Spend It All vs. Leave $$ for the Kids

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ArmchairArchitect
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Re: Spend It All vs. Leave $$ for the Kids

Post by ArmchairArchitect » Wed Nov 13, 2019 2:29 pm

Spend as much as you want, and leave the rest to charity.

The problem with inheritances is that they create an unlevel playing field in society (which is unearned by the beneficiaries to the detriment of those that don't have the same).

This is why I respect "new money" instead of "old money" people- new money people actually earned it for themselves.

WhiteMaxima
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Re: Spend It All vs. Leave $$ for the Kids

Post by WhiteMaxima » Wed Nov 13, 2019 2:52 pm

I would mage save what's left into 529 for my heirs. No inherit for fancy vacation, luxury cars, big house. They have to work hard to earn these. Education fund is the only gift to them.

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willthrill81
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Re: Spend It All vs. Leave $$ for the Kids

Post by willthrill81 » Wed Nov 13, 2019 2:54 pm

ArmchairArchitect wrote:
Wed Nov 13, 2019 2:29 pm
The problem with inheritances is that they create an unlevel playing field in society (which is unearned by the beneficiaries to the detriment of those that don't have the same).
That's an inherent and unavoidable aspect of the world. If someone values charity over their children, that's their business, but doing so because they don't like inequality of starting points seems futile, at best.
“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

smectym
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Re: Spend It All vs. Leave $$ for the Kids

Post by smectym » Thu Nov 14, 2019 4:52 am

ArmchairArchitect wrote:
Wed Nov 13, 2019 2:29 pm
Spend as much as you want, and leave the rest to charity.

The problem with inheritances is that they create an unlevel playing field in society (which is unearned by the beneficiaries to the detriment of those that don't have the same).

This is why I respect "new money" instead of "old money" people- new money people actually earned it for themselves.
An obsolete view, if it ever did make much sense. The idea that it’s wonderful that each generation start over with zero, and that to that end wise, far-seeing mom and dad should make damn sure to send the last nickel down the slot at the tribal casino before they die, has little to commend it and a lot of obvious flaws.

Culbretd
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Re: Spend It All vs. Leave $$ for the Kids

Post by Culbretd » Thu Nov 14, 2019 5:11 am

I will be leaving some to my children as my parents wil be leaving some to me. Both my parents grew up dirt poor in the south and my dad (who is the smartest man I know) never made it past the 8th grade; he finally dropped out after his 3rd try.

I remember growing up in old trailers and ratty clothes. My parents are both very successful now and leaving a decent amount of my money to my brother and I. In todays society anyone that tries to make it can. We leave in the greatest capitalist country in the world. They taught me hard work and never giving up even after many failures. To this day there is nothing I can’t ask my dad that he can’t get a book from the library to figure out how to do something. He passed this down to me. Together we have built several houses and managed and remodeled several others. My mom on the other hand is now a senior manager of a global distribution company. She manages accounts from Hong Kong to Germany to all of North America.

My parents have never given my anything but instead taught me I can do anything I set my mind too. When they pass I have no idea what I will do with the inheritance but I know I will keep adding to it to pass down to further generations. That was both of their goals; to give further generations a head start in life. In the future the notions that “It takes money to make money” will even more true ever. Especially with so many incentives being taking away from small business owners with they way our society it heading.

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Wiggums
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Re: Spend It All vs. Leave $$ for the Kids

Post by Wiggums » Thu Nov 14, 2019 5:49 am

I think one of the best things you can do is to setup your children for success. Set a good example, teach them and encourage them to be independent. We have a DAF and they win when we win. As long as your children are doing the right things in life, I don’t know why you would not choose to leave money to your family. Sure, if your Bill Gates, it makes sense to put tons of money in a foundation, but I’m 100% positive that his family is well taken care of. To each his own...

goblue100
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Re: Spend It All vs. Leave $$ for the Kids

Post by goblue100 » Thu Nov 14, 2019 7:21 am

ArmchairArchitect wrote:
Wed Nov 13, 2019 2:29 pm
Spend as much as you want, and leave the rest to charity.

The problem with inheritances is that they create an unlevel playing field in society (which is unearned by the beneficiaries to the detriment of those that don't have the same).

This is why I respect "new money" instead of "old money" people- new money people actually earned it for themselves.
Personally, I want my kid to have an advantage on the unlevel playing field.
Financial planners are savers. They want us to be 95 percent confident we can finance a 30-year retirement even though there is an 82 percent probability of being dead by then. - Scott Burns

getthatmarshmallow
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Re: Spend It All vs. Leave $$ for the Kids

Post by getthatmarshmallow » Thu Nov 14, 2019 7:46 am

dboeger1 wrote:
Mon Nov 11, 2019 5:47 pm
I haven't read all the replies, and I'm 29 and not yet a parent, but it's a fun topic so I'd like to chime in anyways. Spending on yourself in retirement vs. leaving behind an inheritance is often portrayed as a linear spectrum, and it kind of is... but I think there's also an orthogonal alternative, which is to spend on the kids' development. Looking back at my childhood, I had a nasty habit of letting money burn a hole in my pocket any time I got some. I doubt an inheritance would've done me much good. But I most definitely could have benefitted greatly from better access to educational resources. I was always a good student, but in a fairly mediocre school system which didn't motivate me to go above and beyond the minimum requirements. Later, as a college student and then a highly paid young professional, I found myself surrounded by peers who had every textbook, joined every club, always had access to the latest computers, knew top performers in different fields, had completed compelling projects as early as elementary school, etc. It blew my mind just how far behind I felt.

