What age is the best to give a child control of an inheritance?

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
User avatar
gasdoc
Posts: 1517
Joined: Mon Nov 03, 2014 8:26 am

What age is the best to give a child control of an inheritance?

Post by gasdoc » Sat Mar 31, 2018 3:34 pm

DW and I are considering re-doing our wills. The last time we did this, our only child was an infant. She is now a college freshman. Our current will sets up a trust on our passing, and gives full control of the funds to DD at age 35. Now, I am wondering if that is the appropriate age. She is a premed student, so will probably attend some sort of graduate or professional school, and may not even have her "life path" fully established until she is in her early 30's. Will she have the time by then to be knowledgeable enough about investments to be able to appropriately manage that money at age 35? I probably didn't at that age. Maybe give half at age 35, or at the time of death, and the other half at age 50? Any thoughts out there in Bogleheads land? I appreciate any comments. Thanks!

gasdoc

KlangFool
Posts: 9983
Joined: Sat Oct 11, 2008 12:35 pm

Re: What age is the best to give a child control of an inheritance?

Post by KlangFool » Sat Mar 31, 2018 3:41 pm

gasdoc wrote:
Sat Mar 31, 2018 3:34 pm
DW and I are considering re-doing our wills. The last time we did this, our only child was an infant. She is now a college freshman. Our current will sets up a trust on our passing, and gives full control of the funds to DD at age 35. Now, I am wondering if that is the appropriate age. She is a premed student, so will probably attend some sort of graduate or professional school, and may not even have her "life path" fully established until she is in her early 30's. Will she have the time by then to be knowledgeable enough about investments to be able to appropriately manage that money at age 35? I probably didn't at that age. Maybe give half at age 35, or at the time of death, and the other half at age 50? Any thoughts out there in Bogleheads land? I appreciate any comments. Thanks!

gasdoc
gasdoc,

<<Will she have the time by then to be knowledgeable enough about investments to be able to appropriately manage that money at age 35? >>

How can she learn to manage money without exposure to any real money? You should give her some money to invest and manage now. Match all her earnings into a Roth IRA would be a good start.

Give her some money while you are alive. You can guide, coach, and mentor her. Flooding her with a huge pile of money after you are gone could be disastrous if she does not have the skill and experience to deal with that amount of money.

KlangFool

bob60014
Posts: 617
Joined: Mon Jul 31, 2017 8:59 pm
Location: The Land Beyond ORD

Re: What age is the best to give a child control of an inheritance?

Post by bob60014 » Sat Mar 31, 2018 3:41 pm

"Will she have the time by then to be knowledgeable enough about investments to be able to appropriately manage that money at age 35?"

Not to be a wise guy but, What have you taught her about investing, saving, budgeting? How has she managed her money up until now?
Last edited by bob60014 on Sat Mar 31, 2018 3:45 pm, edited 1 time in total.

KlangFool
Posts: 9983
Joined: Sat Oct 11, 2008 12:35 pm

Re: What age is the best to give a child control of an inheritance?

Post by KlangFool » Sat Mar 31, 2018 3:43 pm

OP,

50% of the lottery winners went bankrupt 10 years after they won the lottery.

KlangFool

aristotelian
Posts: 4609
Joined: Wed Jan 11, 2017 8:05 pm

Re: What age is the best to give a child control of an inheritance?

Post by aristotelian » Sat Mar 31, 2018 3:47 pm

If she is a good kid and fairly responsible, I would just make her the beneficiary TOD. No messing around with a trustee. Have a talk to make sure she understands your expectations. Unless you are at risk of both dying soon, we are likely not talking about her inheriting for many years anyway. So, start educating her now.

User avatar
msi
Posts: 363
Joined: Sun Feb 17, 2008 11:15 pm

Re: What age is the best to give a child control of an inheritance?

Post by msi » Sat Mar 31, 2018 3:58 pm

gasdoc wrote:
Sat Mar 31, 2018 3:34 pm
DW and I are considering re-doing our wills. The last time we did this, our only child was an infant. She is now a college freshman. Our current will sets up a trust on our passing, and gives full control of the funds to DD at age 35. Now, I am wondering if that is the appropriate age. She is a premed student, so will probably attend some sort of graduate or professional school, and may not even have her "life path" fully established until she is in her early 30's. Will she have the time by then to be knowledgeable enough about investments to be able to appropriately manage that money at age 35? I probably didn't at that age. Maybe give half at age 35, or at the time of death, and the other half at age 50? Any thoughts out there in Bogleheads land? I appreciate any comments. Thanks!

gasdoc
Age 50 is a bit much :)

I think the current setup is fine.

