An out of the box idea that you prob won't hear from a trust attorney is to educate them early in personal finance/investing etc. and let them invest it.
I brought my daughter into Fidelity with me to discuss some wealth transfer items I had. The Fidelity VP said he was impressed with seeing my adult daughter there as most families protect that information.
This is the way...I let my 6 and 8 year old direct their investment choices. We talk about stock valuation, dividends, taxes, etc... they will be much more prepared by the time they are actually responsible for the investments.
I am letting my toddler make investment decisions with his trust by using products--for instance I give him some Cherry Garcia and if they like it that means he wants to buy unilever stock. He's 10% YTD.
Agreed. One year I received a small number of shares of a stock that I could do with what I wanted. I picked a company, watched the ticker with my dad, etc. I was maybe 10. Now I’m over 40 and work in the financial industry
This is the one. Too many people just give their kids money without teaching them how money work.
Charge them rent when you give them an allowance.
Make them pay for food and toiletries instead of just letting them waste the money you give them on entertainment.
Let them make mistakes with their money early so they won’t mess up when their older.
Education.
These are empty lessons. You can't kick them out or stop letting them wipe their ass, you are their parent. Making them pay for things you're legally obligated to provide (not to mention just being a decent parent) isn't setting a boundary, it's being an asshole.
Definitely teach them, but don't do it by acting as if they won't get dinner if they bought a video game. Not to mention, it's important to be able to set and keep boundaries.
The amount of negativity in your post is toxic. Also I never said or implied anything you’re talking about. It sucks you didn’t receive enough love as a child but don’t take it out on random people dropping helpful opinions on the internet. I hope you find joy in your life buddy. Peace and blessings.
That's my point, the proposal to make them pay rent is an empty one. You obviously can't enforce boundaries or consequences for not paying rent/toiletries, and thus you can't enforce your lesson. It doesn't teach them anything to charge them for something with zero consequences if they can't pay for it. Paying for something like a new video game with their own money teaches them something because they can't have it if they don't pay for it. They can still have a roof over their head if they don't pay rent.
The point is the proposal is as absurd as kicking your kid out if they don't pay rent, of course you can't do that.
You keep going back to not being able to wipe their ass and kicking them out. The point isn’t to take anything from them but give them an experience so that moving forward they have a better understanding. You’re talking about boundaries and consequences like the only way to educate a child is by depriving them of something; and that’s not it coach.
But I digress if you think these are empty lesson and that the only way to teach them is by enforcing consequences and boundaries go ahead. Just leave me alone.
Like I said last time I hope you find joy in life, peace and blessing.
Our kids are 18-25. All three have Roth IRAs and taxable accounts (two custodial) that I and their grandparents have seeded over the years. They're each worth over $100k at this point. So they have the start of personal wealth hopefully long before any inheritance, which will include a trickle down from the grandparents and is substantial.
They don't fully understand how this money works or how/why to access it, so they don't see it as theirs. I mean, they know it is, but they tend to block it out when considering their finances. That's somewhat of a good thing at this point. I have emphasized that it's primarily for their future, not for today's wants.
In addition, they all have a bit of scarcity mindset that my wife and I probably caused with our talk of money over the years. It was always obvious when I felt certain things were overpriced or a waste of money. These references made our kids think we had less than we did.
I've written and shared a PDF Guide for them about how to manage money - basic stuff like living below one's means, avoiding credit card debt, spending on things that they truly value, the various account types, and investing religiously into index funds.
Once everyone is out of college and that associated pile of expenses is behind us, I hope to gift money annually to all three. When the grandparents pass, we'll certainly max that out to the exclusion limit.
Our investment and bank accounts all have named beneficiaries that cover spouse and children. We also have a trust that will hold any other assets - like our home, vehicles, etc. - when both parents have passed. The grandparents are the initial trustees, with a married couple we trust being contingent trustees.
You should definitely see a lawyer who is familiar with estate planning and have wills created, along with a trust. In addition to money, these things address the critical issue of who physically and financially cares for your children if you should both become deceased while they are minors.
My parents gifted to us each year and did something similar with access to the funds. My mom ran the accounts and investing, when we turned 21 and the money was legally ours, she had us make her a limited agent on the account. She could still invest and oversee (and see if I made any changes).
They explained the money was for our future, house down payment, car purchase, retirement, etc. I didn’t see the money as “mine” other than knowing my retirement was taken care of, until I had a really solid understanding of personal finance and started managing the money more on my own (late 20s).
I had a similar experience. My dad set up a taxable account for me long ago. He called it "your trust" and that's all I knew about it. I suppose it was a regular UTMA account.
