How much is optimal to leave your kids?

[themoneytree]

In the short term (next 10 years), how much money do you want to leave your kids? All of it? Some of it? If you had a lot of assets do you want your kids to have it all upon passing? Dispersed over time?

I’ve known several people who have coasted through life knowing they can live off their parents during life and their estate upon death. It doesn’t seem to make them very happy.
H and I have made our own way, and would prefer the kids do the same. It’s important to both of us to help them as much as possible without tipping the balance too much. No cars as 16 year old birthday presents here.

H and I have an appointment to redo our wills.
We are looking to structure something equitable for all concerned while taking into account the issue of step kids. We each have one daughter (9 and 16).

If we both pass at the same time it’s probably easier. Assets are split down the middle.
Neither of us really likes the idea of giving either kid a very large sum at age 18 or even 25 so would prefer to spread it out a bit maybe? We are still discussing this.

If one of us passes it’s a little different as we are a blended family.
We are considering $600,000 to the affected child plus paid college (so probably $850,000-$900,000 total) if it’s only one of us who passes in the next 10 years. If both pass there would be a lot more and we don’t want it to get out of hand.
We will review this on a 5 - 10 year basis as changes to our finances and cost of living occur.

If you have a higher net worth what plans do you have? Is there too much to leave your kids? Or should they have it all? Did you inherit a lot and if so how did affect you?

H and I both made our own way so we’re not sure what the right move is.

[dr.girlfriend]

I plan to pay for my son's college (and living expenses during college) in the short term, and assist him with post-grad education if he wants it. I don't really think he's in danger of trying to coast off our money -- he's a naturally anxious kid and started worrying about having a good job when he was 5 or 6.

My parents helped me/us a lot, by:
- paying college tuition and living expenses
- paying graduate school (some living expenses because I couldn't survive off a teaching assistantship; tuition was free)
- paying a set amount toward our wedding
- giving us a chunk of money to pay for MIL's funeral, which was nice

They have also helped us out in other ways, for example giving us old cars of theirs when we went from carless city-living to living in the suburbs due to the kid.

I feel like it was a good balance. I always felt supported by them, and was able to pursue higher education in a career that is NOW making me excellent money, but if I had to support myself fully through 10 years of grad school, internship, and postdoc I probably would have dropped out. I also didn't spend the prime of my life paying back huge loans, although of course free tuition plus TA for grad school would have helped in any case.  It also allowed us to have a kid maybe a little earlier than we would have and I didn't have that much time to spare.

I never really "counted" on inheriting the bulk of their funds -- you never know what will happen, and honestly my dad became very erratic at the end of his life so it's entirely possible that he would have squandered his money or disinherited us at some point if he was the surviving spouse. Instead, my mom outlived him and I will likely inherit a significant amount from her, but I'm already heading into my 50s so it's not something that would change my lifestyle significantly except for maybe funding an earlier retirement and more travel, and given how much I like my job (thanks mom and dad for giving me the freedom to pursue it!) I don't really feel a lot of pressure to retire early.  I'm really grateful my (South Asian) parents didn't try to force me into a particular career, and then the joke is ultimately I am making a shocking amount of money for a "soft science" career.

I kind of feel that kids who are most in danger are ones who inherit significant amounts from grandparents, because that comes at a time when you haven't already set your own path. For parents, hopefully you are around long enough to see them on their way.

For our kid, I think we have a trust set up. I can't remember when he gets control of it but I think it is around 25. If we are both gone I don't see the point in denying him access to the assets past that point.

Oops, I forgot -- I did get a car when I turned 17-ish.  We will probably give our son one of our old cars at that point if it's still kicking.  :-)  I think for most parents the cost of an old car is worth the ability to not have to drive your kid around to activities, so it's kind of self-serving.

[sandandsea]

We plan to leave everything to the kids split 50/50 upon both of our deaths. The first goal is to pay for ourselves though so anything to them is a bonus. And if one of us dies before the other it all goes to the surviving spouse first.