Marketman
Posts: 196
Joined: Sun Feb 04, 2018 2:24 pm
Location: Texas

Re: What age is the best to give a child control of an inheritance?

Post by Marketman » Sat Mar 31, 2018 4:06 pm

I think it totally depends on the kid. It would probably be wise to assume the worst at first when they are young (assume they are a spendthrift, etc.) and have an older control age in will. As you live longer and see his or her personality develop you could tweak your will and make the age younger if warranted.

User avatar
gasdoc
Posts: 1517
Joined: Mon Nov 03, 2014 8:26 am

Re: What age is the best to give a child control of an inheritance?

Post by gasdoc » Sat Mar 31, 2018 4:13 pm

KlangFool wrote:
Sat Mar 31, 2018 3:43 pm
OP,

50% of the lottery winners went bankrupt 10 years after they won the lottery.

KlangFool
KlangFool, that is precisely what I would like to prevent!!!

Up until now, she has a small Roth IRA which she manages, which is invested in one of Vanguard's fund-of-funds, though I don't at the moment remember which one. She gets a reasonable monthly transfer from us, which is more than she really needs, but not enough that she doesn't have to budget to make it last until the end of the month. She does manage to be able to put aside enough from outside meals and entertainment to be able to fund an occasional weekend outing with friends, and keeps an emergency fund of $3k at all times. I guess that makes her mostly responsible. DW and I are both in good health presently, so this is more a "just in case" scenario, so hopefully we will get a chance to mentor her before we are gone. It looks like my idea of waiting with a portion of the money until age 50 didn't go over very well! Thanks for the comments.

gasdoc

User avatar
gasdoc
Posts: 1517
Joined: Mon Nov 03, 2014 8:26 am

Re: What age is the best to give a child control of an inheritance?

Post by gasdoc » Sat Mar 31, 2018 4:15 pm

Marketman wrote:
Sat Mar 31, 2018 4:06 pm
I think it totally depends on the kid. It would probably be wise to assume the worst at first when they are young (assume they are a spendthrift, etc.) and have an older control age in will. As you live longer and see his or her personality develop you could tweak your will and make the age younger if warranted.
At what age are you suggesting, assuming "'the worst?" Maybe increase it slightly to 40?

gasdoc

Marketman
Posts: 196
Joined: Sun Feb 04, 2018 2:24 pm
Location: Texas

Re: What age is the best to give a child control of an inheritance?

Post by Marketman » Sat Mar 31, 2018 4:20 pm

I have seen many people use age 35 in wills. It's probably a good age to go with at first. It's a balance of trust administration costs and asset protection. If the child has, for example, a learning impairment that comes out with age or turns out to have a drug problem you might feel the costs of a life-long trust are worthwhile. On the other hand, if he or she is very responsible you may want to decrease the age to minimize trust costs. I say start with a reasonable age (say 35) and update it if needed.
Last edited by Marketman on Sat Mar 31, 2018 4:32 pm, edited 3 times in total.

minimalistmarc
Posts: 256
Joined: Fri Jul 24, 2015 4:38 pm

Re: What age is the best to give a child control of an inheritance?

Post by minimalistmarc » Sat Mar 31, 2018 4:22 pm

Our kids are 0 and 3 and we did our wills recently. Intially we decided on 25 but then change it to 21.

My thinking was to teach my kids well about money and if I die and leave them a large inheritance and they blow it then so be it.

I don't like trying to control people.

daveydoo
Posts: 1564
Joined: Sun May 15, 2016 1:53 am

Re: What age is the best to give a child control of an inheritance?

Post by daveydoo » Sat Mar 31, 2018 4:24 pm

Spouse and I are doing 25, 30, and 35. My now-deceased parents' worst-case planning scenario was 30, 35, and 40, I think (I recently learned). Fortunately, they lived well past that time. I might have gone later but attorney and spouse were inclined toward the earlier time-frame. OTOH, our assets -- divided multiple ways -- are unlikely to take the wind out of anyone's sails.
"I mean, it's one banana, Michael...what could it cost? Ten dollars?"

Marketman
Posts: 196
Joined: Sun Feb 04, 2018 2:24 pm
Location: Texas

Re: What age is the best to give a child control of an inheritance?

Post by Marketman » Sat Mar 31, 2018 4:45 pm

A lot of this also has to do with the absolute amount of money that is at stake. If the inheritance is large and the child is young, you may want to start off with a life-long trust in your will. If you live long enough to see how they turn out you could then use a shorter control age to save admin costs.

