Pride in no inheritance to kids?

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scienceguy
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Pride in no inheritance to kids?

Post by scienceguy » Wed May 18, 2016 6:24 pm

I was reading another thread (now locked) where alot of posters seemed to express some pride that I don't understand in not planning to leave their kids anything. If it happens, it happens, but not a part of their current financial plans in particular.

I am confused by this stance, I was hoping for some insight. As a middle aged guy with kids, I think alot about saving money for the express purpose of leaving them as much money as possible when my wife and I are gone. I am in a fortunate position that I make enough money so saving money is feasible, but I am also in the fortunate position because of some inheritance we have received. Again, not a crazy amount, but some.

I feel like inheritance is so potentially valuable because it gives people some options and freedom. For example, if a non-working spouse in a bad marriage, it provides the financial freedom to leave. That said, I have never experienced or witnessed any of the theoretical bad outcomes from inheritance.

People on this website are smart. Why the pride in not specifically planning to leave inheritance? What am I missing? I don't want to screw this up.

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lthenderson
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Re: Pride in no inheritance to kids?

Post by lthenderson » Wed May 18, 2016 6:33 pm

Perhaps it has to do with the age of the kids. My parents have expressed their desire to leave my brother and I a large inheritance (mostly land) even though we both have said we would be just as happy if they spent every dime. For them, I think the legacy of what they built up is more important than the value. That said, I have two young kids at home and I want to leave them some money too because I know if we were to die early, their futures could depend heavily on it. Once they have families of their own and are independently successful, me leaving them money is probably not very important to me or to them.

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InvestorNewb
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Re: Pride in no inheritance to kids?

Post by InvestorNewb » Wed May 18, 2016 6:34 pm

I don't have kids but I ever do have some, I would certainly want to leave them a nice sum of money. I would try to avoid telling them this until they are older, as it might prevent them from having their own ambitions and achieving their own goals. I would want them to not have to work as hard as I did growing up, and the inheritance would surely take a burden off their shoulders.

Who wouldn't want to make their kids' lives easier? That is what it comes down to for people who want to leave their kids nothing.
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JDCarpenter
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Re: Pride in no inheritance to kids?

Post by JDCarpenter » Wed May 18, 2016 6:34 pm

We have no plans to avoid giving the kids an inheritance. If it happens (as is likely), good for them. (With respect to my in-laws, I told them that I hope they use all their money before they pass--unlikely, but it is theirs.)

My thoughts are that the potential value of an inheritance is far outweighed by the actual, already in-hand value of all expenses paid no question for four years at any college that they chose, as well as giving them the opportunities to be able to choose among the most highly selective colleges--if they so desired. (Also, family loans for grad school--even though they are evidenced by notes and are being repaid, there is value involved.)

That educational foundation (including the resulting assortative mating that is taking (has taken?) place for each of the kids) is far more valuable, IMHO, than an inheritance in their 50s or 60s.

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P.S.--agree with lthenderson. We had funds and insurance earmarked for kids when they were young. Different now.
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delamer
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Re: Pride in no inheritance to kids?

Post by delamer » Wed May 18, 2016 6:41 pm

I am not sure if "pride" is what you are seeing. I do think that many who are anti-inheritance, or anti-gifting while they are alive, believe that inheritance/gifts will be a disincentive for their kids to become productive, self-supporting adults.

Not a point-of-view that I agree with, but that is my interpretation of that mind set.

There are those who think "I made it own my own and my kids can too", while others think "I made it on my own, but a little help along the way would have made life much easier so I want to help my kids."

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Re: Pride in no inheritance to kids?

Post by ourbrooks » Wed May 18, 2016 7:05 pm

There are some who feel that they've already given their kids their legacy up front by bringing them up under comfortable conditions and paying for their educations and that their financial responsibilities ended when the children were able to support themselves. The parents would now like to feel free to spend what's left on themselves.

On the other extreme, some posters on this forum have expressed a desire to give to the children while the parents are still alive. Their goal is also to leave no estate because they've given their money away while they were alive.

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Re: Pride in no inheritance to kids?

Post by goingup » Wed May 18, 2016 7:15 pm

scienceguy wrote:People on this website are smart. Why the pride in not specifically planning to leave inheritance? What am I missing?

I didn't follow the thread you're referring to, but over the years my impression has been that most BHs have plans to leave an inheritance to kids. I think the priority for many folks is to enjoy retirement, not become a financial burden to kids, and leave a tidy sum which is the remainder. This has been my impression anyways.

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Re: Pride in no inheritance to kids?

Post by KlangFool » Wed May 18, 2016 7:16 pm

scienceguy wrote:
People on this website are smart. Why the pride in not specifically planning to leave inheritance? What am I missing? I don't want to screw this up.



scienceguy,

Let me ask you a reverse question. Why should you leave an inheritance to your children? If you did a good job as a parent, they would be able to survive and thrive on their own. If you did not do a good job as a parent, how does leaving an inheritance help in anything? They would waste it anyhow.