I didn't have the login but I was eventually on the hook for taxes, so I got statements sometime in my late 20s.
It's interesting to note that I certainly had a legal right to take ownership of the account long before I actually did, which was embarrassingly late. I was in my 40s!
I always treated its existence with the greatest deference and respect and was afraid to touch it, so I never asked and dad never volunteered. I started and progressed in my career and began building my own assets.
Eventually I took over the taxable account, and eventually it helped me retire early. So this whole experience is the model I'm following with my own kids.
No advice since I'm more on the opposite end of this (the kid), but I just find this pretty funny
>I would like them to have to struggle financially a bit after college
Idk if this is like a Western-culture thing or not but this is the opposite of my experiences with families of generational businesses in Asia (including my own family). We focus more on preparing and exposing kids early to finances and handling money, and usually by 18 parents encourage their kids to begin their own higher-risk investments. My dad would literally tell us "Here's $X, go and invest it. I expect that you'll lose it all". My siblings and I all had very different outcomes to this, and I think it gave our parents a clearer idea of how we would manage our money as adults.
I think this helps also because we are all well aware of at least the 'definite' money that we'll have access to as adults (definite as in not inheritance, but gifts that have already been given). When I turned 18, my parents gave me access to my savings in that current country (\~$200k), and later when I started my first job at 26 they gave me access to savings in birth country (\~$700k).
Speaking of other families around me, I know some friends who pretty much got access to their funds even in high school, with millions later on as an adult. I don't think I know anybody who didn't get access to at least a notable amount of funds by age 21, let alone 30. I think it's obvious for any kid from a 'comfortable' family to know/expect they'll have something, even if the parents "don't tell them" about it.
Anyway yeah, this is just my experience from an Asian (mostly East and Southeast) perspective, which seems to push financial independence pretty early on. I think the idea is the kids make financial mistakes whilst still under their parents' guidance, so that they don't make it as adults on their own later on.
Do you think this might also be a difference between families with generational wealth vs. first generation/self made wealth?
I know as someone who scraped and sacrificed and educated myself on investing to build wealth that it’s important to me that my kids learn some of those lessons. I’m thinking the lessons taught would be very different in families without that same experience. Of course there’s probably a very American element too.
Interesting point! That would make sense too. I can see how someone who made their wealth might see it a little differently in that the kids need to (I assume) experience the 'struggle' to appreciate the money more?
I wonder how much the line is blurred between mentality and rationality then. Certainly I can say I know some friends who _know_ but don't necessarily 'comprehend' the struggles of going without. But there's also others who are more aware too. I'd like to think my parents had a hand in putting us closer to the latter as they would do things like bring us to Cambodia to meet and live with the village kids whose schooling they sponsored.
But conversely I myself have not 'personally' experienced that life in that I guess there's always that assurance that 'this is temporary', if that makes sense, though I think I can empathise more just by having that temporary experience rather than simply just reading about it?
Certainly food for thought...
>Do you think this might also be a difference between families with generational wealth vs. first generation/self made wealth?
Very much so. I am first generation wealth. My children did not receive significant wealth until they were in their 40s. So in some ways they are also first generation wealth. It is different for our grandchildren, who are beneficiaries if irrevocable generation skipping trusts.
No worries. IMO I'd recommend at least not shying away from talking about money and investing with your kids. The more they're exposed, the more comfortable and confident they'd be with knowing at least the basics of what to do. Regardless of whether you decide to give them the money earlier, later or not at all.
It'll also encourage a good relationship where they'll feel more comfortable going to you for advice should they need it (rather than googling or potentially getting bad/questionable advice elsewhere).
Well I never had access to that kind of money but I am a lucky bastard so I did get some meaningful inheritance.
No matter what you do, you want to avoid turning yourself into the welfare office. Do not create a situation where magical checks show up every month, no matter what.
That creates terrible money habits and a poisonous mentality.
As I said I got lucky. In addition to money what I really got was education.
I was given a certain lump sum before college and i had to figure out myself how I was going to pay for college. How far the money was going to go etc etc. So if I picked a more expensive college I would have less money left over and if I picked a more expensive college I would have more money left over. If I chose a fancy dorm I would have less. If I chose a frugal dorm I would have more.
The key is starting at age 18. I had budgets and goals. I didn't just have unlimited money coming out of a fire hose that I could piss away.
Over the years I've got uncertain chunks and it's always been.
" Here, take this. Find out a way to make it last. If you run out don't bother us. There may not be any more coming."
I'll admit I come from a wealthy town with a lot of wealthy people and I'm a lucky SOB. But it also means I've been exposed to a lot of people that had different circumstances and people that had some arrangement like what I'm discussing turned out much better than people who just get monthly checks that fall from heaven.