If the amount at stake is not life changing and the child is young, you could use a middle-of-the-road age of 35 or so and then change if needed in the future. I always tell people to write a will assuming you drop dead immediately after signing it. As things change, update your will.

User avatar
Sandtrap
Posts: 5248
Joined: Sat Nov 26, 2016 6:32 pm
Location: Hawaii😀 Northern AZ.😳 Retired.

Re: What age is the best to give a child control of an inheritance?

Post by Sandtrap » Sat Mar 31, 2018 4:54 pm

Successor trustee and co-corporate trustee and or trust protector.
Incremental distributions.
Spendthrift provisions.
Provisions to limit redirection of funds not for her benefit, etc, etc.
Refer to “Beyond the Grave” by Condon.

J🌺🌺🌺

User avatar
gasdoc
Posts: 1517
Joined: Mon Nov 03, 2014 8:26 am

Re: What age is the best to give a child control of an inheritance?

Post by gasdoc » Sat Mar 31, 2018 4:58 pm

Thanks for the responses so far. I guess if we passed away tomorrow, I would be comfortable with age 35.... DW just told me she thought age 40 is too late. Younger than 35 is too young if DD was just getting through with her education or was still in the process. And it can always be changed (again).

gasdoc

User avatar
gasdoc
Posts: 1517
Joined: Mon Nov 03, 2014 8:26 am

Re: What age is the best to give a child control of an inheritance?

Post by gasdoc » Sat Mar 31, 2018 4:59 pm

Sandtrap wrote:
Sat Mar 31, 2018 4:54 pm
Successor trustee and co-corporate trustee and or trust protector.
Incremental distributions.
Spendthrift provisions.
Provisions to limit redirection of funds not for her benefit, etc, etc.
Refer to “Beyond the Grave” by Condon.

J🌺🌺🌺
Thanks, Sandtrap, I actually read that book a year ago or so. It had so much info it may have led to inactivity.

gasdoc

Marketman
Posts: 196
Joined: Sun Feb 04, 2018 2:24 pm
Location: Texas

Re: What age is the best to give a child control of an inheritance?

Post by Marketman » Sat Mar 31, 2018 5:01 pm

Personally I have no problem with "managing money from the grave" until the beneficiary proves themself to be responsible.

User avatar
Smorgasbord
Posts: 352
Joined: Fri Jun 10, 2016 8:12 pm

Re: What age is the best to give a child control of an inheritance?

Post by Smorgasbord » Sat Mar 31, 2018 5:04 pm

Well, if you gave her $100,000 tomorrow what would she do with it?

LarryAllen
Posts: 1079
Joined: Fri Apr 22, 2016 9:41 am
Location: State of Confusion

Re: What age is the best to give a child control of an inheritance?

Post by LarryAllen » Sat Mar 31, 2018 5:07 pm

Forty.

PFInterest
Posts: 2120
Joined: Sun Jan 08, 2017 12:25 pm

Re: What age is the best to give a child control of an inheritance?

Post by PFInterest » Sat Mar 31, 2018 5:10 pm

gasdoc wrote:
Sat Mar 31, 2018 3:34 pm
DW and I are considering re-doing our wills. The last time we did this, our only child was an infant. She is now a college freshman. Our current will sets up a trust on our passing, and gives full control of the funds to DD at age 35. Now, I am wondering if that is the appropriate age. She is a premed student, so will probably attend some sort of graduate or professional school, and may not even have her "life path" fully established until she is in her early 30's. Will she have the time by then to be knowledgeable enough about investments to be able to appropriately manage that money at age 35? I probably didn't at that age. Maybe give half at age 35, or at the time of death, and the other half at age 50? Any thoughts out there in Bogleheads land? I appreciate any comments. Thanks!

gasdoc
I could manage my parents estate after intern year. Sooner if I had found out about this stuff earlier, like college or med school. So 35 seems unnecessary.

letsgobobby
Posts: 11511
Joined: Fri Sep 18, 2009 1:10 am

Re: What age is the best to give a child control of an inheritance?

Post by letsgobobby » Sat Mar 31, 2018 5:18 pm

Assuming you do not mean terminating the trust but rather making your daughter trustee. We are using age 31 or 35 (don't remember off hand).

Jack FFR1846
Posts: 7643
Joined: Tue Dec 31, 2013 7:05 am

Re: What age is the best to give a child control of an inheritance?