We also have everything in a trust. My sister has control over it so she has to approve any withdrawals. It should cover cars, college, and more. They get some upon college graduation or age 25 and the rest at 30 subject to my sisters approval. She also will take care of the kids if something happens. I’m thankful we have someone likeminded to handle it.

ETA. I tell my 9yo that is into cool supercars that he’s getting my super cool 2016 Prius when he starts driving just to tease him. We do plan on getting them cars at 16 but for our own convenience - probably making them earn gas money and pay for insurance. But in all honestly that’s the type of car they will likely get - a 10 year old cheaper car.

Eta2. Our parents won’t be leaving is anything and we will be lucky to not have to pay to care for them. We put ourselves through college, paid for our wedding, and have done it on our own. They taught us to have goals and work hard, but didn’t have the means to help us financially. So paying for college and other stuff is a huge goal for us to be able to help our kids as we know how hard it is to get ahead on your own and want to help them if we can.

[Susie]

I'm not really concerned about how much I leave them.  My goal is to support them through college, as my parents did for me.  My parents stopped there, maybe we'll go further into grad school.  I'm sure if we can, we will.  I remember the transition from college to law school being rough financially, because my life didn't change much (still a full time student) but I suddenly had no financial backing at all.

After that, the goal is that they'll be self-supporting and anything we leave them will be bonus.  It will be the same for me.  I know my dad does have a meaningful net worth, but I'm not including inheritance of half of it (shared with my brother) in any of my plans.  When it someday happens, then we'll decide then what to do with it.

[ny96]

Our goals are to make sure that our children’s education is paid for, and that they have money for housing (down payment). They have a 529 that has enough to cover college and beyond for each of them. I’m sure they’ll have a trust at some point and I’m not sure how that will work (pretty sure they won’t get the money until they’re in their 30s at least). They’re 4 and 8 so we’ve got some time.

ETA: I answered the question wrong. If we were to die I totally agree with spearmintleaf. Our kids would get everything, although it would be actively managed in a trust and doled out for education, housing, and other necessities as needed until they turned 30.

[Pilsy]

We are aiming to pay for college, but I don't know how realistic that is; it depends largely on where they go to school, as they're all expensive, but there is a large swing between in-state public schools and all private schools. Beyond that, I have no specific goals with respect to what we leave them, but we will help with what we can and will leave them everything (split 50/50) when we pass. Should we both go when they are still minors, the money will be in a trust, and I can't remember the details, but we added provisions for allowing disbursements for a bunch of common milestones, and I think they get whatever remains as a lump sum by age 30 or 35.

My H recently revealed he aspires to leaving them each $1M. I have no idea where that came from, and I think it's really unrealistic, but he's entitled to his dreams. lol

[ohgillian]

I'm not sure what you're asking about the 10 years part -- you mean if I die in the next 10 years, how much money do i want them to get?

If so: Our will triggers a trust where the funds are available for their care and keeping and education, then divvies the remainder to them at various ages over the next 2 decades. I think the last amount may be at 30, but I haven't looked at it in several years.

Beyond that, if I'm fortunate to live until they are adults, I expect will leave most of the funds to them and some amount to charities, but not a lot. I don't have a 'goal' amount to leave them, though.

[W.T.Faulkner]

Aug 6, 2021 9:51:26 GMT -5 themoneytree said:

I’ve known several people who have coasted through life knowing they can live off their parents during life and their estate upon death. It doesn’t seem to make them very happy.

H and I have made our own way, and would prefer the kids do the same. It’s important to both of us to help them as much as possible without tipping the balance too much. No cars as 16 year old birthday presents here.

I think it’s possible to prevent “coasting” and still leave a large inheritance, and it involves the balance you mention here.

[ssmjlm]

I have no idea. My financial picture will change significantly upon the passing of my parents (similar to W.T.Faulkner) and while DH and I are successful on our own, it's life changing money and real estate.