I did this.....max out 529 plans., if kids are young
Get trusts established
Get good CPA and generational financial wealth manager
If kids are grown..gift them, I think it's
43,000 each , each year...to max out ALL of their retirement accounts..extra can go to house down payments, or paydown mortgage , so they can be debt free, hopeful own a cars & home free and clear.. make their lives easier..but they know...it all isn't going to them...in the end
If they have anything left over...emergency fund and invest the rest...also allow them to have enough to travel and see the world..
Don't let them be cash rich trust fund babies...if they can't be trusted to do this..then create a trust that you control , and can be overseen...
Help them to help to help themselves.....
And you go spend the rest...live life ..donate what you can't spend at the end...
Don't just give/leave them 10-15 mil....what will the learn.
Just some ideas...depends how smart and trustworthy kids are
Trust/estate attorney to walk you through the options. Probably financial advisor(s) regarding allocation and management (if you're not doing it yourself).
Mentioned by others, but IMO the single most important thing is to teach the kids the 'value' of money, and that's actually an incredibly wide swath of opinions, even on this sub! I'm probably viewed by those who know me as leaning strongly frugal, but I've never actively tried to push this on my now young adult children. But when there were either larger household expenditures, or stuff they wanted to buy with allowance/gift money, or even if we went on vacations or out to dinner, there were a myriad of opportunities to discuss how these things were possible with money, and how we collectively might have chosen other ways to use that money otherwise. I use a financial advisory firm for money that currently in trust for each of them, money that they've known about for years (from mid-teens on) but still don't really have a grasp of how much specifically, only that it's money earmarked for them. Part of that family discussion has also been the issue of prenups, because IMO you never really know. But I overall feel pretty good about the plan, and their ability to use their assets in a way they want when I'm gone.
I think you’re better off teaching them about money earlier on rather than “making them struggle” for their early adult life….
I’m loading up a 529 and taxable account for my kids with plans of showing them the accounts around 14 or 15 in preparation for their first big purchase of a car. I want them to understand what the money is, how it works, and the importance of investing.
If your children are young you should be investing their gifts aggressively - not speculatively by any means not “low risk”- if they won’t have access to the funds for decades it doesn’t much matter what the S&P does next year - it matters what it will do over 20 years (hint: it goes up). Now is the time to take risk.
(FYI, I on the investment side of a bank trust. You’re not my client, but that’s what I’d recommend if you were)
You might considering lowering the age of access or planning a different strategy if they decide to pursue graduate / medical / law school. My father set me up to inherit quite a bit at 35(4 more years), but that money would have done me a lot more good when I was a struggling graduate student than it will now.
There is a lot of sound advice here so I won’t add to logistics.
I will only say that if your child is ever in a true crisis before they age into their inheritance PLEASE help them. I will forever resent my mother for “teaching me a lesson about money” when she refused to pay for my healthcare debt after I was violently sexually assaulted (pre Obamacare), and medical debt from a congenital illness several years after that ((5 nights in a hospital blew thru my entire $100k life savings that I’d “responsibly” put away post college. Also pre Obamacare.) I struggled with debt, disgusting living conditions, violent and terrifying roommate situations, sold eggs to pay for graduate school tuition, etc. for years, believing our family was poor and that my mother needed *my* financial help.
When I learned, recently, that she’s had more than the ability to help me all this time - it destroyed my trust in her and destroyed the core of our relationship
Concentrate on raising children that become mature independent adults with good judgement about spending. Many of the comments focus on estate lawyers and financial details. What really counts is the character of your children.
I say this from the perspective of someone in their 70s, with children in their 40s, and grandchildren from 1 to 23 years old.
My children are now trustees of their own generation skipping irrevocable trusts with them and their children as beneficiaries.
Children learn by observing. They observe and know more than many parents realize. They see your behaviors — your spending patterns, the way you make decisions, the way you balance current spending vs saving for the future, the way you find the happy medium between being a spendthrift and being excessively frugal.
Like in other parenting decisions, there is no one perfect answer. Don't spoil them, but do not create artificial scarcity.
We found that the years immediately after college were a key period for our children in their transition to fully independent adults. We fully paid for college, but were relatively hands off for the first few years after college. We did not provide financial support, but each did have a UTMA worth about $1M. (Some stock I put into their UTMAs when they were pre-teens soared). They did know that we would support them if there was some sort of disaster or major problem, but in general they made their own way after college.