Post by Jack FFR1846 » Sat Mar 31, 2018 5:32 pm

Are you afraid she'd splurge and pay off $500k in medical school loans or something?
Bogle: Smart Beta is stupid

ofckrupke
Posts: 518
Joined: Mon Jan 10, 2011 2:26 pm

Re: What age is the best to give a child control of an inheritance?

Post by ofckrupke » Sat Mar 31, 2018 5:45 pm

gasdoc wrote:
Sat Mar 31, 2018 4:13 pm
KlangFool wrote:
Sat Mar 31, 2018 3:43 pm
OP,

50% of the lottery winners went bankrupt 10 years after they won the lottery.

KlangFool
KlangFool, that is precisely what I would like to prevent!!!
KF's implication is laughably tainted by selection and interference effects. 100% of lottery winners demonstrated some combination of innumeracy and financial impropriety, prior to winning, by having bought tickets in the first place....which misbehavior was then reinforced by the reward of winning. You almost couldn't choose a worse cohort for a wealth management study.

From what you've shared, your child is far more likely to have conceptual and behavioral skill sets well suited to the task of managing earned and unearned wealth at age 35, as well as a healthy appreciation of the significant impact of good fortune in birth and privilege in upbringing on her circumstances.

I do agree with KF that some living gifting, to accelerate development of managment skills, makes sense.
Last edited by ofckrupke on Sat Mar 31, 2018 5:48 pm, edited 1 time in total.

golfCaddy
Posts: 696
Joined: Wed Jan 10, 2018 10:02 pm

Re: What age is the best to give a child control of an inheritance?

Post by golfCaddy » Sat Mar 31, 2018 5:46 pm

gasdoc wrote:
Sat Mar 31, 2018 3:34 pm
Will she have the time by then to be knowledgeable enough about investments to be able to appropriately manage that money at age 35? I probably didn't at that age.
gasdoc
This doesn't make sense to me. By 35, plenty of people are managing their investments in a 401k or IRA. Managing a three fund portfolio or if you want it even more simple, a Vanguard target date fund isn't that hard. If she's not a boglehead, start those conversations now on investing. While some lottery winners may go bankrupt, some of those lottery winners were in their 40s or 50s. There's no magic age at which everyone suddenly becomes financially responsible.

bayview
Posts: 1537
Joined: Thu Aug 02, 2012 7:05 pm
Location: WNC

Re: What age is the best to give a child control of an inheritance?

Post by bayview » Sat Mar 31, 2018 5:52 pm

gasdoc, much respect to you as an involved parent, but I think I remember a thread by you a year or so ago that dealt with your worries about your daughter's financial smarts. I can't remember the precise topic, but there was a lot of hand-wringing on your part.

Has she ever given you a reason to think that she might greatly diverge (let's say more than 30% or so) from what you might want her to do with her finances?

At some point, I think you have to decide that you've done the best that you can as a parent, and that kids (as wonderful as they might be) are not going to be clones of you, and that in some areas, you just have to let go of the reins and let them run.

If you feel that you haven't given her enough financial guidance thus far, then to me the sensible thing to do is to start this conversation now, and then give her the responsibility of managing the money, rather than anxiously hovering from beyond the grave to try to keep her from making any mistakes, as you define them. Perhaps start gifting her part of the anticipated inheritance each year, and discussing what she does with it, and why, and acknowledging that you are not her, and that she might have very valid reasons for handling the money differently than you might.

Love 'em and let them go. You'll both be happier in the long run. :beer
The continuous execution of a sound strategy gives you the benefit of the strategy. That's what it's all about. --Rick Ferri

Stormbringer
Posts: 569
Joined: Sun Jun 14, 2015 7:07 am

Re: What age is the best to give a child control of an inheritance?

Post by Stormbringer » Sat Mar 31, 2018 6:02 pm

gasdoc wrote:
Sat Mar 31, 2018 3:34 pm
Maybe give half at age 35, or at the time of death, and the other half at age 50
Think about the message this sends to your child. I would be pretty insulted if my parents thought so little of me that they felt they had to wait until I was 50 to responsibly handle an inheritance.
"Compound interest is the most powerful force in the universe." - Albert Einstein

letsgobobby
Posts: 11511
Joined: Fri Sep 18, 2009 1:10 am

Re: What age is the best to give a child control of an inheritance?

Post by letsgobobby » Sat Mar 31, 2018 6:11 pm

Really need gasdoc to clarify if the trust is to be dissolved at age 35 or 50, or if daughter is to become trustee. Significant difference. Different implications.

In any case I think 50 is far too late.

quantAndHold
Posts: 1701
Joined: Thu Sep 17, 2015 10:39 pm

Re: What age is the best to give a child control of an inheritance?