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Re: Pride in no inheritance to kids?

Post by randomguy » Wed May 18, 2016 7:22 pm

delamer wrote:I am not sure if "pride" is what you are seeing. I do think that many who are anti-inheritance, or anti-gifting while they are alive, believe that inheritance/gifts will be a disincentive for their kids to become productive, self-supporting adults.

Not a point-of-view that I agree with, but that is my interpretation of that mind set.

There are those who think "I made it own my own and my kids can too", while others think "I made it on my own, but a little help along the way would have made life much easier so I want to help my kids."


When a rich kid isn't productive, we blame it on the money (squandered opportunities). When a poor kid isn't productive, we blame it on the lack of money (i.e. limited opportunities);)

Realistically if you don't die til you (or your spouse) is 80+, the die has already been cast. Your kids are going be 40+ in most cases and the money isn't going to change them. It might be enabling (i.e. can quit the job and be a bum) but that is just bringing out a quality that is already there. Parental support at younger ages (i.e. giving the kid money because the life they are living on a Starbucks Barista salary isn't good enough for you) has a lot bigger effect on your kid becoming a self supporting adult.

Of course you also run into the cases where money lets dreams come through. To some extent it is easy to tell that early on (i.e. the kid is working hard at being a PGA tour pro, actor, musician, journalist, various media internships or any other field where the pay is crappy at the start but if you pay your dues, there is a chance to rise up) but it gets hard when after a couple of years you have to tell them that the dream isn't coming true and they have to move on to plan B

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Re: Pride in no inheritance to kids?

Post by Carefreeap » Wed May 18, 2016 7:24 pm

delamer wrote:I am not sure if "pride" is what you are seeing. I do think that many who are anti-inheritance, or anti-gifting while they are alive, believe that inheritance/gifts will be a disincentive for their kids to become productive, self-supporting adults.

Not a point-of-view that I agree with, but that is my interpretation of that mind set.

There are those who think "I made it own my own and my kids can too", while others think "I made it on my own, but a little help along the way would have made life much easier so I want to help my kids."


Oh my parents and particularly my father was very proud of the fact that they were spending their kids' inheritance. And it went even further that he wasn't going to pay for any of his kids' college educations because people don't appreciate anything they are given and we would just party our educations away. This despite the fact that his mom paid for private high school for him. My parents made life far more difficult than it needed to be and we were definitely outliers in the upper middle class neighborhood I grew up in.

Karma has a way of biting people. My parents wound up filing for bankruptcy when they were 58/60 and divorcing shortly there after. They would have lost the house if they hadn't talked my brother into moving in and eventually buying them out. He DID wind up losing the house through foreclosure but that's another post. Mom died with a negative estate of -$400,000. Dad is now living at the poverty level getting food stamps and Medi-caid and is still bitter about how my mother spent all of their money. Uh, I believe both of you guys spent the money.

I don't need an inheritance and never expected one. But I do think my parents would have been better off setting aside money for their old age so that they had some options.

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Re: Pride in no inheritance to kids?

Post by cherijoh » Wed May 18, 2016 7:26 pm

delamer wrote:I am not sure if "pride" is what you are seeing. I do think that many who are anti-inheritance, or anti-gifting while they are alive, believe that inheritance/gifts will be a disincentive for their kids to become productive, self-supporting adults.

Not a point-of-view that I agree with, but that is my interpretation of that mind set.

There are those who think "I made it own my own and my kids can too", while others think "I made it on my own, but a little help along the way would have made life much easier so I want to help my kids."


A friend of a friend lost her parents at a relatively young age (before she was 30) and when I knew her she was receiving the income from a trust fund. She really wasn't self-supporting and had never had a full-time job. I think this is the image that comes to mind when you think about the ills of an inheritance. But I believe she was a late-in-life baby and spoiled by her parents when they were alive. So the inheritance was more of a symptom than a causal factor IMO.

If you bring your kids up right, an inheritance should be a non-issue. Although there always seem to be cases where one adult child mooches off his/her parents while his/her siblings are perfectly self-supporting. That one has always baffled me, although I have friends dealing with this issue.

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Re: Pride in no inheritance to kids?

Post by alex_686 » Wed May 18, 2016 7:27 pm

I have mixed feelings about inheritance.

I have seen intergenerational transfers put to good use. Down payment on a home. College for children or grandchildren. A safety cushion of cash, allowing the next generation to experiment a bit, take some risks, and focus on important long term goals instead of scrambling to meet urgent - but not important - short term goals.

Note that I used the term intergenerational transfers, not inheritance.

I have seen trust fund babies. I have seen grandparents try to control their unborn grandkids from the grave.

I have seen children putting off things, deferring dreams and goals, patiently waiting for their parents to die. Parents who were to die in a year or 2 then live for 30 years. Or disinherit the child at the end.

I have seen families rip apart as siblings fight over money - sometimes surprisingly small amounts.