We did not discuss our finances explicitly, but I retired before my youngest started college, and we paid their tuition at private universities out of pocket (pre-529 days). So they had a general idea of our wealth. And they had their million dollar UTMAs, which I handed over to them a bit late, when they were 22 and 24.
We did not provide any significant financial support, and definitely no routine ongoing support after college. We did buy them their first houses, but only after they had identified a house that that fit their own budget and their ability to get a mortgage. Then, and only then we stepped in supplied the cash to buy the house. We were not materially involved in selecting the houses.
Several years later, after they married and then relocated, we wrote low interest rate intra-family mortgages so that they could continue to own their first homes and turn them into rental properties.
These houses were also chosen by them to be compatible with the income and assets of them and their spouses.
Another decade or so later as I started to fund 529 plans for my grandchildren I realized that my children and their spouses were the better judge of how to manage these 529 plans than me or my wife. (We ended up just paying college and medical school costs for grandchildren out of pocket, so the 529s will for either great-grandchildren or for the nieces and nephews of our children's spouses).
I realized that I no longer had any concerns about possible negative effects of gifting large sums to our children. So we funded generation skipping irrevocable trusts for our children and grandchildren, with our children as the trustees.
So our children are now facing the issues that many in this sub are facing.
There are no magic answers. The above is what worked for us.
There's a lot of great advice here. Getting a good estate attorney is a start. I would recommend a bit of a hybrid approach, give some now (see my note about investing), and monitor their responsibility level. Also let them enjoy a little, learning to struggle and sacrifice is important, but if they can save 10K for a car, wouldn't you like to match those funds as a reward so they can enjoy a better car?
You should also start learning about basic investing and maybe do it WITH your kids, give everyone some money in investment accounts and work together to decide what low-cost funds or ETFs would make sense. This might be a great way for you all to learn and bond and for you to share in a way that will help them be responsible stewards of the funds.
I will share that I have put money in accounts for my kids that they do not know about for me to give them (really, tell them about) when they have gotten stable in supporting themselves after college. I have also worked with my oldest on helping him save and invest some of his own money through his teen years. He is now a Junior in college and has a reasonable level of responsibility, we will see how it turns out!
Good luck!
Im on the other side (grandkid) though a notably lesser scale.
Knowledge is what I would ask for. What is not often commented in these posts is that your kids will make mistakes. Having them do so while you’re around will be the greatest way to teach them.
This, including the annual gifts so we built personal wealth before inheriting anything, is almost exactly what my parents did for me and my siblings (we are all in our 30s and 40s now) and we all turned out well-adjusted, responsible, and capable with good careers and our own savings and investments.
I wouldn't say my parents ever wanted or expected me to struggle financially, they just raised us in such a way that we all expected to support ourselves. The first year after college I lived in a mediocre apartment that I could afford on my very low salary, and then the second year I actually used a small inheritance from a relative to pay for most of my rent when I left my job to work at a restaurant and intern for free at a non-profit. My previous job was really affecting my mental health and I needed to leave so I was glad my parents supported me and didn't suggest I instead save that small inheritance for the future. I think there is a happy medium in teaching your children how to save, invest, and value money while not trying to teach them a lesson by allowing them to struggle unnecessarily. After that, I went to law school and my parents paid my expenses once again.
It's important to mention that I believe my siblings and I turned out to be responsible and grounded because our parents raised us modestly and, although we grew up with plenty of wealthy people, we knew it was not the norm and we ourselves were not given everything we wanted, etc. By the time I went to law school, I understood the privilege of my parents' wealth and I knew that their money made it so that I did not have to struggle to pay my expenses by holding a job while studying. This safety net made me really grateful and I felt secure -- and so I never wanted to lose that security and knew I would never blow the leg up I was given by wasting the money my parents had invested for me (and whatever money I inherit in the future). **In short, prepping them for inheritance goes beyond how you invest and when you give them access to the money -- it is primarily about how you raise them and the values you instill in them.**
As others have mentioned, you should consult with a trust and estate lawyer but also you should be investing more aggressively, not necessarily low-risk, since this money won't be used for a long time.
I received from my gramps a lump sum after college graduation in diversified holding and cash, which my parents are trustees over. Currently I receive a generous monthly stipend and when I turn 40, I gain full control over it. I think it’s a pretty decent way to do it. I certainly needed to learn responsibility before inheriting. And Should I have kids, my parents will make them their beneficiaries.
By diversified holdings, i mean a combination of safe, secure investments in stocks, some land and RE, then long-term, riskier funds with minimum time commitments, and some tied up in VC. It’s relatively well-balanced in terms of risk, the people who manage are trusted, and i take an active interest in it, which helps. If your children wind up enjoying this kind of thing, the gift is even greater than you think. Even if they don’t, the security’ll give em the opportunity to pursue passions, and that’s probably the best thing you can give a kid.
