When to give adult children their inheritance?

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TradingPlaces
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Re: When to give adult children their inheritance?

Post by TradingPlaces »

nonurseorpurse wrote: When my kids graduated from college and started a "real" job, I donated $2,000 to a Roth IRA for 10 years for each. You can tell this was a long time ago! The understanding was they would not touch the money until they retired and this is to be their inheritance. I told them I'm spending the last penny the day I die, I just haven't figured out the particulars yet! That part of the estate plan relieves me of worrying about passing on an inheritance. The 10 years has expired, so now I match their Roth IRA contributions up to $2000. Where else can you get a 100% guaranteed return!

I'd also suggest reading "The Millionaire Next Door" by Stanley and Danko. Especially the part on economic outpatient care. There is a fine line between helping and hurting when it comes to giving significant amounts of money. I elect to give cash gifts annually and do not put any limits on the use of the money. I did give a significant amount of money for a down payment on the purchase of a home and stipulated the money was for only that use.

The 4 grandkids are also benefiting from contributions to their 529 plans. About 25% of their post-secondary education costs will be covered by the contributions.

Good luck with your decision!
This is very nice!
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lthenderson
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Re: When to give adult children their inheritance?

Post by lthenderson »

Dazed wrote:OP here- So what does one discuss with them exactly and in how much detail? They are currently 22 and 24.
It they were my kids, I would tell them that I plan to leave them a significant amount of money when I die but I don't think I would say how much. I would ask them what they might do with that money to get a sense of how responsible they would be. Or I might just tell them on how I hope they use the money to better their future.

When I had this conversation with my parents, they also told me where they keep a detailed list of all their financial accounts so if they should die suddenly, I will be able to locate all the accounts. I have never actually seen the list or how much money is in the accounts but it is reassuring knowing where all that information can be found when the day comes.
Ron
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Re: When to give adult children their inheritance?

Post by Ron »

What's an inheritance? :oops:

- Ron
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gasdoc
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Re: When to give adult children their inheritance?

Post by gasdoc »

With my own daughter, now 16 years old, I try not to even talk about inheritances. I want her to think that the quality of her life is completely dependant on the amount of work she is willing to put in- starting now.
SpaceCowboy
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Re: When to give adult children their inheritance?

Post by SpaceCowboy »

This thread caused me to review our family's trust. It was written over a decade ago when our kids were toddlers. They are now both in high school. How time flies.
When we drafted it, I remember being warned by our attorney of trying to rule from the grave by using achievement based milestones. What it provides for is an annual stipend for each kid that is indexed to inflation. The stipend is ok, but considerably less than they would receive in salary from a post-graduation job. Also, while until age 21 the stipend remains under the control of the Trustee. It then essentially distributes one-third at each of ages 25, 30 and 35. This means that if they want to blow it, it will take 10 years at least. The Trustee also has discretion to fund other key expenses for them, such as education and health. A down payment on a house is not called out.
I'm certainly hopeful that my wife and I will survive past the time our youngest turns 35, but I do think they should be able to handle an initial injection of personal wealth by the time they're 25.
Paul78
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Re: When to give adult children their inheritance?

Post by Paul78 »

I would say in the range of 35-40.

That way they still have to live their life (college, career, marriage, ect), still get the money early enough to still enjoy it with many-hopefully- healthy years left in their life, and are hopefully old enough not to just waste the money.

If they get it too early and it is a significant amount it could make them overly dependent on it and stunt their development.
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sleepysurf
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Re: When to give adult children their inheritance?

Post by sleepysurf »

TradingPlaces wrote:
sleepysurf wrote:I recently grappled with this question when updating my Trust/Estate Plan... I earmarked an annual "stipend" of $XX,000 (with COLA adjustments) to supplement her annual income, and $10,000 more annually if she starts Grad School (in an accredited program), then an additional $10,000 annually once she graduates... The designated Trustee has discretion to release additional sums of money for health issues, purchasing a home, etc.
Nice! Merit based. I like that.

What about other milestones:

- getting married,
- having children,
- buying a house.

All of these are important milestones, but can be expensive. If you earmark gifts for these occasions, it will be a nice way for them to help celebrate the occasion.
As long as I'm alive, I plan on "gifting" additional aliquots of $$ for various milestones. After I'm gone, my two younger sisters have agreed to serve as Trustees, to carry out my plan.

I plan on living to a ripe old age, and will update my Family Trust as indicated from time to time.
Retired 2018 | currently ~64/33/3 (partially sliced and diced, with a slowly rising equity glide path)
dc81584
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Re: When to give adult children their inheritance?

Post by dc81584 »

You could arrange for a certain dollar amount or percentage to be paid out on an annual basis. This way, you are being generous, yet prudent. Then again, if you trust that they will handle the money wisely and truly appreciate your gracious gesture, then you could arrange for it to be paid out in two equal installments or as a lump sum.
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