I have seen parents pinching pennies over decades, depositing their savings in safe but low yield savings accounts. Then I have seen the children blow the money in a few years.

For myself, a ideal world would be where parents would transfer the "inherence" while they were still living. There are practical reasons why this can't happen, but I would encourage people to skew in this direction.

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Re: Pride in no inheritance to kids?

Post by Starper » Wed May 18, 2016 7:29 pm

Carefreeap wrote: Mom died with a negative estate of -$400,000. .


How exactly did she end up with a negative estate of -400K? Just curious.

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Re: Pride in no inheritance to kids?

Post by campy2010 » Wed May 18, 2016 7:33 pm

I also think you're mis-interpreting "pride". For the vast majority of people, their primary concern about retirement is whether or not they have enough for their own lifetime. If you're in the financial position where all of your needs will be met regardless of any black swan events, then consider yourself very lucky. This is not the reality for many.

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Re: Pride in no inheritance to kids?

Post by celia » Wed May 18, 2016 7:48 pm

delamer wrote:There are those who think "I made it own my own and my kids can too", while others think "I made it on my own, but a little help along the way would have made life much easier so I want to help my kids."

I wonder if there is a correlation in that those who received an inheritance are more likely to leave one. (This would be similar to those who received an expensive education may also pay for one for their kids.)

The "pay it forward" concept could be at play without people consciously aware of it.
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Re: Pride in no inheritance to kids?

Post by delamer » Wed May 18, 2016 7:56 pm

cherijoh wrote:
delamer wrote:I am not sure if "pride" is what you are seeing. I do think that many who are anti-inheritance, or anti-gifting while they are alive, believe that inheritance/gifts will be a disincentive for their kids to become productive, self-supporting adults.

Not a point-of-view that I agree with, but that is my interpretation of that mind set.

There are those who think "I made it own my own and my kids can too", while others think "I made it on my own, but a little help along the way would have made life much easier so I want to help my kids."


A friend of a friend lost her parents at a relatively young age (before she was 30) and when I knew her she was receiving the income from a trust fund. She really wasn't self-supporting and had never had a full-time job. I think this is the image that comes to mind when you think about the ills of an inheritance. But I believe she was a late-in-life baby and spoiled by her parents when they were alive. So the inheritance was more of a symptom than a causal factor IMO.

If you bring your kids up right, an inheritance should be a non-issue. Although there always seem to be cases where one adult child mooches off his/her parents while his/her siblings are perfectly self-supporting. That one has always baffled me, although I have friends dealing with this issue.


Based on personal observation, this is the key issue. If your child enters adulthood as a responsible human being then any gifting or inheritance just will ease the path, not turn her/him into a wastrel. If your child enters adulthood as an irresponsible jerk, then the money will enable the jerkiness to continue.

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Re: Pride in no inheritance to kids?

Post by cheese_breath » Wed May 18, 2016 7:56 pm

goingup wrote:
scienceguy wrote:People on this website are smart. Why the pride in not specifically planning to leave inheritance? What am I missing?

I didn't follow the thread you're referring to...

I can't think of specific threads, but I do recall various posts along the line OP mentions. Except I'm not sure pride is the right word; adamant might be more fitting IMHO.
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Re: Pride in no inheritance to kids?

Post by MN Finance » Wed May 18, 2016 8:00 pm

Randomguy said it well.

Imo the die is cast. Other than a fairly young death with young kids, if an inheritance negatively impacts the kids, well the kids didn't raise themselves and give themselves their own compass. That said, most reasonable kids would be just as happy to see the money spent by their parents or enjoy it together. I'm thrilled my parents paid for a large family vacation where they could splash with my kids at the beach rather than inherit an extra 50k in 20 years.

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Re: Pride in no inheritance to kids?

Post by littlebird » Wed May 18, 2016 8:05 pm

campy2010 wrote:I also think you're mis-interpreting "pride". For the vast majority of people, their primary concern about retirement is whether or not they have enough for their own lifetime. If you're in the financial position where all of your needs will be met regardless of any black swan events, then consider yourself very lucky. This is not the reality for many.


I agree with this. I will be sufficiently proud if I can continue the tradition of my maternal family of living modestly, but comfortably in retirement and not needing help from their children. If there's anything left at the end, well and good, but denying myself small "wants" and comforts in my old age ( as I do see some of my contemporaries do) in order to pass money down to children who are doing quite well by themselves, well that to me seems like irrational pride. Different strokes, as we used to say when I was young

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Re: Pride in no inheritance to kids?

Post by stoptothink » Wed May 18, 2016 8:11 pm

campy2010 wrote:I also think you're mis-interpreting "pride". For the vast majority of people, their primary concern about retirement is whether or not they have enough for their own lifetime. If you're in the financial position where all of your needs will be met regardless of any black swan events, then consider yourself very lucky. This is not the reality for many.