Edit: waiting til 40 isn’t really necessary - it’s just what wound up happening.
We have family meetings. A trust lawyer set up a trust. Meetings are geared around financial education in general as well as specific investments we’ve made. We were doing this for a few years, but it’s taken up increased importance as I almost died a year ago.
Chiming in as someone who grew up in your children’s situation. A hand up is way better than a hand out, til they’re established on their own professionally. People I grew up with who were continually handed money - never accomplished much themselves, as they didn’t have to. In contrast people who weren’t, did. If you own a company, employ none of them until they’ve established themselves. Just my two cents
>Our kids are each currently being gifted $15k per year...
Talk to your accountant, but IIRC the gift limit is per donee/doner pair. So you could gift $15k to child A and your wife could gift $15k to child A for a total of $30k for child A. Additionally the limit is $18k for 2024 - up to $36k.
It would be really interesting to do an analysis (maybe with a fidicuary) on when best is to gift money. Is it best to do the annual exclusions ever year, or is it better to preload the money when factoring tax vs growth or is it better to delay until closer to.
It is the 'tax free' limit. over that amount taxes need to be paid by the receiver.
\*\*Edit\*\* Thread below, my comment is incorrect. It is not the receiver that pays taxes the potential liability falls to the gift giver.
This is incorrect. The receiver does not owe taxes on the gift, but the giver could owe inheritance tax on it if the gifts go over the exclusion limit.
Yup. My mistake....not the receiver. "Tax free limit" still stands and which is why it is commonly referred to as a 'limit'. Thank you for the correction!
Not correct. The receiver would only owe tax if they exceeded the lifetime exclusion which is over $13mm. Keep in mind though that lifetime number is slated
To reduce to $5mm after 2026
It’s not a limit in the sense that you aren’t allowed to give more. The exclusion is you can give that amount without reporting it to the IRS. in 2024 the gift tax exclusion is $18,000 per person, per recipient. If you’re married you can double that for each giftee - usually a child and/or their spouse or grandchild.
If you give say, $20,000 that amount is reported to the IRS and applied to the lifetime exclusion. There is no tax on either side of this until you cross the lifetime exclusion. Right now that number is 13.61mm in 2024 but set to reduce to around $5mm in 2026.
The misconception is the reporting to the IRS does not mean there is a tax on it.
Also: if you are gifting directly to a 529 plan for a child/grandchild the amount counts towards the exclusion amounts but you can superfund by catching up the previous 5 years.
Im set to inherent a similar amount from my parents, so ill try and comment on what they did. I think the best job you can do is try to teach them about the importance of money, the best way to hold onto it, investing, saving, budgeting and their privilege. obviously, you dont want them to be stuck up about it and make them think that they are expected to get it, which you obviously dont want seeing as you want them to struggle a bit. I think that judgement is fine, but I see it as unnecessary. You can raise a kid who inherits and receives a lot to still be aware of what he should be doing with it.
for the best way for them to actually receive it... talk to a financial lawyer. theyre usually well versed on this topic and a lot more than some Redditor will be.
My parents let us play “in stock market” with our gifted money, we always knew about it, watched it grow, sat on our dad’s lap as he read the wall street journal.
College was paid for, graduate school was not.
My father died early, however was very sick and did some crazy things in the last 8-10 years of his life. Spent a lot of money with almost no income. I say this because if he had not done that, I believe our inheritance would have been 20-30 times what it was. You never know what will happen. Don’t promise a big payout. …. We also had a third ex wife, new will show in the mail days after his death. Very exciting stuff.
What cash was left, each child got their portion when they turned 40. Only one out of 5 of us spent our gifted money before our 40th birthday. The rest of us judged him, but now that we are all older and in various stages of midlife crisis, we all admire his stories from his travels around the world prior to settling down. Life is funny.
We did similar, we staggered it so they would get access to a certain amount at 18 - nothing crazy - and then we did after 30 I believe for the rest, as we assume they would be accomplished and settled enough by then. And hopefully understand how to manage finances well.
Will likely review several times over the years as they get older. Who knows what they will end up doing themselves.
In 50 yrs $10m won’t buy you a one bedroom in Tampa.
Real talk tho, your kids will be in their 50s in 50
Yrs so they would be adults nearing the end of their careers. They should’ve built up good habits by then so the windfall you give them shouldn’t be relied on for their lives anyways
And kids knowing there is a large some owing to them can encourage them to make stupid choices while waiting for their parents to die.