Post by quantAndHold » Sat Mar 31, 2018 6:16 pm

I’m hoping that your will is set up so that she could get through all of her professional training without incurring any debt, right?

Is she a drug addict, or mentally ill, or otherwise unfit in some way that would make you think that she would blow all the money if she got it at age 21? The message you’re sending by holding control of the money until age 35 is that you don’t trust her. Maybe you should work on solving the trust issue instead of locking up the money.

I went to school with someone who inherited a large pile of money that was locked up so tightly in a trust that he and his siblings couldn’t even draw basic living expenses from it. Ever. The siblings all ended up going to school and getting graduate degrees in either finance or economics. Then they went to court, got themselves appointed as the trustees, and were able to pay themselves an appropriate salary out of the trust. Don’t be that kind of parent.

metalworking
Posts: 136
Joined: Sun Jan 03, 2016 9:20 pm

Re: What age is the best to give a child control of an inheritance?

Post by metalworking » Sat Mar 31, 2018 6:32 pm

We chose 21. She has been responsible and we have been aggressive with discussing saving/investing etc every since a young age. We told her that we would highly recommend if something happens to call vanguard/fidelity and use their advisory service to get her invested properly. We also told her that if she blows it then that is her problem. I am not going to die again and give her a second chance. We also discussed prenups

Grt2bOutdoors
Posts: 19083
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: What age is the best to give a child control of an inheritance?

Post by Grt2bOutdoors » Sat Mar 31, 2018 6:36 pm

See posts by BSteiner. Age 40 IMO is just ridiculous to have daughter wait to retain full control of trust.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

Dottie57
Posts: 4308
Joined: Thu May 19, 2016 5:43 pm

Re: What age is the best to give a child control of an inheritance?

Post by Dottie57 » Sat Mar 31, 2018 6:45 pm

golfCaddy wrote:
Sat Mar 31, 2018 5:46 pm
gasdoc wrote:
Sat Mar 31, 2018 3:34 pm
Will she have the time by then to be knowledgeable enough about investments to be able to appropriately manage that money at age 35? I probably didn't at that age.
gasdoc
This doesn't make sense to me. By 35, plenty of people are managing their investments in a 401k or IRA. Managing a three fund portfolio or if you want it even more simple, a Vanguard target date fund isn't that hard. If she's not a boglehead, start those conversations now on investing. While some lottery winners may go bankrupt, some of those lottery winners were in their 40s or 50s. There's no magic age at which everyone suddenly becomes financially responsible.

+1

By 35 a person is an adult or will never be an adult. Certainly no later than 35.

User avatar
Eagle33
Posts: 69
Joined: Wed Aug 30, 2017 3:20 pm

Re: What age is the best to give a child control of an inheritance?

Post by Eagle33 » Sat Mar 31, 2018 6:55 pm

If OP has so little faith in how well they have educated her regarding personal finances, then maybe the approach to use is the one from the movie "Brewster's Millions" should be used?

Personally I would prefer to transition myself to a full level of trust of her ability by arranging an afternoon or evening a couple times per year for the next few years to discuss a specific aspect of the various financial issues concerning her future inheritance. Engaging her in the knowledge transfer should be more important than the $ transfer. Teach her to fish instead of just supplying the fish.
Rocket science is not “rocket science” to a rocket scientist, just as personal finance is not “rocket science” to a Boglehead.

User avatar
willthrill81
Posts: 5396
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: What age is the best to give a child control of an inheritance?

Post by willthrill81 » Sat Mar 31, 2018 6:59 pm

Dottie57 wrote:
Sat Mar 31, 2018 6:45 pm
golfCaddy wrote:
Sat Mar 31, 2018 5:46 pm
gasdoc wrote:
Sat Mar 31, 2018 3:34 pm
Will she have the time by then to be knowledgeable enough about investments to be able to appropriately manage that money at age 35? I probably didn't at that age.
gasdoc
This doesn't make sense to me. By 35, plenty of people are managing their investments in a 401k or IRA. Managing a three fund portfolio or if you want it even more simple, a Vanguard target date fund isn't that hard. If she's not a boglehead, start those conversations now on investing. While some lottery winners may go bankrupt, some of those lottery winners were in their 40s or 50s. There's no magic age at which everyone suddenly becomes financially responsible.

+1

By 35 a person is an adult or will never be an adult. Certainly no later than 35.
:thumbsup

I think that anywhere from 30-35 is fine. Some could certainly handle it younger than that, but many would not.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

blevine
Posts: 1942
Joined: Sat Feb 27, 2010 3:57 pm
Location: New York

Re: What age is the best to give a child control of an inheritance?