A good example is with my guitar playing skills. I've played guitar since I was a kid, but I never really learned to be that good. I started on low-quality instruments and didn't have much in the way of instructional materials. I remember one of the things that frustrated me the most was that because I shared a room with my brother, I was never allowed to leave my guitar stuff set up in the room. Setting it up and putting it away each time was a major hassle, and really demotivated me. It wasn't until years later in college that I really fell in love with playing the guitar when I was able to buy my own high quality instrument. I played for hours every day and never had to put anything away because I had my own dorm room. But by that time, I was busy with studies and other things in life, and I just never became as good as I aspired to. I'm now married, and my wife doesn't like it when I leave my guitar stuff out, so I mostly don't play anymore, except on rare occasions when a guest asks to hear me play, and then I end up just playing old songs I learned growing up. Not exactly awe-inspiring.

When I think about hypothetical things that would have given me a huge boost in life, at least with regards to something like playing guitar, grandparents who lived nearby with a dedicated music room where I could practice to my heart's content without having to clean up after myself would be pretty high on the list, lol. This is admittedly a pretty silly and contrived example, but I think it's an interesting point nonetheless. It may not be money your kids need; it might be other kinds of help and resources, which leftover money might be able to help with in an immensely positive way. It might be a textbook, or tuition fees for an after-school class, or extra supplies for a club.
+1. There's value to starting from nothing and working your way up, but there's also value in having the resources to be able to achieve more because you're not worrying about basics.

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Wiggums
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Re: Spend It All vs. Leave $$ for the Kids

Post by Wiggums » Thu Nov 14, 2019 7:53 am

goblue100 wrote:
Thu Nov 14, 2019 7:21 am
Personally, I want my kid to have an advantage on the unlevel playing field.
:sharebeer

smectym
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Re: Spend It All vs. Leave $$ for the Kids

Post by smectym » Thu Nov 14, 2019 7:55 am

WhiteMaxima wrote:
Wed Nov 13, 2019 2:52 pm
I would mage save what's left into 529 for my heirs. No inherit for fancy vacation, luxury cars, big house. They have to work hard to earn these. Education fund is the only gift to them.
We’ve already paid for college and funded the 529 for law school. That doesn’t mean we are reluctant to leave an inheritance. And as a general rule, trying to restrict the discretion of heirs on how to spend their money (and it’s as much theirs as if they had “earned” it, if not more so) is a horrible idea.

Broken Man 1999
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Re: Spend It All vs. Leave $$ for the Kids

Post by Broken Man 1999 » Thu Nov 14, 2019 9:17 am

Wiggums wrote:
Thu Nov 14, 2019 5:49 am
I think one of the best things you can do is to setup your children for success. Set a good example, teach them and encourage them to be independent. We have a DAF and they win when we win. As long as your children are doing the right things in life, I don’t know why you would not choose to leave money to your family. Sure, if your Bill Gates, it makes sense to put tons of money in a foundation, but I’m 100% positive that his family is well taken care of. To each his own...
Agreed! And, one can do both, to a certain degree.

I believe my responsibility to society is making sure my family is a contributing factor in society. To that end, my investments in their education and other financial things furthers that goal. Strong families make strong communities, and nations.

Inequality has always existed, and probably always will. Tough nut to crack.There is a wide range of ability, aptitude, initiative, and, to be honest, luck. Also, not everyone has the same feelings toward education, dropping out of high school isn't normally a good career path. Education has changed the financial trajectory of millions, lifting people out of poverty.

One thing that contributes to inequality is the preference of educated people to marry other educated people. Virtually all the friends of my daughters are married couples, both with college degrees, many with graduate degrees. A generation ago, one of the married couple might have been college educated. So, yeah, two educated people are probably going to zoom by many in terms of income.

I'll continue to invest in my family, and give to charity. That works for me.

Broken man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven then I shall not go. " -Mark Twain

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TomatoTomahto
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Re: Spend It All vs. Leave $$ for the Kids

Post by TomatoTomahto » Thu Nov 14, 2019 9:21 am

goblue100 wrote:
Thu Nov 14, 2019 7:21 am
ArmchairArchitect wrote:
Wed Nov 13, 2019 2:29 pm
Spend as much as you want, and leave the rest to charity.

The problem with inheritances is that they create an unlevel playing field in society (which is unearned by the beneficiaries to the detriment of those that don't have the same).

This is why I respect "new money" instead of "old money" people- new money people actually earned it for themselves.
Personally, I want my kid to have an advantage on the unlevel playing field.
Yes. You don’t read people espousing hitting a kid over the head until they no longer have an intelligence advantage, or making them wear ill fitting shoes to reducing their advantage in sports, etc. I guess genetic advantages get a pass? Life is unfair enough.
Okay, I get it; I won't be political or controversial. The Earth is flat.

MnD
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Re: Spend It All vs. Leave $$ for the Kids

Post by MnD » Thu Nov 14, 2019 9:37 am

With joint life expectancies they way they are nowadays, keep in mind the "kids" may be well into their 60's and the grandkids could well be in their 30's, out of school and financially well-established. On the basis of historical sequences our SWR of 5% of annual portfolio 3% floor has a worst and best case ending balance of ~$250K and ~$2M per million starting balance and an average and median of around $1M. A significant reason for choosing our SWR was to avoid leaving many multiples of starting portfolio on the table at check-out time which is a "feature" of low, inflation fixed SWR's in all but terrible sequences.