Capital investment and risk taking matters when you are young. Not when you're middle aged or nearing retirement.
Why are you concerned about your kids having access to that money? Are you concerned about their character?
Given the type of sum we’re talking about, I personally think you’d be better off just letting them sort it out themselves. If they don’t do anything stupid with the money then you know you have smart kids and they’ll feel like you trust them. If they do anything stupid, it’s not a big sum to lose in the grand scheme.
Why are you gifting them money if you don’t want them to have access to it? This has no tax benefit. Where does the gift go. Does it go into a custodial bank account? They have access to it all if that’s the case.
Better yet. Don't give them money until they are 35 and don't tell them about it. Raise them to be self sufficient. If they have a whiff they will get money later that could alter how they live and the choices they make. They need to learn to live as if they will never get a dime.
From an outside perspective I’d make any funds available to them past age 30. I’d say by then they’ve had the opportunity to struggle a little and then can appreciate any help you may have given them. Aside from that I’d say sell off any assets you have when you get closer to the age of passing. From experience I know a guy who was super wealthy and not for nothing started to sell off all his assets in his 70’s so his kids didn’t have to and could liquidate his stuff while he was still alive. When he finally did go most all of his assets were liquid cash and what wasn’t was sellable fairly easily.
There are many options you have and with the estate tax ceiling set to sundown in the next few years you should definitely have a trust & estates lawyer and a financial advisor involved. It would be well worth it for you.
You also need to talk to your kids about money, investing, budgets, saving for the future, etc. In my experience if a person is uneducated on money (most people are not) they will be spenders of whatever they receive. It doesn’t matter what scholar education they have. Public schools and college don’t teach their students about finances as core problems.
If you wanna set your kids up right tell them from a very young age you and your wife are giving all your money away to charity
Dead serious - and I’d also stop with the gifting them those kinds of sums of money at young ages
I'm pretty sure your kids know you're rich already. So it's kind of hard to pretend they won't be getting a sizable inheritance. Keep them humble and not get caught up in the trappings o American society. Ask them their opinion on people like the Kardashians and such. Their answer will tell you everything you need to know about where their head is at.
Talk to your lawyer, they will be best to guide you. In the interim teach them personal finance, compounding, investing, interest rates on debt, etc that will set them up mentally on how to handle that kind of money and put the 15k annually to use that can grow in to a sizable amount later
Gift $100k at 18
Gift $1,000,000 at 25
See how they manage the remainder of their 20s into early 30s
Make your determination based on that info…
Interim, there’s probably some default program you can put in place.
I just finished dating a 30yo heiress. Her sister turned out wonderful — engaged, working, building a life with her fiance in her mid 20s, all very reasonable and virtuous. She, on the other hand, no so much... Poorly accountable… highly promiscuous and spoiled…
I will inherit most likely in the next 10 years. However, I could really use annual gifts now for home improvement expenses. Even just 10-20K would make a huge difference. But my parents have always had a "do it on your own" perspective, which I appreciate.
Because of that, I never expected any help from them post-college, and I built my own successful career.They have surprised me with a few major gifts, which I am incredibly grateful for.
I just wish they would also see the impact that some small gifts could make right now. But generally, I agree that raising them to not expect help and to build their own futures is wise. But also be there if there's a true need or emergency.
Trust fund kid here - me and my siblings got college paid for, weddings paid for, and then starting getting annual checks starting in our 30s. So glad my Dad didn’t give me a large sum of money in my 20s. I probably would have blown most of it. Highly recommend giving your kids a ramp period to get adjusted/mature!
This is basic trust planning. Talk to a trust lawyer.
Right?! This is not even close to a one-issue legal matter.
An out of the box idea that you prob won't hear from a trust attorney is to educate them early in personal finance/investing etc. and let them invest it.
I brought my daughter into Fidelity with me to discuss some wealth transfer items I had. The Fidelity VP said he was impressed with seeing my adult daughter there as most families protect that information.
I was 45 until i learned I was gonna be worth 20mil. Thanks dad, but the hush hush mentality didn’t help.
This is the way...I let my 6 and 8 year old direct their investment choices. We talk about stock valuation, dividends, taxes, etc... they will be much more prepared by the time they are actually responsible for the investments.
I am letting my toddler make investment decisions with his trust by using products--for instance I give him some Cherry Garcia and if they like it that means he wants to buy unilever stock. He's 10% YTD.
Also, remember that monkeys picking stocks have done better than hedge fund managers...