OP is absolutely misinterpreting "pride". Bottom line is our first priority for the assets we earn is to take care of us, our retirement, when we are no longer willing/able to work - that takes precedence over paying for college as well as leaving an inheritance. At this point, as pretty decent earners and prodigious savers in our early 30's, it is extremely likely that our children will be receiving substantial inheritances, but we certainly aren't planning for that eventuality. We aren't going to spend it frivolously in retirement, we are very frugal, but I plan to enjoy my last years.

I've been helping my mother off-and-on financially for over a decade and we've also been doing the same thing with my in-laws recently. Neither my wife or I received a penny for college and there is essentially zero chance we will be receiving any inheritance, but we will have to continue to assist at least one set of parents (in-laws) for the remainder of their lives - they are moving in with us in a month. If there is some left over, there is some leftover, and it is theirs - I have an inkling they are going to be pleasantly surprised.

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Re: Pride in no inheritance to kids?

Post by alex_686 » Wed May 18, 2016 8:22 pm

celia wrote:I wonder if there is a correlation in that those who received an inheritance are more likely to leave one. (This would be similar to those who received an expensive education may also pay for one for their kids.)


There is, but there probably is not a casual relationship. Trying to untangle income, wealth, and cultural background is hard. Studies I have seen point to 2 bigger factors.

One is about transmitting values is more important. Hard work, delayed gratification, value of education. etc.

The other is on "cultural competency" or learning the secret handshakes that move you ahead. Getting into a elite college requires good grades but the right extracurricular activities helps, and it helps it you start the kids in music or a second language when they are young. When you get your first job you should max out your 401(k) and skew heavily towards equities.

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Re: Pride in no inheritance to kids?

Post by littlebird » Wed May 18, 2016 8:31 pm

celia wrote:I wonder if there is a correlation in that those who received an inheritance are more likely to leave one. (This would be similar to those who received an expensive education may also pay for one for their kids.)
The "pay it forward" concept could be at play without people consciously aware of it.


It also could be that those who received an inheritance and/or an expensive education are in a financial position and belong to a social class where such things are normal and expected. To others, those are things from a different planet.

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Re: Pride in no inheritance to kids?

Post by celia » Wed May 18, 2016 8:40 pm

alex_686 wrote:
celia wrote:I wonder if there is a correlation in that those who received an inheritance are more likely to leave one. (This would be similar to those who received an expensive education may also pay for one for their kids.)

There is, but there probably is not a casual relationship.

Alex, I think you mean causal, as one event causes another.
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Giving while alive

Post by Taylor Larimore » Wed May 18, 2016 8:48 pm

I think a lot about saving money for the express purpose of leaving them as much money as possible when my wife and I are gone.

scienceguy:

When you have enough, why not start giving your heirs their inheritance while you are still alive?

Best wishes.
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Re: Pride in no inheritance to kids?

Post by AlohaJoe » Wed May 18, 2016 8:49 pm

scienceguy wrote:As a middle aged guy with kids, I think alot about saving money for the express purpose of leaving them as much money as possible when my wife and I are gone.


FWIW, there is about a 15% chance that you and/or your wife live until you're over 100, just going by average statistics. (And wealthier, more educated people live longer, so you're probably even more likely to live to that age.) That means there's a very good chance your children won't receive an inheritance until they are in their 60s or 70s.

In 1999 the average person was 53 years old when they received their inheritance. In the 17 years since then, the number has crept up so the average is now nearly 60. By the time you die, the average is likely to be in the mid- to late-60s.

I feel like inheritance is so potentially valuable because it gives people some options and freedom. For example, if a non-working spouse in a bad marriage, it provides the financial freedom to leave.


Why not give them that freedom when they are in their 20s or 30s instead of when they are in their 60s, or 70s?

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Re: Pride in no inheritance to kids?

Post by Peter Foley » Wed May 18, 2016 8:52 pm

klangfool wrote:

Let me ask you a reverse question. Why should you leave an inheritance to your children? If you did a good job as a parent, they would be able to survive and thrive on their own. If you did not do a good job as a parent, how does leaving an inheritance help in anything? They would waste it anyhow.


Responding to the portion of the reverse question and comment that I put in red.

Times have changed. It is difficult for young couples to survive and thrive, even when both work full time. Health care at work is often not as comprehensive as it was 20 years ago, college costs and resulting student loans for many millennials are a burden we early boomers did not have, and child care is very expensive in many metropolitan areas. Survive yes, thrive maybe. Save early for retirement, not for the vast majority.

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Re: Pride in no inheritance to kids?

Post by chx » Wed May 18, 2016 9:01 pm

KlangFool wrote:Let me ask you a reverse question. Why should you leave an inheritance to your children? If you did a good job as a parent, they would be able to survive and thrive on their own.

That seems rather presumptuous. I know examples of good parents whose children are not fully able to survive and thrive on their own for a variety of reasons that have nothing to do with whether the parenting was good.