Adjusted to actual started balance, this range and average numbers would be fine with me. I'd speculate we'll check out with less than $1M real per $1M starting balance divided by 2 kids. Nice money but not life-altering. But it would be nice if the kids could benefit from this quite earlier in life. Not sure how to do that without degrading the robustness of an SWR plan. :confused
Last edited by MnD on Thu Nov 14, 2019 12:03 pm, edited 1 time in total.
70/30 AA for life, Global market cap equity. Rebalance if fixed income <25% or >35%. Weighted ER< .10%. 5% of annual portfolio balance SWR, Proportional (to AA) withdrawals.

stoptothink
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Re: Spend It All vs. Leave $$ for the Kids

Post by stoptothink » Thu Nov 14, 2019 9:52 am

goblue100 wrote:
Thu Nov 14, 2019 7:21 am
ArmchairArchitect wrote:
Wed Nov 13, 2019 2:29 pm
Spend as much as you want, and leave the rest to charity.

The problem with inheritances is that they create an unlevel playing field in society (which is unearned by the beneficiaries to the detriment of those that don't have the same).

This is why I respect "new money" instead of "old money" people- new money people actually earned it for themselves.
Personally, I want my kid to have an advantage on the unlevel playing field.
It's impossible to "level the playing field", especially when there is nothing you can do about genetics (some people are inherently smarter, better looking , more athletic). Countless cultures in history have tried to level the playing field financially and all have actually made it worse. It's a noble thought and totally pointless in reality. Since it's inevitable, I want my kids to have the best shot too. Now this doesn't mean we spoil our kids, they don't (and won't until they are much older) have a clue that we have some money, but they will have things that my wife and I could have never dreamed growing up. We plan on spending it all, but chances are very slim that happens.

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MaryO
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Re: Spend It All vs. Leave $$ for the Kids

Post by MaryO » Thu Nov 14, 2019 10:24 am

MnD wrote:
Thu Nov 14, 2019 9:37 am
….Nice money but not life-altering. But it would be nice if the kids could benefit from this quite earlier in life. Not sure how to do that without degrading the robustness of an SWR plan. :confused
I think that money can be quite life-altering when one has access to it at an early age. It could give our kids confidence to take more risks, like start their own business or join a start-up rather than take a more stable corporate job. Or buy a more expensive home in a wonderful school district that also save hours on daily commuting time. Or have more children. (I hope!) And have the $ for music lessons and cool family experiences.

I agree 100% that the "how" is quite tricky.

fleetwdl
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Re: Spend It All vs. Leave $$ for the Kids

Post by fleetwdl » Thu Nov 14, 2019 11:40 am

It is a goal of mine and DW to leave some wealth for our children. One is doing a great job living within his means and investing for retirement. The other--not so much, but they both are working and supporting themselves. Both our families were hard working, but not wealthy. We are aiming to change our family tree (thats right--Dave Ramsey). The inheritance we leave to children will more likely benefit our grandchildren, as our children will be nearing retirement when we pass, I hope. The idea that my children or their children could pay cash and open a McDonalds franchise is something that I find very appealing. We have prepared them the best we could, and if one or both of them blow the money, then so be it. I don't believe in controlling the lives of others in perpetuity.

Culbretd
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Re: Spend It All vs. Leave $$ for the Kids

Post by Culbretd » Thu Nov 14, 2019 12:53 pm

goblue100 wrote:
Thu Nov 14, 2019 7:21 am
ArmchairArchitect wrote:
Wed Nov 13, 2019 2:29 pm
Spend as much as you want, and leave the rest to charity.

The problem with inheritances is that they create an unlevel playing field in society (which is unearned by the beneficiaries to the detriment of those that don't have the same).

This is why I respect "new money" instead of "old money" people- new money people actually earned it for themselves.
Personally, I want my kid to have an advantage on the unlevel playing field.
Same here. Money can give someone more options. Could be the difference in them starting a business at 25 years old compared to 35 years old. Finical stability can can give someone a huge peace of mind when deciding to step out on the limb and take a risk. I want their life to be easier than mine just as my parents made mine easier than theirs. Would be ideal to see each generation take a step up on the ladder of success. (Ideal world, I know)

Nowizard
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Re: Spend It All vs. Leave $$ for the Kids

Post by Nowizard » Thu Nov 14, 2019 12:58 pm

We would not plan to spend it all if that involved moving beyond our comfort level just to spend or plan to leave X amount of inheritance. We are leading our lives, spending more when desired, the same when desired, less when desired. Something will or will not be remaining when we die, and our children will or will not have an inheritance. The only thing we will do is assure that they will not have any financial issues pertinent to our lives or deaths. It is just that simple for us, though the probability is that our children will receive at least some inheritance.

Tim

delamer
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Re: Spend It All vs. Leave $$ for the Kids

Post by delamer » Thu Nov 14, 2019 1:33 pm

fleetwdl wrote:
Thu Nov 14, 2019 11:40 am
It is a goal of mine and DW to leave some wealth for our children. One is doing a great job living within his means and investing for retirement. The other--not so much, but they both are working and supporting themselves. Both our families were hard working, but not wealthy. We are aiming to change our family tree (thats right--Dave Ramsey). The inheritance we leave to children will more likely benefit our grandchildren, as our children will be nearing retirement when we pass, I hope. The idea that my children or their children could pay cash and open a McDonalds franchise is something that I find very appealing. We have prepared them the best we could, and if one or both of them blow the money, then so be it. I don't believe in controlling the lives of others in perpetuity.
Why make your children wait until your dead and they are retired to benefit from your legacy?