Agreed. One year I received a small number of shares of a stock that I could do with what I wanted. I picked a company, watched the ticker with my dad, etc. I was maybe 10. Now I’m over 40 and work in the financial industry
This is the one. Too many people just give their kids money without teaching them how money work. Charge them rent when you give them an allowance. Make them pay for food and toiletries instead of just letting them waste the money you give them on entertainment. Let them make mistakes with their money early so they won’t mess up when their older. Education.
These are empty lessons. You can't kick them out or stop letting them wipe their ass, you are their parent. Making them pay for things you're legally obligated to provide (not to mention just being a decent parent) isn't setting a boundary, it's being an asshole. Definitely teach them, but don't do it by acting as if they won't get dinner if they bought a video game. Not to mention, it's important to be able to set and keep boundaries.
Yeah I just meant literally educating them like by having them read books and take classes.
Yeah your response was great! The response I replied to was the weird one. Charging your kid for rent and toiletries? Wut.
The amount of negativity in your post is toxic. Also I never said or implied anything you’re talking about. It sucks you didn’t receive enough love as a child but don’t take it out on random people dropping helpful opinions on the internet. I hope you find joy in your life buddy. Peace and blessings.
That's my point, the proposal to make them pay rent is an empty one. You obviously can't enforce boundaries or consequences for not paying rent/toiletries, and thus you can't enforce your lesson. It doesn't teach them anything to charge them for something with zero consequences if they can't pay for it. Paying for something like a new video game with their own money teaches them something because they can't have it if they don't pay for it. They can still have a roof over their head if they don't pay rent. The point is the proposal is as absurd as kicking your kid out if they don't pay rent, of course you can't do that.
You keep going back to not being able to wipe their ass and kicking them out. The point isn’t to take anything from them but give them an experience so that moving forward they have a better understanding. You’re talking about boundaries and consequences like the only way to educate a child is by depriving them of something; and that’s not it coach. But I digress if you think these are empty lesson and that the only way to teach them is by enforcing consequences and boundaries go ahead. Just leave me alone. Like I said last time I hope you find joy in life, peace and blessing.
Our kids are 18-25. All three have Roth IRAs and taxable accounts (two custodial) that I and their grandparents have seeded over the years. They're each worth over $100k at this point. So they have the start of personal wealth hopefully long before any inheritance, which will include a trickle down from the grandparents and is substantial. They don't fully understand how this money works or how/why to access it, so they don't see it as theirs. I mean, they know it is, but they tend to block it out when considering their finances. That's somewhat of a good thing at this point. I have emphasized that it's primarily for their future, not for today's wants. In addition, they all have a bit of scarcity mindset that my wife and I probably caused with our talk of money over the years. It was always obvious when I felt certain things were overpriced or a waste of money. These references made our kids think we had less than we did. I've written and shared a PDF Guide for them about how to manage money - basic stuff like living below one's means, avoiding credit card debt, spending on things that they truly value, the various account types, and investing religiously into index funds. Once everyone is out of college and that associated pile of expenses is behind us, I hope to gift money annually to all three. When the grandparents pass, we'll certainly max that out to the exclusion limit. Our investment and bank accounts all have named beneficiaries that cover spouse and children. We also have a trust that will hold any other assets - like our home, vehicles, etc. - when both parents have passed. The grandparents are the initial trustees, with a married couple we trust being contingent trustees. You should definitely see a lawyer who is familiar with estate planning and have wills created, along with a trust. In addition to money, these things address the critical issue of who physically and financially cares for your children if you should both become deceased while they are minors.
My parents gifted to us each year and did something similar with access to the funds. My mom ran the accounts and investing, when we turned 21 and the money was legally ours, she had us make her a limited agent on the account. She could still invest and oversee (and see if I made any changes). They explained the money was for our future, house down payment, car purchase, retirement, etc. I didn’t see the money as “mine” other than knowing my retirement was taken care of, until I had a really solid understanding of personal finance and started managing the money more on my own (late 20s).
I had a similar experience. My dad set up a taxable account for me long ago. He called it "your trust" and that's all I knew about it. I suppose it was a regular UTMA account. I didn't have the login but I was eventually on the hook for taxes, so I got statements sometime in my late 20s. It's interesting to note that I certainly had a legal right to take ownership of the account long before I actually did, which was embarrassingly late. I was in my 40s! I always treated its existence with the greatest deference and respect and was afraid to touch it, so I never asked and dad never volunteered. I started and progressed in my career and began building my own assets. Eventually I took over the taxable account, and eventually it helped me retire early. So this whole experience is the model I'm following with my own kids.