So right now, if we die, my parents are her guardians and she gets everything at 25. My dad wasn't a fan of not disbursing it more, but at the time, it seemed easiest.

I plan to support my child same as my parents supported me. Yes, we have money, but hell to no of you not getting an education and picking a career. I don't care if she wants to be a plumber or a lawyer, she's going to get trained or go to college and make her own way. I'm happy to help her get there, but I'm also instilling the importance of saving and retirement. Then as she gets older and wiser (hopefully) I'll support her here/there with some of the bigger life things.

[ellipses84]

I think enough to pay for college and a down payment on a house (and/or part of a wedding) is enough. I don’t think anything that would finance a middle class life is too much though - modest house and college costs for a couple future grandkids. If you are over a couple million in assets I’d consider other options to spread the wealth, or putting some into something that will generate income for kids to inherit (ie rental properties). I have a lot of worry for the future of our kids and grandkids with COL rapidly outpacing pay and global climate crisis.

Dh and I have not benefited much from generational wealth. College alone would have put us so far ahead in our adult lives. He grew up in absolute poverty and I grew up working class poor (with all grandmothers / grandfathers / parents working blue collar / service industry jobs). I was the first person in my family to go immediately to university from high school and DH has more higher education than anyone in his family. I have massive student loans and he joined the military for the GI bill. On paper we’ve mostly lived paycheck to paycheck during our 20s-30s. We work so hard but our jobs but they don’t pay that well despite our degrees. I’ve tried to prioritize our retirement so money for our kids will come from us paying as things come up, our life insurance if we pass or inheriting retirement accounts. I do like the idea of a trust to pay for college / basic living expenses until 25 or 30 (maybe a monthly allotment unless it’s a larger amount for a specific purpose like buying a house).

More important to me is teaching my kids how to make wise financial decisions early in life and their 20s, from the careers they choose, taking on loan, saving money, etc. Part of that would be teaching generosity and good work ethic, which we were taught despite not having much.

Others in my family got more higher Ed later in life and we all worked our way up to solidly middle class, my mom inherited some small properties, but I have no assumption that I will inherit anything (and DH won’t). I hope she lives a healthy life for a long time more and uses most of it up. My parents are very “equal” with gifts so I imagine they will split everything equally between 5 kids and a smaller amount equally between 9 grandkids, but that won’t amount to much. My brother is much younger and has special needs and time will only tell if he can live independently. They’ve talked about buying him a house to try while they are still alive and they may leave more $$ to him.

[themoneytree]

Aug 6, 2021 14:06:25 GMT -5 W.T.Faulkner said:

Aug 6, 2021 9:51:26 GMT -5 themoneytree said:

I’ve known several people who have coasted through life knowing they can live off their parents during life and their estate upon death. It doesn’t seem to make them very happy.

H and I have made our own way, and would prefer the kids do the same. It’s important to both of us to help them as much as possible without tipping the balance too much. No cars as 16 year old birthday presents here.

I think it’s possible to prevent “coasting” . 
[br. 

This is exactly what we want to achieve and are trying to. Our kids have absolutely no clue what our net worth is. They know we live in a nice house in an expensive area (or at least the 16 year old does), but beyond that they don’t know anything.
Both kids have chores and 16 year old has a job and is learning about investing from H. She’s a good saver. I’m really hopeful that she is on the right track. We have told her we will finance 70% of her college and will walk her through what the 30% means for her in $$s based on which colleges she is looking at. If she does well at it we will pay off her portion or give her a financial graduation gift.

My daughter is still really young so I’m hopeful that she will start showing more interest in saving. I’m concerned that her Dad isn’t quite as money conscious as we are. He earns well but spends a lot and she doesn’t hear ‘no’ as often as I would like at his house.

Assuming we stay alive until the kids are through college and into adulthood we will disperse funds as we go in small amounts as needed (based on their own contribution).

I worry only if one of us dies while the kids are still younger. Nightmare scenario for anyone of course.