If you are financially secure, now is the time to be generous.

Provide equity for a business for your child now. Subsidize your child’s contribution to her/his retirement plan now. Put money into a 529 plan for your grandchild now. Give money so it can make their lives better today.

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willthrill81
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Re: Spend It All vs. Leave $$ for the Kids

Post by willthrill81 » Thu Nov 14, 2019 1:40 pm

Culbretd wrote:
Thu Nov 14, 2019 12:53 pm
goblue100 wrote:
Thu Nov 14, 2019 7:21 am
ArmchairArchitect wrote:
Wed Nov 13, 2019 2:29 pm
Spend as much as you want, and leave the rest to charity.

The problem with inheritances is that they create an unlevel playing field in society (which is unearned by the beneficiaries to the detriment of those that don't have the same).

This is why I respect "new money" instead of "old money" people- new money people actually earned it for themselves.
Personally, I want my kid to have an advantage on the unlevel playing field.
Same here. Money can give someone more options. Could be the difference in them starting a business at 25 years old compared to 35 years old. Finical stability can can give someone a huge peace of mind when deciding to step out on the limb and take a risk. I want their life to be easier than mine just as my parents made mine easier than theirs. Would be ideal to see each generation take a step up on the ladder of success. (Ideal world, I know)
I've often thought about whether it's possible to create lasting generational wealth in a way that does not engender 'trust fund kid' syndrome (e.g. blowing the money on frivolities and/or a feeling of entitlement leading to lack of a strong work ethic). For instance, I know someone who inherited about $50k when he was 18 and blew it all almost immediately. We know of another very financially secure family who has lavished their two daughters, now college age, with everything they could possibly want, and it seems to have ruined them. This is not a new problem. In one of Mark Twain's short stories, he noted that one boy got everything he wanted and stated that it of course ruined him, while another got very little and of course developed good character. It may be as futile as trying to have one's cake and eat it too, but I'm not sure. I think that it takes very strong parenting, including some real hardships for children, to get there, but I'm not sure that that alone is sufficient. Further, I suspect that the real challenge is not making the wealth last for the second generation but the third and beyond. Also, the proverbial chain is only as strong as the weakest link, maybe the use of trusts can help, but that potentially circles back to the 'trust fund kid' problem.

This is a real conundrum for us.
“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

delamer
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Re: Spend It All vs. Leave $$ for the Kids

Post by delamer » Thu Nov 14, 2019 2:06 pm

willthrill81 wrote:
Thu Nov 14, 2019 1:40 pm
Culbretd wrote:
Thu Nov 14, 2019 12:53 pm
goblue100 wrote:
Thu Nov 14, 2019 7:21 am
ArmchairArchitect wrote:
Wed Nov 13, 2019 2:29 pm
Spend as much as you want, and leave the rest to charity.

The problem with inheritances is that they create an unlevel playing field in society (which is unearned by the beneficiaries to the detriment of those that don't have the same).

This is why I respect "new money" instead of "old money" people- new money people actually earned it for themselves.
Personally, I want my kid to have an advantage on the unlevel playing field.
Same here. Money can give someone more options. Could be the difference in them starting a business at 25 years old compared to 35 years old. Finical stability can can give someone a huge peace of mind when deciding to step out on the limb and take a risk. I want their life to be easier than mine just as my parents made mine easier than theirs. Would be ideal to see each generation take a step up on the ladder of success. (Ideal world, I know)
I've often thought about whether it's possible to create lasting generational wealth in a way that does not engender 'trust fund kid' syndrome (e.g. blowing the money on frivolities and/or a feeling of entitlement leading to lack of a strong work ethic). For instance, I know someone who inherited about $50k when he was 18 and blew it all almost immediately. We know of another very financially secure family who has lavished their two daughters, now college age, with everything they could possibly want, and it seems to have ruined them. This is not a new problem. In one of Mark Twain's short stories, he noted that one boy got everything he wanted and stated that it of course ruined him, while another got very little and of course developed good character. It may be as futile as trying to have one's cake and eat it too, but I'm not sure. I think that it takes very strong parenting, including some real hardships for children, to get there, but I'm not sure that that alone is sufficient. Further, I suspect that the real challenge is not making the wealth last for the second generation but the third and beyond. Also, the proverbial chain is only as strong as the weakest link, maybe the use of trusts can help, but that potentially circles back to the 'trust fund kid' problem.

This is a real conundrum for us.
Most of the friends that I was close to in high school came from solidly middle or upper middle class families. We had summer jobs in high school and college, and there was the expectation that we’d do well academically. Parents paid for college and most got help with purchases of first cars and first homes. With one exception, all of us have been at least as successful as our parents; most of us are actually doing better financially than our parents. Except for the one exception just noted, we all have graduate degrees.

None of us went through any “real hardships” but we all valued education, achievement, and financial security as taught by our parents via their attitudes and their examples.

Don’t be profligate, but don’t be cheap. Don’t create artificial hardship for kids. If they have half a brain, they’ll see through that and resent it. Model the life you want them to emulate. No guarantees if you follow this path, but the odds are in your favor.