Post by blevine » Sat Mar 31, 2018 7:02 pm

I am in the process of convincing my 19 year old to take his first non trivial paychecks from a coming professional internship, and put most of it into an IRA.

He is learning a lesson, but also being interviewed to manage my money in the future ;-)

User avatar
8foot7
Posts: 695
Joined: Mon Jan 05, 2015 7:29 pm

Re: What age is the best to give a child control of an inheritance?

Post by 8foot7 » Sat Mar 31, 2018 7:05 pm

Think of the positive things your offspring could do with that money between 35 and 50. Pay off student loans. Buy a house. Perhaps even put a kid through college (a newborn had at 30 is college bound at 48). Allow one spouse to stay at home to avoid daycare expense. The positive options are numerous. At 50, while your child may not yet be financially independent per se, your child will likely have a lot less need for the money than during the years where large capital outlays to establish one’s self in semi-permanent adulthood are quite common and not unreasonable.

cherijoh
Posts: 4932
Joined: Tue Feb 20, 2007 4:49 pm
Location: Charlotte NC

Re: What age is the best to give a child control of an inheritance?

Post by cherijoh » Sat Mar 31, 2018 7:23 pm

Stormbringer wrote:
Sat Mar 31, 2018 6:02 pm
gasdoc wrote:
Sat Mar 31, 2018 3:34 pm
Maybe give half at age 35, or at the time of death, and the other half at age 50
Think about the message this sends to your child. I would be pretty insulted if my parents thought so little of me that they felt they had to wait until I was 50 to responsibly handle an inheritance.
+1
My dad passed away when my brother and I were in our early 30s. My Mom decided to get a revocable living trust and named my brother and I as co-survivor trustees. No "wait until you hit xx years old to get the money" stuff. Thankfully my mom lived another 14 years, but she considered us to be responsible adults at the time she created the trust.

Obviously, Gasdoc may be talking about a much larger inheritance, but is it really worth the hassle and expenses involved in setting up an ongoing trust until your daughter is 50?

oldfatguy
Posts: 80
Joined: Tue Feb 27, 2018 1:38 pm

Re: What age is the best to give a child control of an inheritance?

Post by oldfatguy » Sat Mar 31, 2018 7:24 pm

In my will, my daughter would get everything at age 18 if we are both gone before then. But then again, there won't be that much to get.

Dottie57
Posts: 4308
Joined: Thu May 19, 2016 5:43 pm

Re: What age is the best to give a child control of an inheritance?

Post by Dottie57 » Sat Mar 31, 2018 7:28 pm

blevine wrote:
Sat Mar 31, 2018 7:02 pm
I am in the process of convincing my 19 year old to take his first non trivial paychecks from a coming professional internship, and put most of it into an IRA.

He is learning a lesson, but also being interviewed to manage my money in the future ;-)
I think the problem is putting "most" of it in an IRA. At that age I would not have wanted to do that. How about 25-50% instead.

quantAndHold
Posts: 1701
Joined: Thu Sep 17, 2015 10:39 pm

Re: What age is the best to give a child control of an inheritance?

Post by quantAndHold » Sat Mar 31, 2018 7:42 pm

Our kids inherited six figure chunks from grandad when they were in their early 20’s. Both of them used the money to put down payments on houses.

I would have preferred that they had blown the money traveling the world like their hippie parents did in a similar situation, but I guess we taught them to be sensible with money. Maybe a little too sensible.

annielouise
Posts: 301
Joined: Wed May 14, 2008 4:11 pm

Re: What age is the best to give a child control of an inheritance?

Post by annielouise » Sat Mar 31, 2018 8:10 pm

quantAndHold wrote:
Sat Mar 31, 2018 6:16 pm

Is she a drug addict, or mentally ill, or otherwise unfit in some way...
Perhaps you meant to say "mentally incompetent"?

Plenty of people with a "mental illness" are perfectly capable of handling their own finances or an inheritance. For example, I know a highly respected doctor with a BH type investment philosophy who also happens to have schizophrenia. I am certain that many of our fellow BHs have conditions such as depression, anxiety, bipolar, etc.

😎

letsgobobby
Posts: 11511
Joined: Fri Sep 18, 2009 1:10 am

Re: What age is the best to give a child control of an inheritance?