KlangFool wrote:If you did not do a good job as a parent, how does leaving an inheritance help in anything? They would waste it anyhow.


Once again, I see this as presumptuous.

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Re: Pride in no inheritance to kids?

Post by DonDraper » Wed May 18, 2016 9:11 pm

Keep in mind if you live into your into your 80's your kids are going to be in their 50's or older when they inherit your money. You aren't going to screw up their life giving them money at that age.

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Re: Pride in no inheritance to kids?

Post by HomerJ » Wed May 18, 2016 9:26 pm

My first goal is to save enough so my kids don't have to support ME in retirement.

I think housing and feeding them for 22 years, and giving them a free college education, and never asking them for help in my old age is a pretty good deal. Better than most.

Of course, almost every Boglehead will have money left over at the end. Most of us are crazy conservative. My kids will probably inherit a decent amount (split 3 ways though).

But I'm not focused on leaving them as much as I can. If that's YOUR plan, then you better never retire, and work right up until the day you die to maximize that inheritance... What? You want to retire at 65? Don't you love your kids? :)

I hope to give away some of my money while I'm living. Maybe help with grandkids college, take the whole family on some nice trips...

But I don't intend to ever help with down payments on houses, or loans for whatever. My kids will be fully functioning adults on their own in their 40s or 50s before they start seeing any money from me.

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Re: Pride in no inheritance to kids?

Post by KlangFool » Wed May 18, 2016 9:28 pm

Peter Foley wrote:klangfool wrote:

Let me ask you a reverse question. Why should you leave an inheritance to your children? If you did a good job as a parent, they would be able to survive and thrive on their own. If you did not do a good job as a parent, how does leaving an inheritance help in anything? They would waste it anyhow.


Responding to the portion of the reverse question and comment that I put in red.

Times have changed. It is difficult for young couples to survive and thrive, even when both work full time. Health care at work is often not as comprehensive as it was 20 years ago, college costs and resulting student loans for many millennials are a burden we early boomers did not have, and child care is very expensive in many metropolitan areas. Survive yes, thrive maybe. Save early for retirement, not for the vast majority.


Peter Foley,

Just to be clear.

1) Are you saying that it is the parent's responsibility to contribute to the children's retirement?

<<Times have changed. It is difficult for young couples to survive and thrive, even when both work full time. >>

2) I disagreed. It is always difficult for anyone to survive and thrive. So, nothing had changed.

KlangFool

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Re: Pride in no inheritance to kids?

Post by stoptothink » Wed May 18, 2016 9:29 pm

Peter Foley wrote:klangfool wrote:

Let me ask you a reverse question. Why should you leave an inheritance to your children? If you did a good job as a parent, they would be able to survive and thrive on their own. If you did not do a good job as a parent, how does leaving an inheritance help in anything? They would waste it anyhow.


Responding to the portion of the reverse question and comment that I put in red.

Times have changed. It is difficult for young couples to survive and thrive, even when both work full time. Health care at work is often not as comprehensive as it was 20 years ago, college costs and resulting student loans for many millennials are a burden we early boomers did not have, and child care is very expensive in many metropolitan areas. Survive yes, thrive maybe. Save early for retirement, not for the vast majority.


So, how do you view young couples (we are 34 and 29, with a 1 and 4yr old) now if they aren't planning to leave an inheritance? Do we get looked down upon because we aren't planning to leave an inheritance to our children (in part, because we have to plan to help our parents who can not support themselves despite apparently had it easier than us)?

Where this subject loses me is in expectations. We'll certainly discuss finances with my children when we are at that point, but that is quite different than planning for that eventuality.

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Re: Pride in no inheritance to kids?

Post by JonnyDVM » Wed May 18, 2016 9:29 pm

I wouldn't take pride in it but I wouldn't go out of my way to deprive myself for decades to pass a ball of money in to my children. The time we have is short so I'd rather enjoy it than worry about making sure I'm passing money on. Children that grow up expecting a large inheritance tend to grow up entitled brats. I don't have any statistics in this but surely you have seen it with your own eyes. I intend to give them everything they need in order to provide a good life for themselves.

And BTW it is is absolutely harder to make it in today's America. For starters many perusing higher education (without significant parental contribution) start out in a sizable financial hole. This was not true 20 or 30 years ago.
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stoptothink
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Re: Pride in no inheritance to kids?

Post by stoptothink » Wed May 18, 2016 9:31 pm

HomerJ wrote:My first goal is to save enough so my kids don't have to support ME in retirement.

I think housing and feeding them for 22 years, and giving them a free college education, and never asking them for help in my old age is a pretty good deal. Better than most.

Of course, almost every Boglehead will have money left over at the end. Most of us are crazy conservative. My kids will probably inherit a decent amount (split 3 ways though).

But I'm not focused on leaving them as much as I can. If that's YOUR plan, then you better never retire, and work right up until the day you die to maximize that inheritance... What? You want to retire at 65? Don't you love your kids? :)

I hope to give away some of my money while I'm living. Maybe help with grandkids college, take the whole family on some nice trips...