(The one exception decided to be a traditional stay-at-home mom, and never had a professional career. Her husband had a decent job, but they aren’t as financially well-off as her parents were.)

smitcat
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Re: Spend It All vs. Leave $$ for the Kids

Post by smitcat » Thu Nov 14, 2019 3:08 pm

willthrill81 wrote:
Thu Nov 14, 2019 1:40 pm
Culbretd wrote:
Thu Nov 14, 2019 12:53 pm
goblue100 wrote:
Thu Nov 14, 2019 7:21 am
ArmchairArchitect wrote:
Wed Nov 13, 2019 2:29 pm
Spend as much as you want, and leave the rest to charity.

The problem with inheritances is that they create an unlevel playing field in society (which is unearned by the beneficiaries to the detriment of those that don't have the same).

This is why I respect "new money" instead of "old money" people- new money people actually earned it for themselves.
Personally, I want my kid to have an advantage on the unlevel playing field.
Same here. Money can give someone more options. Could be the difference in them starting a business at 25 years old compared to 35 years old. Finical stability can can give someone a huge peace of mind when deciding to step out on the limb and take a risk. I want their life to be easier than mine just as my parents made mine easier than theirs. Would be ideal to see each generation take a step up on the ladder of success. (Ideal world, I know)
I've often thought about whether it's possible to create lasting generational wealth in a way that does not engender 'trust fund kid' syndrome (e.g. blowing the money on frivolities and/or a feeling of entitlement leading to lack of a strong work ethic). For instance, I know someone who inherited about $50k when he was 18 and blew it all almost immediately. We know of another very financially secure family who has lavished their two daughters, now college age, with everything they could possibly want, and it seems to have ruined them. This is not a new problem. In one of Mark Twain's short stories, he noted that one boy got everything he wanted and stated that it of course ruined him, while another got very little and of course developed good character. It may be as futile as trying to have one's cake and eat it too, but I'm not sure. I think that it takes very strong parenting, including some real hardships for children, to get there, but I'm not sure that that alone is sufficient. Further, I suspect that the real challenge is not making the wealth last for the second generation but the third and beyond. Also, the proverbial chain is only as strong as the weakest link, maybe the use of trusts can help, but that potentially circles back to the 'trust fund kid' problem.

This is a real conundrum for us.

"This is a real conundrum for us."
I believe time will allow a much better view of the possibility of problems.
Now that our daughter is much older and working a few jobs it is very clear that she will have no problem with the money she receives.
Kinda hard to extrapolate that out when they re very young though.

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Re: Spend It All vs. Leave $$ for the Kids

Post by willthrill81 » Thu Nov 14, 2019 5:02 pm

delamer wrote:
Thu Nov 14, 2019 2:06 pm
willthrill81 wrote:
Thu Nov 14, 2019 1:40 pm
Culbretd wrote:
Thu Nov 14, 2019 12:53 pm
goblue100 wrote:
Thu Nov 14, 2019 7:21 am
ArmchairArchitect wrote:
Wed Nov 13, 2019 2:29 pm
Spend as much as you want, and leave the rest to charity.

The problem with inheritances is that they create an unlevel playing field in society (which is unearned by the beneficiaries to the detriment of those that don't have the same).

This is why I respect "new money" instead of "old money" people- new money people actually earned it for themselves.
Personally, I want my kid to have an advantage on the unlevel playing field.
Same here. Money can give someone more options. Could be the difference in them starting a business at 25 years old compared to 35 years old. Finical stability can can give someone a huge peace of mind when deciding to step out on the limb and take a risk. I want their life to be easier than mine just as my parents made mine easier than theirs. Would be ideal to see each generation take a step up on the ladder of success. (Ideal world, I know)
I've often thought about whether it's possible to create lasting generational wealth in a way that does not engender 'trust fund kid' syndrome (e.g. blowing the money on frivolities and/or a feeling of entitlement leading to lack of a strong work ethic). For instance, I know someone who inherited about $50k when he was 18 and blew it all almost immediately. We know of another very financially secure family who has lavished their two daughters, now college age, with everything they could possibly want, and it seems to have ruined them. This is not a new problem. In one of Mark Twain's short stories, he noted that one boy got everything he wanted and stated that it of course ruined him, while another got very little and of course developed good character. It may be as futile as trying to have one's cake and eat it too, but I'm not sure. I think that it takes very strong parenting, including some real hardships for children, to get there, but I'm not sure that that alone is sufficient. Further, I suspect that the real challenge is not making the wealth last for the second generation but the third and beyond. Also, the proverbial chain is only as strong as the weakest link, maybe the use of trusts can help, but that potentially circles back to the 'trust fund kid' problem.

This is a real conundrum for us.
Most of the friends that I was close to in high school came from solidly middle or upper middle class families. We had summer jobs in high school and college, and there was the expectation that we’d do well academically. Parents paid for college and most got help with purchases of first cars and first homes. With one exception, all of us have been at least as successful as our parents; most of us are actually doing better financially than our parents. Except for the one exception just noted, we all have graduate degrees.

None of us went through any “real hardships” but we all valued education, achievement, and financial security as taught by our parents via their attitudes and their examples.

Don’t be profligate, but don’t be cheap. Don’t create artificial hardship for kids. If they have half a brain, they’ll see through that and resent it. Model the life you want them to emulate. No guarantees if you follow this path, but the odds are in your favor.

(The one exception decided to be a traditional stay-at-home mom, and never had a professional career. Her husband had a decent job, but they aren’t as financially well-off as her parents were.)
Thanks for your thoughts.

