aka “death tax”) for large enough amounts.
What is one spouse has one sibling and the other has four? Would you split it five ways, or does the one sole sibling get 50% and the four from the other family split the remaining 50% four ways?
We have 3 and 2 siblings respectively, all with kids. We’re both the youngest. It was easier to split it evenly at that level. Specifying nieces and nephews was too complex.
My mother didn’t have a trust for just this reason. She believed that dead people should pay taxes. Towards the end of her life, when my brothers were handling her financial affairs, one brother tried to set up a trust, but it was too late. He asked me why she hadn’t already done so. (My father had, and they had relationships with the the lawyers and accountants.) My brother was kinda pissed when i told him, but accepted it as a done deal.
The problem with that logic, she already paid taxes, presumably she was investing the money left over you know, after it has been taxed. It’s a silly argument.
3 and 2 is easier to deal with. 1 and 4 is a little more difficult.
We will probably donate a lot over time but we need to get it documented at some point. I’m 53 and several years older than my wife, but we need to get this going. This is always a “we’ll get to it this winter” thing that we don’t get done.
We don’t have children and I don’t believe any of the rest of our family should have any expectations like that. At this point, I don’t think it’s worth the money and hassle to try to protect our assets from taxes. I guess the more we give away, the less there is to tax any way. We still have a long way to go though so who knows? Maybe there will be run away inflation and another great depression and we’ll all be poor except for Musk and Bezos.
Are you against capital gains taxes?
Do you ever think even just for a fraction of a second that you wish you could just keep all the wealth you earned in your lifetime and spend it on yourself and not have to save anything and pass it on to your kids? I know that would make most parents feel guilty but doesn’t that cross your mind sometimes?
Also what if your kids ended up being 10x more successful than you and have millions already for themselves secured …and they say we don’t want you to give us any of your wealth and just spend it to enjoy your retirement…would you still feel it’s your responsibility as parents to pass your wealth onto them or would you feel guilt-free knowing your kids have made themselves super successful in life that they don’t need a penny and just spend all your wealth on yourself then?
This makes me wonder, what if you don’t have any kids? Now you’ve got all this accumulated wealth from your lifetime of work and you are in your retirement years, do you get to just enjoy your harvest and all the hard work you put into it?
We’re not waiting. It makes no sense to give a bunch of cash to some 60- or 70-year-olds. We’ve written checks to my kids and the wife’s nieces for the past two years, and we’re helping out with education costs for one (for now) of the grandkids. The money is worth more now than it will be in 20 years and they can all use the extra cash just before Christmas or whatever (I don’t care what they spend it on). We’re careful not to cut ourselves short, of course, and we’re not shy about spending on ourselves, although there is little we need or want. Our car is a 2016, but only has 18K miles on it. As our years increase, the checks will get larger.
We don’t have children so can do exactly this, but what are we going to spend it on? We aren’t extravagant people. We already have a nice house. Our 11 year old Subaru is fine for us (we are looking at replacing it with an EV though). It isn’t like we are going to change who we are and start buying designer clothes, eat caviar and wash it down with expensive champagne, go on expensive vacations (we do go on nice trips, but a lot of them are backpacking or cycling related), etc.
I dunno, man. If you have the personal serenity and equanimity to truly be unoffended if your parents cut you out, and leave everything to your brother without any particular reason except maybe they like him better, this is truly commendable. But I bet you don’t do this to your own kids on a whim.
Agreed. I think most reasonable and wise people such as yourselves even without kids will use their savings/wealth carefully and not just blow it all because you can.
This is sort of connected to another post I have going and I revealed that I have been unemployed for over 2 years now. I’m just living off my savings and living off my parents who are retired and get their monthly checks and doing quite comfortably now. I started to wonder, because I can live off my parents for a while, what if I just coasted so-to-speak until I naturally just inherit everything from them when they pass away. This is a really odd and strange thing to think about because first, I would never wish or desire for them to pass away so that I can get money. I’d rather receive no money ever and have them live forever. But the reality is, if I am still alive and healthy, they will pass away and I would eventually inherit 50% of whatever they leave behind (the other half to my sibling). It makes me feel guilty thinking I would just do the bare minimum to get by in life until I retire myself and then not worry about not having enough for retirement because I’ll eventually get a fat paycheck.
I started to think, what if I won’t save up enough for retirement? But then I thought, don’t MOST people inherit a good deal of wealth from their parents? (assuming your parents lived responsibly and saved up a decent amount). So then it made feel a little reassured that I won’t be completely broke in my retirement but at least get a nice half million injection to whatever savings I have by that time. Plus since I won’t have any kids of my own, I don’t have to worry about leaving anything behind…I can look at whatever wealth I have and see it as all for my own life until I go. It’s just what my odd brain thinks about these days.
I would tend to think it makes your parents worried as well. They likely are worried about what will happen to you after they are gone. They may be living frugally in order to ensure you have an inheritance you can live on. I hope you get an inheritance, but living in a manner that depends on that inheritance being sufficient may be putting some pressure on your parents. If you can support yourself, you will likely remove a major worry from your parents.
Correct if I’m wrong. So the inheritance your parents left for you, you decided to put all of that into a long-term care investment for your life? I’m not really sure that means. I think you are saying that it is a wise action to take by investing the inheritance into something that can take care of you over the long-term for the rest of your elderly years?
This is an issue I worry about. I’ve always tried to be fair to my kids, but “fair” isn’t always the same as “equal”.
My mom split her estate 50/50 between me and my brother, with no provision for the grandkids. I was happy with that, because I didn’t want him resenting his neices (not that he would have, but still). My household is in a higher income bracket than his, but neither of us needed that money. However, although it wasn’t a huge estate as estates go (the retirement accounts she was living on and the proceeds from the sale of her house and car), it turned out to be life-changing. My brother was able to retire instead of scrambling for a new job at the age of 55 after his long-time employer closed the business down, and my family had cash to invest when a business opportunity came along.
In my case, our older daughter is married, just bought a house, and is planning to have kids. She and her husband both have good jobs and are thrifty. We’ve thrown as much money to them as they would accept; we split the cost of a big wedding with his parents, we kicked in a few thousand so they could get a decent interest rate in an overheated housing market, and we give them birthday and Christmas checks in amounts that make them shake their heads and say, “You shouldn’t have!”
Our younger daughter lives with us and doesn’t have plans to move out. We don’t charge her rent or board, and if we all eat out, we pay the check. She’s been working at a low-paying educational assistant job while she figures out whether she wants to spend the time and money to get a master’s in education or go in a different career direction. When we paid a fortune for her sister’s wedding and a large cash wedding gift, we asked her how she felt about it, and she maintains she doesn’t feel like it’s unequal because we’re supporting her all the time. Her older sister had expressed relief that we have someone already in place to help us as we get older.
We structured our will so that our estate will be split 50/50 between the two. As it stands now, there should be enough cash that the house won’t need to be sold in order to split the assets equally, but we put a stipulation in the will that the sister who’s living in the house can’t be made to sell it within the first year. My kids are close, they’re very fair-minded people, and I can’t imagine them damaging their relationship over money, but we’ve done all the planning we could to make sure that doesn’t happen.