Post by letsgobobby » Sat Mar 31, 2018 8:22 pm

quantAndHold wrote:
Sat Mar 31, 2018 7:42 pm
Our kids inherited six figure chunks from grandad when they were in their early 20’s. Both of them used the money to put down payments on houses.

I would have preferred that they had blown the money traveling the world like their hippie parents did in a similar situation, but I guess we taught them to be sensible with money. Maybe a little too sensible.
Six figures is not seven or eight.

KlangFool
Posts: 9983
Joined: Sat Oct 11, 2008 12:35 pm

Re: What age is the best to give a child control of an inheritance?

Post by KlangFool » Sat Mar 31, 2018 8:23 pm

gasdoc wrote:
Sat Mar 31, 2018 4:13 pm
KlangFool wrote:
Sat Mar 31, 2018 3:43 pm
OP,

50% of the lottery winners went bankrupt 10 years after they won the lottery.

KlangFool
KlangFool, that is precisely what I would like to prevent!!!

Up until now, she has a small Roth IRA which she manages, which is invested in one of Vanguard's fund-of-funds, though I don't at the moment remember which one. She gets a reasonable monthly transfer from us, which is more than she really needs, but not enough that she doesn't have to budget to make it last until the end of the month. She does manage to be able to put aside enough from outside meals and entertainment to be able to fund an occasional weekend outing with friends, and keeps an emergency fund of $3k at all times. I guess that makes her mostly responsible. DW and I are both in good health presently, so this is more a "just in case" scenario, so hopefully we will get a chance to mentor her before we are gone. It looks like my idea of waiting with a portion of the money until age 50 didn't go over very well! Thanks for the comments.

gasdoc
gasdoc,

I do not know how much that she stands to inherit. But, if it is 7 figures, you may want to give her more now. For example, 15K from you and 15K from your wife. Aka, 30K per year.

A person cannot learn to manage 7 figures without the experience of managing a smaller amount.

I am not as rich as you. Both of my kids will graduate college with about 20K to 30K worth of investment. This is from their own years of saving and my contribution to their Roth IRAs.

KlangFool

User avatar
goodenyou
Posts: 1323
Joined: Sun Jan 31, 2010 11:57 pm
Location: Skating to Where the Puck is Going to Be..or on the golf course

Re: What age is the best to give a child control of an inheritance?

Post by goodenyou » Sat Mar 31, 2018 8:37 pm

70 yo
"Ignorance more frequently begets confidence than does knowledge" | "The best years you have left are the ones you have right now"

warner25
Posts: 282
Joined: Wed Oct 29, 2014 4:38 pm

Re: What age is the best to give a child control of an inheritance?

Post by warner25 » Sat Mar 31, 2018 8:39 pm

I want to ask gasdoc (or anyone else in this position), what is the purpose of passing on an inheritance to adult children? I ask out of curiosity, and also because I think the answer might lead to an answer for the original question.

I'm many years away from needing to think about this myself. Our kids are babies, so we see our savings and life insurance benefits as necessary to provide for them (through the designated guardian) until they're old enough to provide for themselves. But after one reaches adulthood, they presumably don't need the money, especially if you think your kid is bound to be a medical doctor. So at that point isn't it just a gift? If so, why the concern about how they might use the gift, or their ability to "appropriately manage" or "handle" it? What does "appropriate" mean?

On the surface it seems like many people just want their adult children to continue their personal mission to grow the biggest possible pile of money. Like people want to give their kid a 7-figure sum of money, but don't want them to change their lifestyle as a result of it. So what's the point?

I'm increasingly thinking that once our kids get through school and get established as adults with their own careers, families, etc., our best option will be leaving our estate to a charity for poor kids in Africa.

User avatar
Wildebeest
Posts: 1142
Joined: Fri Dec 27, 2013 2:36 pm

Re: What age is the best to give a child control of an inheritance?

Post by Wildebeest » Sat Mar 31, 2018 8:48 pm

If you have worries about your child controlling her inheritance, may be you should give her money now and sees how she does.

We plan to live to 100 and have given our child and spouse a good amount of money now. They will hit the jack pot when we die but hen they may be in their 70's , money does not mean as much as when you are in your twenties.

My parents gave me money when I needed it and I like to think that they felt I used it well. I feel the same way about my offspring.

Wildebeest.
The Golden Rule: One should treat others as one would like others to treat oneself.

User avatar
Pajamas
Posts: 6015
Joined: Sun Jun 03, 2012 6:32 pm

Re: What age is the best to give a child control of an inheritance?

Post by Pajamas » Sat Mar 31, 2018 8:53 pm

Is there something in particular that you are worried about?