But I don't intend to ever help with down payments on houses, or loans for whatever. My kids will be fully functioning adults on their own in their 40s or 50s before they start seeing any money from me.


Exactly

KlangFool
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Re: Pride in no inheritance to kids?

Post by KlangFool » Wed May 18, 2016 9:31 pm

chx wrote:
KlangFool wrote:Let me ask you a reverse question. Why should you leave an inheritance to your children? If you did a good job as a parent, they would be able to survive and thrive on their own.

That seems rather presumptuous. I know examples of good parents whose children are not fully able to survive and thrive on their own for a variety of reasons that have nothing to do with whether the parenting was good.


chx,

So, are you saying that it is the parent's responsibility to financially support the children if they cannot survive and thrive on their own? Even after they had grown up as an adult?

KlangFool

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TomatoTomahto
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Re: Pride in no inheritance to kids?

Post by TomatoTomahto » Wed May 18, 2016 9:46 pm

Warren Buffett wrote:A very rich person should leave his kids enough to do anything but not enough to do nothing.


DW and I are discussing how much to leave our kids, assuming our net worth continues to climb. We disagree on the topic.

Zott
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Re: Pride in no inheritance to kids?

Post by Zott » Wed May 18, 2016 10:06 pm

KlangFool wrote:
chx wrote:
KlangFool wrote:Let me ask you a reverse question. Why should you leave an inheritance to your children? If you did a good job as a parent, they would be able to survive and thrive on their own.

That seems rather presumptuous. I know examples of good parents whose children are not fully able to survive and thrive on their own for a variety of reasons that have nothing to do with whether the parenting was good.


chx,

So, are you saying that it is the parent's responsibility to financially support the children if they cannot survive and thrive on their own? Even after they had grown up as an adult?

KlangFool


Indeed it is part of a parent's responsibility and a labor of love, to assist children who would have difficulty thriving financially --IF the parents are able. My two children, ages 19 and 20, will likely never attend college and I am not sure that they would be able to get jobs in a profession that would pay well, and provide health and retirement benefits, etc. They both work (part-time jobs for now). We live in a HCOL area. I want them to be independent but realize that I will have to help them financially for a while, and I'm fortunate to be able to do so. Anything left upon our deaths will go into a trust, and paid out over several years.

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HomerJ
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Re: Pride in no inheritance to kids?

Post by HomerJ » Wed May 18, 2016 10:15 pm

Zott wrote:We live in a HCOL area. I want them to be independent but realize that I will have to help them financially for a while, and I'm fortunate to be able to do so.


It's a fine line. You have to be real careful. Helping them may hinder them from becoming independent.

Estate_Esq
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Re: Pride in no inheritance to kids?

Post by Estate_Esq » Wed May 18, 2016 10:29 pm

OP, it is strange indeed. It's a kind of plebeian, peasant pride; definitely something that doesn't infect aristocratic souls. Sadly, Warren Buffet is infected with this same petty pride. Perhaps many, looking to him as a role model, are adopting his brand of pathetic pecuniary perfidy.

Miakis
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Re: Pride in no inheritance to kids?

Post by Miakis » Wed May 18, 2016 10:43 pm

My husband and I don't have kids. When we wrote our wills, we thought a lot about who we'd want to leave money to and how much. By the time we got to the end of our list of bequeathals, we still had plenty of estate left over that we decided to leave to charity - assuming we died today.

The exercise leaves me to wonder - if people didn't feel obligated by some kind of tradition to give money to their kids, would their kids actually be their first choice to leave EVERYTHING to?

Do you really want to work extra or deprive yourself of something so that you can leave your 50 year old son $100,000? Or $500,000? Or $1,000,000? To what end? If that guy hasn't figured his life out by then, then what difference does an inheritance make?

Then there's the sibling burden. Is the inheritance equal? Are the siblings equally responsible? Does one have more kids? Bigger health problems? A spouse who makes less money? A second marriage? Mental problems? Is your estate going to create problems and stress for them?

It seems like a nice parting gift to leave someone something when you die - especially if they're not expecting it. But if they are expecting it, it kind of poisons the well. It feels less like a gift and more like an obligation. A lot of people seem to feel that they deserve an inheritance. They're counting their parents' money as their own before their parents even die. That's not a gift. That stops being something nice.

I don't think it's pride. I think it's just that a lot of people have seen inheritances become negative, and they don't want that in their relationship with their kids.

Gnirk
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Re: Giving while alive

Post by Gnirk » Wed May 18, 2016 11:26 pm

Taylor Larimore wrote:When you have enough, why not start giving your heirs their inheritance while you are still alive?

Best wishes.
Taylor


:thumbsup My thoughts, too. My mother did this, and I am gifting to my adult single daughters now and then. The good thing is they don't expect it!

randomguy
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Re: Pride in no inheritance to kids?