[maudefindlay]

If we die before the kids turn 18 we have guardians and trusts set up as well as allowing money for the guardians to buy a bigger vehicle etc as we have 3 kids.

But hoping we live, we will pay for college and expenses for all 3 kids. When one of us dies the other gets it all. When both of us are gone everything will be split 3 ways at that time. DH and I have no goal on what to leave the kids as we plan to travel lots in retirement and who knows how long we will live. That said we will also be inheriting large sums of money and real estate upon the passing of our parents. We already lost MIL and her mother passed after her and left us MIL'S portion in the past year. Last year some of our stock was sold in a buy out and we received a 7 figure sum last November which also has upped our situation.

The best thing is a clear cut will that will stay updated in plain language that is even for all the kids. Also, making sure copies of the will and important documents are located in a spot that all kids know about. As our kids grow up we are teaching them money management and about investments. We also lead by example with our financial decisions. In the end we hope for the best, but we have chosen not to delay any portion of their inheritance if they are adults at the time.

[aprilsails]

DH is really invested in this topic, particularly as real estate prices in our area have recently soared and we’re looking at a costly future (climate change, + education and housing all rising precipitously).

When we set up our wills we established a trust for our life insurance that would disperse based on age or major life events. This obviously only happens if we both die, which seems unlikely. The kids would have access to money for undergrad, post grad if they do that, or set amounts for a house down payment or wedding, and then a percentage of the trust disperses at 25, 30, and 35. If we died right now that trust would be funded to 2.5M, and we’ve allowed the guardians (my sister) access to a 4% annual drawdown for living expenses for the kids (daycare and sports, clothing, food, etc), as well as a lump sum of $250,000 immediately for time off and selling and upgrading her house to have access to more space if needed.

Assuming we both live, DH intends to fully find their undergrad degree as well as give them both a lump sum towards a house down payment. He is big into teaching money management so hopefully we raise smart kiddos. DH had a good friend who was given too much money at 18 and basically frittered it away and has nothing to show for it at 37 and no real career. A cautionary tale DH has taken to heart.

[Poppy]

My sister and I received a lump sum of money in young adulthood. Neither of us frittered it away and IMO we are both responsible, productive adults.

I think the outcome for your kids is mostly associated with their personality and how you (and/or their guardians) raise them. The timeline/strings attached on the disbursements are probably not so important.

That said, we hope that if we pass away before our kids are launched, their guardians will have some financial support for raising them and our kids will have most of their college paid for and ideally a little extra for life start up costs (eg buying a home).

Our will puts money into a trust with a trustee (separate from the guardian) for disbursing until they reach some age (25?) when they'll get a lump sum.

But I really do think that a financially irresponsible person will blow money no matter what age they receive it at, so... I don't think there's a magic answer for this.

I hope to not accumulate so much wealth that the above becomes moot. We are already ramping up our giving and scaling back on paid work in favor of volunteer time.

[gt7301b]

Our wills pay for our son's college and would then disperse his inheritance to him at 25 if we were to both pass away before then.

I think the step children dynamics do make things tricky here.  If we had step-children I would probably take out a life insurance policy that leaves both children an amount earmarked to be split for them both to receive at 25.  So ($250,000 - $500,000) each.  If you are operating as blended family I would want to afford both children the ability to have a nice down payment for a house, etc.  I realize that only one child would have lost a blood parent, but that doesn't mean both children won't be impacted.

I don't worry too much about leaving too much for my son if we were to pass away at a young age, because most of our assets are for us in retirement and this is the most probable scenario.  But we do want to make sure their is a plan in place if we were to pass early.

I would consider the assets that we are saving jointly for the surviving spouse to live off of and would not want to dip into those. 

My mom remarried and their wills call for all assets to be split equally between me and my half brother even if she were to pass first. Now technically, my step-father could change his will if my mom passed and leave everything to my brother, but I don't see that happening.

We both will most likely inherit assets from our parents when they pass, but it doesn't impact what we save or how we live our lives.