Unless you are talking about an amount that will require estate taxes to be paid, just leave it to her at the time of your death as long as she is 21 or older.

If she isn't capable of handling a lesser inheritance for some reason, then set up a trust or life annuity, but since she is pre-med, that seems unlikely.

If it is an estate-tax amount of wealth at state or federal level either one, then do something to try to avoid that and to keep her from losing it in a divorce or lawsuit, but not to keep it out of her hands.

You'll know by the time she's 30 how well she would handle it, if you don't already, which I suspect you do. If it's just a knowledge issue, then have a talk with her and give her a couple of books to read.

User avatar
Wildebeest
Posts: 1142
Joined: Fri Dec 27, 2013 2:36 pm

Re: What age is the best to give a child control of an inheritance?

Post by Wildebeest » Sat Mar 31, 2018 9:01 pm

warner25 wrote:
Sat Mar 31, 2018 8:39 pm
I want to ask gasdoc (or anyone else in this position), what is the purpose of passing on an inheritance to adult children? I ask out of curiosity, and also because I think the answer might lead to an answer for the original question.

I'm many years away from needing to think about this myself. Our kids are babies, so we see our savings and life insurance benefits as necessary to provide for them (through the designated guardian) until they're old enough to provide for themselves. But after one reaches adulthood, they presumably don't need the money, especially if you think your kid is bound to be a medical doctor. So at that point isn't it just a gift? If so, why the concern about how they might use the gift, or their ability to "appropriately manage" or "handle" it? What does "appropriate" mean?

On the surface it seems like many people just want their adult children to continue their personal mission to grow the biggest possible pile of money. Like people want to give their kid a 7-figure sum of money, but don't want them to change their lifestyle as a result of it. So what's the point?

I'm increasingly thinking that once our kids get through school and get established as adults with their own careers, families, etc., our best option will be leaving our estate to a charity for poor kids in Africa.
You make a great point and we will be leaving the majority of our estate to charity. Support your children now when they need it most!
The Golden Rule: One should treat others as one would like others to treat oneself.

aristotelian
Posts: 4609
Joined: Wed Jan 11, 2017 8:05 pm

Re: What age is the best to give a child control of an inheritance?

Post by aristotelian » Sat Mar 31, 2018 9:08 pm

warner25 wrote:
Sat Mar 31, 2018 8:39 pm
I want to ask gasdoc (or anyone else in this position), what is the purpose of passing on an inheritance to adult children? I ask out of curiosity, and also because I think the answer might lead to an answer for the original question.

I'm many years away from needing to think about this myself. Our kids are babies, so we see our savings and life insurance benefits as necessary to provide for them (through the designated guardian) until they're old enough to provide for themselves. But after one reaches adulthood, they presumably don't need the money, especially if you think your kid is bound to be a medical doctor. So at that point isn't it just a gift? If so, why the concern about how they might use the gift, or their ability to "appropriately manage" or "handle" it? What does "appropriate" mean?

On the surface it seems like many people just want their adult children to continue their personal mission to grow the biggest possible pile of money. Like people want to give their kid a 7-figure sum of money, but don't want them to change their lifestyle as a result of it. So what's the point?

I'm increasingly thinking that once our kids get through school and get established as adults with their own careers, families, etc., our best option will be leaving our estate to a charity for poor kids in Africa.
I agree completely, although I would also trust my kids to give it to charity on my behalf once they decide they have no further need for it.

User avatar
Watty
Posts: 13855
Joined: Wed Oct 10, 2007 3:55 pm

Re: What age is the best to give a child control of an inheritance?

Post by Watty » Sat Mar 31, 2018 9:17 pm

gasdoc wrote:
Sat Mar 31, 2018 3:34 pm
She is a premed student.....
For perspective in a few years peoples lives could be depending on her judgement if she becomes a doctor.

The funds should already be set up in a stable portfolio and you should have an IPS written up to explain how the money should be managed so it should not require a lot of specific investing skills.

If she is irresponsible when she is 30, then that will likely not change in five or ten years.

Stormbringer
Posts: 569
Joined: Sun Jun 14, 2015 7:07 am

Re: What age is the best to give a child control of an inheritance?

Post by Stormbringer » Sat Mar 31, 2018 9:50 pm

warner25 wrote:
Sat Mar 31, 2018 8:39 pm
I want to ask gasdoc (or anyone else in this position), what is the purpose of passing on an inheritance to adult children?
Because I would feel like a real jerk disinheriting my daughter for no good reason.
"Compound interest is the most powerful force in the universe." - Albert Einstein

Post Reply