Post by randomguy » Wed May 18, 2016 11:45 pm

KlangFool wrote:
chx wrote:
KlangFool wrote:Let me ask you a reverse question. Why should you leave an inheritance to your children? If you did a good job as a parent, they would be able to survive and thrive on their own.

That seems rather presumptuous. I know examples of good parents whose children are not fully able to survive and thrive on their own for a variety of reasons that have nothing to do with whether the parenting was good.


chx,

So, are you saying that it is the parent's responsibility to financially support the children if they cannot survive and thrive on their own? Even after they had grown up as an adult?

KlangFool


Who do you think should take care of those kids? The fact that an autistic, down syndrome, or any of a dozen other conditions results in a 21 year old not being able to take care of themselves has nothing to do if the parents did a good job or not. I suppose you could dump them on social services and hope for the best but I expect most parents in that situation try and plan to take care of the kids as well as they can even though they are adults.

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mephistophles
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Re: Pride in no inheritance to kids?

Post by mephistophles » Thu May 19, 2016 12:29 am

scienceguy wrote:I was reading another thread (now locked) where alot of posters seemed to express some pride that I don't understand in not planning to leave their kids anything. If it happens, it happens, but not a part of their current financial plans in particular.

I am confused by this stance, I was hoping for some insight. As a middle aged guy with kids, I think alot about saving money for the express purpose of leaving them as much money as possible when my wife and I are gone. I am in a fortunate position that I make enough money so saving money is feasible, but I am also in the fortunate position because of some inheritance we have received. Again, not a crazy amount, but some.

I feel like inheritance is so potentially valuable because it gives people some options and freedom. For example, if a non-working spouse in a bad marriage, it provides the financial freedom to leave. That said, I have never experienced or witnessed any of the theoretical bad outcomes from inheritance.

People on this website are smart. Why the pride in not specifically planning to leave inheritance? What am I missing? I don't want to screw this up.


I never got that one either!

OutInThirteen
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Re: Pride in no inheritance to kids?

Post by OutInThirteen » Thu May 19, 2016 12:56 am

Due to multiple COLA'd pensions and SS, my spouse and I were able to retire in our 50s, and won't need to draw from retirement savings for our expected expenses. As a result, we have quite a bit in reserve for medical and long term care expenses should they arise. We certainly aren't depriving ourselves of anything we'd really like to have or do. So we consider ourselves to be very fortunate in that respect. We'd like our two children to be able to retire from the working world at an early enough age to enjoy retirement like we're able to do. However, things have changed and they won't have the same opportunities (e.g., pensions) as we did. So if there's anything left over when both of us pass, it will certainly help, even if they are in their late 50s or early 60s.

SQRT
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Re: Pride in no inheritance to kids?

Post by SQRT » Thu May 19, 2016 2:52 am

delamer wrote:

There are those who think "I made it own my own and my kids can too", while others think "I made it on my own, but a little help along the way would have made life much easier so I want to help my kids."


I take the latter view. I had little help from my parents but I sure could have used some. The decade of my 20's was a blur of night classes after full days of working. Not something I would want my daughter to experience. I believe the value of personal struggle is overrated.

We paid for her education to the masters level as well as other help along the way. Nevertheless she is a very hard working independent, recently married young woman with a successful career. She doesn't act entitled in the least, I am very proud of her.

She is the primary beneficiary in our wills and I expect she will inherit well into 8 figures. This is not really planned by us but will be the result of our generally just spending dividends in retirement. My issue is that if this happens when we pass away, she may well be in her mid 60's (I am 65, wonderful wife is 58, darling daughter is 32). Seems like a lot, but perhaps too late to really change her life. Accordingly, I think it is better to gift at least some to her while we are alive. More fun for us too. Gave her a large gift to cover a downpayment for a house recently. We need to figure out how best to help her while maintaining her independence and our desired lifestyle in retirement. We will certainly fund any grandchildren's education if my daughter and son-in-law agree. We have been very lucky to have been able to have such success in life and enjoy such a well funded retirement. While our primary objective was never to provide a large inheritance, I am happy to pass some of this on to the next generations.

The practicalities of using an investment portfolio to fund retirement, will in most cases result in a fair sum left at death. Conservative withdrawal rates almost guarantee this for the vast majority with such portfolios. So whether you want to or not, leaving a legacy of some sort is almost certain for people with significant net worth.
Last edited by SQRT on Fri May 20, 2016 7:08 am, edited 1 time in total.

wfromm
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Re: Pride in no inheritance to kids?

Post by wfromm » Thu May 19, 2016 3:45 am

I feel that we know our children well enough by a certain age to determine if they are conservative. If their parents are bogleheads, then they are probably conservative and could be given some of the wealth while the parent is alive. I like Taylor's idea of giving IRA money. Gifts that are put into IRA's or help the child put money into a 401k, etc. are oftentimes better than giving them an inherited IRA where they are stuck with required minimum distributions. However, we deal with our children the way we see fit. I don't want my children to be responsible for my wife and my well being in retirement and I feel this will never be the case.