Regarding the 'hardships' for your kids issue, I really like what Jim Dahle recently did for his teenage daughter, telling her that she had $1,000 to buy and fix up her first car. That's the kind of thing that I mean. Yes, having a car that runs is more than billions on this planet have, but virtually no teenager I've ever seen with one like she bought (actually spent $800) is going to get all high and mighty about it. And it will teach her to appreciate a better car down the road.
“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

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Re: Spend It All vs. Leave $$ for the Kids

Post by willthrill81 » Thu Nov 14, 2019 5:04 pm

smitcat wrote:
Thu Nov 14, 2019 3:08 pm
I believe time will allow a much better view of the possibility of problems.
Now that our daughter is much older and working a few jobs it is very clear that she will have no problem with the money she receives.
Kinda hard to extrapolate that out when they re very young though.
If your daughter is working multiple jobs, it sounds like you did a good job. I think that building a work ethic in one's children is absolutely vital.
“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

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Re: Spend It All vs. Leave $$ for the Kids

Post by rossington » Thu Nov 14, 2019 7:47 pm

I'll never forget one day I came home from school and in the mail was an envelope with a certificate of 100 shares of stock in it registered in my name. I had no clue it was coming or knew nothing about it beforehand. That was my father's way of introducing me to investing. The rest is history.
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Re: Spend It All vs. Leave $$ for the Kids

Post by goblue100 » Thu Nov 14, 2019 11:14 pm

willthrill81 wrote:
Thu Nov 14, 2019 1:40 pm
I've often thought about whether it's possible to create lasting generational wealth in a way that does not engender 'trust fund kid' syndrome (e.g. blowing the money on frivolities and/or a feeling of entitlement leading to lack of a strong work ethic). For instance, I know someone who inherited about $50k when he was 18 and blew it all almost immediately. We know of another very financially secure family who has lavished their two daughters, now college age, with everything they could possibly want, and it seems to have ruined them. This is not a new problem. In one of Mark Twain's short stories, he noted that one boy got everything he wanted and stated that it of course ruined him, while another got very little and of course developed good character. It may be as futile as trying to have one's cake and eat it too, but I'm not sure. I think that it takes very strong parenting, including some real hardships for children, to get there, but I'm not sure that that alone is sufficient. Further, I suspect that the real challenge is not making the wealth last for the second generation but the third and beyond. Also, the proverbial chain is only as strong as the weakest link, maybe the use of trusts can help, but that potentially circles back to the 'trust fund kid' problem.

This is a real conundrum for us.
Getting everything you want your whole life, starting at birth, would probably ruin anyone. If you model frugal behavior for your child, I believe most will pick up on it by osmosis. But as was pointed out either earlier in this thread or in another thread, most "children" won't inherit until their own 50's or 60's. Hopefully by then they can handle it.

However, I guess I'm talking about modest wealth. For Buffet or Gates type money I could see real problems. Not a problem I'll ever have!
Financial planners are savers. They want us to be 95 percent confident we can finance a 30-year retirement even though there is an 82 percent probability of being dead by then. - Scott Burns

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Re: Spend It All vs. Leave $$ for the Kids

Post by willthrill81 » Fri Nov 15, 2019 12:17 am

goblue100 wrote:
Thu Nov 14, 2019 11:14 pm
willthrill81 wrote:
Thu Nov 14, 2019 1:40 pm
I've often thought about whether it's possible to create lasting generational wealth in a way that does not engender 'trust fund kid' syndrome (e.g. blowing the money on frivolities and/or a feeling of entitlement leading to lack of a strong work ethic). For instance, I know someone who inherited about $50k when he was 18 and blew it all almost immediately. We know of another very financially secure family who has lavished their two daughters, now college age, with everything they could possibly want, and it seems to have ruined them. This is not a new problem. In one of Mark Twain's short stories, he noted that one boy got everything he wanted and stated that it of course ruined him, while another got very little and of course developed good character. It may be as futile as trying to have one's cake and eat it too, but I'm not sure. I think that it takes very strong parenting, including some real hardships for children, to get there, but I'm not sure that that alone is sufficient. Further, I suspect that the real challenge is not making the wealth last for the second generation but the third and beyond. Also, the proverbial chain is only as strong as the weakest link, maybe the use of trusts can help, but that potentially circles back to the 'trust fund kid' problem.

This is a real conundrum for us.
Getting everything you want your whole life, starting at birth, would probably ruin anyone. If you model frugal behavior for your child, I believe most will pick up on it by osmosis. But as was pointed out either earlier in this thread or in another thread, most "children" won't inherit until their own 50's or 60's. Hopefully by then they can handle it.
I believe you're right that living the way you want your children to live is important. When it comes to being cheap (i.e. fearful of spending money), I know of one family where the parents were very cheap, and it led to two of their four adult children swinging the pendulum in the other direction, spending money wantonly in order to avoid feeling deprived.
“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

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Re: Spend It All vs. Leave $$ for the Kids

Post by RadAudit » Fri Nov 15, 2019 3:45 pm

delamer wrote:
Thu Nov 14, 2019 1:33 pm

Why make your children wait until your dead and they are retired to benefit from your legacy?
It reduces the chances of you offering opinions on what they should of done with "your" money. :happy
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Re: Spend It All vs. Leave $$ for the Kids

Post by halfnine » Fri Nov 15, 2019 4:23 pm

I look at "our" money as insurance. At this point insurance against longevity or sequence of return risk for us. Barring those occurring, it is to provide Insurance against health, disability, or sequence of return risk for our children and their future children.

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Re: Spend It All vs. Leave $$ for the Kids

Post by JoeRetire » Fri Nov 15, 2019 4:37 pm

wiredaces80 wrote:
Tue Nov 12, 2019 6:28 pm
I think that is the rub. What is responsible? What if you try to spend everything before you die, but live longer? what if 5 years longer? what if 10 years longer?
That's not relevant for an annuity, though.
I suppose i see though; if the annuity matured 5 years or 10 years after you died, that would make sense. But do you really know when you are going to die?
What does the phrase "annuity matured" mean to you?
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Re: Spend It All vs. Leave $$ for the Kids

Post by JoeRetire » Fri Nov 15, 2019 4:39 pm

willthrill81 wrote:
Tue Nov 12, 2019 8:25 pm
In my view, the minimum, which might be sufficient, for responsibility is for retirees' children to not need to provide them with financial support. Historically, that's been a major burden on adult children, so relieving them of that is a big deal.
Well said!

I know that was a big motivator for my dad before he passed.
And it's a big motivator for me.
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Re: Spend It All vs. Leave $$ for the Kids

Post by JoeRetire » Fri Nov 15, 2019 4:41 pm

ArmchairArchitect wrote:
Wed Nov 13, 2019 2:29 pm
Spend as much as you want, and leave the rest to charity.

The problem with inheritances is that they create an unlevel playing field in society (which is unearned by the beneficiaries to the detriment of those that don't have the same).

This is why I respect "new money" instead of "old money" people- new money people actually earned it for themselves.
No thanks.
I care a lot more about my family than I do about the "unlevel playing field in society". Your mileage may vary.
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Re: Spend It All vs. Leave $$ for the Kids

Post by MDfan » Fri Nov 15, 2019 4:43 pm

mortfree wrote:
Sat Nov 09, 2019 12:50 pm
Give some money now (e.g. 14k). Then you won’t have to stress about whether to spend it all or leave some.

If anything is left at the end, then they get whatever remains.
That's our plan. Help them along the way. Whatever's left in the end is gravy. But we plan to help kids, grandkids, and fund some really nice family vacations.

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Re: Spend It All vs. Leave $$ for the Kids

Post by MDfan » Fri Nov 15, 2019 4:46 pm

ArmchairArchitect wrote:
Wed Nov 13, 2019 2:29 pm
Spend as much as you want, and leave the rest to charity.

The problem with inheritances is that they create an unlevel playing field in society (which is unearned by the beneficiaries to the detriment of those that don't have the same).

This is why I respect "new money" instead of "old money" people- new money people actually earned it for themselves.

Don't subscribe to this theory at all.

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Re: Spend It All vs. Leave $$ for the Kids

Post by HopeToGolf » Sat Nov 16, 2019 7:27 pm

BobStrauss wrote:
Mon Nov 11, 2019 4:17 pm
One thing I haven’t really seen brought up yet: how inheritance could help adult children in weathering a financial storm. Major health care surprises, freak accidents, lawsuits. There are so many ways in which a bad bounce or two can have permanent negative impacts on one’s life. No matter the values and discipline you instill in your children, you never know what kind of breaks, bad or good, they may have in their future. However, if you raise your kids with BH sensibilities, leaving something behind could potentially make an enormous difference to them in challenging times.
This.

We recently had an issue pop up for our offspring that has us questioning our ability to experience early retirement and concerned that we leave as large an inheritance as possible. While the story is still to be written, we experienced an unexpected negative turn of events that has us thinking very differently than we were before. Fortunately, living the BH life to date allows us to worry more about the issues and less about money.

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Re: Spend It All vs. Leave $$ for the Kids

Post by TomatoTomahto » Sat Nov 16, 2019 7:57 pm

HopeToGolf wrote:
Sat Nov 16, 2019 7:27 pm
We recently had an issue pop up for our offspring that has us questioning our ability to experience early retirement and concerned that we leave as large an inheritance as possible. While the story is still to be written, we experienced an unexpected negative turn of events that has us thinking very differently than we were before. Fortunately, living the BH life to date allows us to worry more about the issues and less about money.
I’m sorry to hear it, but early retirement isn’t necessarily the outcome of a life well lived. My father always said that friends and family need many things from us, and many of those things don’t cost a nickel, but that sometimes money will make things better for those we love. That might be an anti-BH view, but it is what it is.

The older I get, the more I understand my wife’s desire to provide a considerable safety net for family.

Good luck and I hope a positive turn will transpire for you and yours.
Okay, I get it; I won't be political or controversial. The Earth is flat.

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Re: Spend It All vs. Leave $$ for the Kids

Post by HopeToGolf » Sat Nov 16, 2019 8:06 pm

TomatoTomahto wrote:
Sat Nov 16, 2019 7:57 pm
HopeToGolf wrote:
Sat Nov 16, 2019 7:27 pm
We recently had an issue pop up for our offspring that has us questioning our ability to experience early retirement and concerned that we leave as large an inheritance as possible. While the story is still to be written, we experienced an unexpected negative turn of events that has us thinking very differently than we were before. Fortunately, living the BH life to date allows us to worry more about the issues and less about money.
I’m sorry to hear it, but early retirement isn’t necessarily the outcome of a life well lived. My father always said that friends and family need many things from us, and many of those things don’t cost a nickel, but that sometimes money will make things better for those we love. That might be an anti-BH view, but it is what it is.