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FiveK
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Re: Pride in no inheritance to kids?

Post by FiveK » Thu May 19, 2016 4:10 am

randomguy wrote:When a rich kid isn't productive, we blame it on the money (squandered opportunities). When a poor kid isn't productive, we blame it on the lack of money (i.e. limited opportunities) ;)

Nicely put!

SGM
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Re: Pride in no inheritance to kids?

Post by SGM » Thu May 19, 2016 4:11 am

I am planning on leaving an inheritance. Kids are working hard and I have been funding a Roth IRA for each of them since they first received any earned income. They save a portion of their incomes and have pride in working.

Living expenses are a lot higher than when I was first out of school and working. I see no harm in giving children a little help if you can afford it.

basspond
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Re: Pride in no inheritance to kids?

Post by basspond » Thu May 19, 2016 4:58 am

As a parent I will have failed if my children don't do better then me and I don't do better then my parents. My grandparents and parents benefitted from receiving inheritances and it didn't change them. They still worked hard and didn't become lazy ungreatful parasites to society. We have been lucky I guess, but also we have instilled that monetary gains are not the most important thing in life. And it is amazing that when your priories in life aren't mainly about financial wealth how financial wealth builds.

joebh
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Re: Pride in no inheritance to kids?

Post by joebh » Thu May 19, 2016 5:21 am

scienceguy wrote:I am confused by this stance, I was hoping for some insight.


It's a difficult issue. And I suspect that while most people actually do want to leave something to their loved ones, there are normative and cultural aspects that prevent them from saying so here at Bogleheads.

One thought going around these days is to "take care of your retirement future first, before you take care of your kids' future". That comes into play when we talk about funding college versus funding retirement. As they say "you can get a loan for college but you cannot get a loan for retirement".

Another thought is that you don't want to "enable bad financial behavior" by taking the financial worry away from your kids. Many folks didn't grow up wealthy, and the thinking is that what was "good" for them must also be good for their children. They might think we sacrificed, why shouldn't we allow our kids to sacrifice as well. Sometimes that even expands to deriding a whole generations as feeling "entitled".

Some (a minority, I believe) feel that leaving anything to your heirs means you have denied yourself something and couldn't live the way you wanted. YOLO!

And of course some simply cannot leave anything because they know that they will have nothing to leave. They may be sad or ashamed that they aren't able, and try to hide that by saying that kids shouldn't feel "entitled".

I know that I want my children to have a better, easier life than I did, but at the same time I don't want them to become "spoiled" or "entitled". My wife and I waited and saved before we started having kids, so that she could stay home and be with them until they left elementary school. We sacrificed a fair bit of lifestyle in our early married years to get there, but it was important to us.

I didn't want my children to have to be burdened by school loans for themselves - so we paid for their college education. I don't want my children to be burdened by school loans for my grandchildren - so we set up 529 plans for each of them.

At the same time, I've tried to educate them financially. I've encouraged them to save, to fund their own retirement plans, and to put their own money away for their childrens' educations. Much of our philosophy was that we would pay for the needs, and the important things, but the kids were expected to pay for most of their wants, and the more frivolous things. It wasn't always easy for us to draw the line (we still struggle with it). So far, it seems to have been a reasonable balance.

My wife and I do expect to leave some money to them upon our demise. But we haven't (yet) attached a specific dollar amount to that bequest. As of now it's just "whatever is left over". I'm confident there will be some, but planning and budgeting so far put that at the bottom of the list. If the economy performs at all reasonably over the next 25-30 years or so, they'll end up with a rather tidy sum. And if it goes that way, we'll be looking for ways to transfer some of it while we are still around. But if the economy or life in general somehow get in the way, they'll get less.

Our kids have turned out to be great adults and great parents themselves. I'm sure it's mostly due to them, but I like to think we helped out a bit.

So I'm not planning to disinherit my children and I'm pretty sure that's not going to happen. But if it does, I'm also confident that my children would understand, and know that it isn't because we don't love them.

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Re: Pride in no inheritance to kids?

Post by MossySF » Thu May 19, 2016 5:35 am

Think about all the stories of lottery winners going bankrupt -- athletes/musicians going bankrupt after their peak is over -- etc. Humans in general are not good at dealing with large windfalls.

There's a chapter in Millionaires Next Door about this. Wealth almost never lasts past the 2nd generation. Those who didn't do the work in earning/saving/investing a lumpsum rarely understand how easy it is to spend down in a blink of an eye. It would be one thing if then the inheritors thought "we had a good 10 years of living beyond our means with this inheritance and now we'll just return back to our previous lifestyle with these happy memories" -- but there's no way nobody will think that way.

That being said -- I probably will leave something to my kids. But I still have another 15-20 years of trying to teach them not to keep up with the Jones and being happy with their position on the ladder.

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