The older I get, the more I understand my wife’s desire to provide a considerable safety net for family.

Good luck and I hope a positive turn will transpire for you and yours.

Thanks much from one Garden Stater to another (IIRC). So devastating and unexpected.

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Re: Spend It All vs. Leave $$ for the Kids

Post by bltn » Sat Nov 16, 2019 9:29 pm

willthrill81 wrote:
Sat Nov 09, 2019 12:52 pm
1789 wrote:
Sat Nov 09, 2019 12:30 pm
I find it hard to believe why parents would not want to leave anything to their kids once they are financially (more than enough) independent.
My belief is that there is a balancing act between providing your children with the wisdom and character needed to do well in life and resources, financial and otherwise. Given the choice between the two, I would absolutely choose the former over the latter. So did George Clason in his story about a young man given a bag full of gold and two tablets of wisdom from his father. The young man quickly squandered the money but eventually used the wisdom of the tablets to gain back the money and much more.

I do believe that it's possible to provide children with both wisdom/character and resources, but it's very difficult to achieve. Very few parents seem to have succeeded in both.
Anyone who references The Richest Man in Babylon has my respect.
Long before I heard of Jack Bogle or became a devotee of passive investing, I used to give copies of that book to family members and friends who were interested in proper money management. There s a reason that book has been in print almost 100 years. Basic concepts of saving, paying down debt, and investing.

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Re: Spend It All vs. Leave $$ for the Kids

Post by bltn » Sat Nov 16, 2019 9:48 pm

smectym wrote:
Thu Nov 14, 2019 4:52 am
ArmchairArchitect wrote:
Wed Nov 13, 2019 2:29 pm
Spend as much as you want, and leave the rest to charity.

The problem with inheritances is that they create an unlevel playing field in society (which is unearned by the beneficiaries to the detriment of those that don't have the same).

This is why I respect "new money" instead of "old money" people- new money people actually earned it for themselves.
An obsolete view, if it ever did make much sense. The idea that it’s wonderful that each generation start over with zero, and that to that end wise, far-seeing mom and dad should make damn sure to send the last nickel down the slot at the tribal casino before they die, has little to commend it and a lot of obvious flaws.
I agree. Our family places a great deal of value in providing some financial security for their children . The children may or may not use their inheritance wisely , but at least they have an increased opportunity. I feel that this is a manifestation of our love for our children.
I suppose giving all of the remaining family assets away at one s demise in an effort to make their children self sufficient might be another manifestation of parental care. But not in our family.

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Re: Spend It All vs. Leave $$ for the Kids

Post by TomatoTomahto » Sun Nov 17, 2019 1:40 am

HopeToGolf wrote:
Sat Nov 16, 2019 8:06 pm
Thanks much from one Garden Stater to another (IIRC). So devastating and unexpected.
You’re very welcome, but after some 50 or so years in NJ, we moved to a rural town near Boston. :thumbsup
Okay, I get it; I won't be political or controversial. The Earth is flat.

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Re: Spend It All vs. Leave $$ for the Kids

Post by Caduceus » Sun Nov 17, 2019 2:18 am

If I ever had kids, I would leave enough for them to be comfortable, and give the rest away. I very much doubt that I would give them all of my money. I think it can be very nice as your last act in life to help your children on in some important, material way.

I would definitely not spend it all though - lots of causes can use the money better than you can. I've been taking a look into environmental land trusts lately. Basically, these people buy land for conservation purposes. I would probably leave the bulk of any money I did not use myself to something like this.

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Re: Spend It All vs. Leave $$ for the Kids

Post by LilyFleur » Sun Nov 17, 2019 2:27 am

bltn wrote:
Sat Nov 16, 2019 9:29 pm
willthrill81 wrote:
Sat Nov 09, 2019 12:52 pm
1789 wrote:
Sat Nov 09, 2019 12:30 pm
I find it hard to believe why parents would not want to leave anything to their kids once they are financially (more than enough) independent.
My belief is that there is a balancing act between providing your children with the wisdom and character needed to do well in life and resources, financial and otherwise. Given the choice between the two, I would absolutely choose the former over the latter. So did George Clason in his story about a young man given a bag full of gold and two tablets of wisdom from his father. The young man quickly squandered the money but eventually used the wisdom of the tablets to gain back the money and much more.

I do believe that it's possible to provide children with both wisdom/character and resources, but it's very difficult to achieve. Very few parents seem to have succeeded in both.
Anyone who references The Richest Man in Babylon has my respect.
Long before I heard of Jack Bogle or became a devotee of passive investing, I used to give copies of that book to family members and friends who were interested in proper money management. There s a reason that book has been in print almost 100 years. Basic concepts of saving, paying down debt, and investing.
I read parts of The Richest Man in Babylon in elementary school. When I had run out of Nancy Drew mysteries and had nothing else to read, I would read my parent's books...

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Re: Spend It All vs. Leave $$ for the Kids

Post by Daryl » Sun Nov 17, 2019 7:57 am

When I speak with my family about inter-generational wealth transfer, it is usually around values and priorities (and not absolute dollars!). At this stage in our respective lives (parents in 60's and my brothers and I in our 30's), I know my parents are giving more money to their church and to various charities than they are giving to my brothers and I combined. I trust that they still have enough for themselves, and that there will still be enough leftover to continue their legacy of generosity long after they are gone.

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