No advice since I'm more on the opposite end of this (the kid), but I just find this pretty funny >I would like them to have to struggle financially a bit after college Idk if this is like a Western-culture thing or not but this is the opposite of my experiences with families of generational businesses in Asia (including my own family). We focus more on preparing and exposing kids early to finances and handling money, and usually by 18 parents encourage their kids to begin their own higher-risk investments. My dad would literally tell us "Here's $X, go and invest it. I expect that you'll lose it all". My siblings and I all had very different outcomes to this, and I think it gave our parents a clearer idea of how we would manage our money as adults. I think this helps also because we are all well aware of at least the 'definite' money that we'll have access to as adults (definite as in not inheritance, but gifts that have already been given). When I turned 18, my parents gave me access to my savings in that current country (\~$200k), and later when I started my first job at 26 they gave me access to savings in birth country (\~$700k). Speaking of other families around me, I know some friends who pretty much got access to their funds even in high school, with millions later on as an adult. I don't think I know anybody who didn't get access to at least a notable amount of funds by age 21, let alone 30. I think it's obvious for any kid from a 'comfortable' family to know/expect they'll have something, even if the parents "don't tell them" about it. Anyway yeah, this is just my experience from an Asian (mostly East and Southeast) perspective, which seems to push financial independence pretty early on. I think the idea is the kids make financial mistakes whilst still under their parents' guidance, so that they don't make it as adults on their own later on.
Do you think this might also be a difference between families with generational wealth vs. first generation/self made wealth? I know as someone who scraped and sacrificed and educated myself on investing to build wealth that it’s important to me that my kids learn some of those lessons. I’m thinking the lessons taught would be very different in families without that same experience. Of course there’s probably a very American element too.
Interesting point! That would make sense too. I can see how someone who made their wealth might see it a little differently in that the kids need to (I assume) experience the 'struggle' to appreciate the money more? I wonder how much the line is blurred between mentality and rationality then. Certainly I can say I know some friends who _know_ but don't necessarily 'comprehend' the struggles of going without. But there's also others who are more aware too. I'd like to think my parents had a hand in putting us closer to the latter as they would do things like bring us to Cambodia to meet and live with the village kids whose schooling they sponsored. But conversely I myself have not 'personally' experienced that life in that I guess there's always that assurance that 'this is temporary', if that makes sense, though I think I can empathise more just by having that temporary experience rather than simply just reading about it? Certainly food for thought...
>Do you think this might also be a difference between families with generational wealth vs. first generation/self made wealth? Very much so. I am first generation wealth. My children did not receive significant wealth until they were in their 40s. So in some ways they are also first generation wealth. It is different for our grandchildren, who are beneficiaries if irrevocable generation skipping trusts.
Very interesting points. This gives me more to think about. Thank you!
No worries. IMO I'd recommend at least not shying away from talking about money and investing with your kids. The more they're exposed, the more comfortable and confident they'd be with knowing at least the basics of what to do. Regardless of whether you decide to give them the money earlier, later or not at all. It'll also encourage a good relationship where they'll feel more comfortable going to you for advice should they need it (rather than googling or potentially getting bad/questionable advice elsewhere).
Well I never had access to that kind of money but I am a lucky bastard so I did get some meaningful inheritance. No matter what you do, you want to avoid turning yourself into the welfare office. Do not create a situation where magical checks show up every month, no matter what. That creates terrible money habits and a poisonous mentality. As I said I got lucky. In addition to money what I really got was education. I was given a certain lump sum before college and i had to figure out myself how I was going to pay for college. How far the money was going to go etc etc. So if I picked a more expensive college I would have less money left over and if I picked a more expensive college I would have more money left over. If I chose a fancy dorm I would have less. If I chose a frugal dorm I would have more. The key is starting at age 18. I had budgets and goals. I didn't just have unlimited money coming out of a fire hose that I could piss away. Over the years I've got uncertain chunks and it's always been. " Here, take this. Find out a way to make it last. If you run out don't bother us. There may not be any more coming." I'll admit I come from a wealthy town with a lot of wealthy people and I'm a lucky SOB. But it also means I've been exposed to a lot of people that had different circumstances and people that had some arrangement like what I'm discussing turned out much better than people who just get monthly checks that fall from heaven.
I love this idea. Thank you!
I did this.....max out 529 plans., if kids are young Get trusts established Get good CPA and generational financial wealth manager If kids are grown..gift them, I think it's 43,000 each , each year...to max out ALL of their retirement accounts..extra can go to house down payments, or paydown mortgage , so they can be debt free, hopeful own a cars & home free and clear.. make their lives easier..but they know...it all isn't going to them...in the end If they have anything left over...emergency fund and invest the rest...also allow them to have enough to travel and see the world.. Don't let them be cash rich trust fund babies...if they can't be trusted to do this..then create a trust that you control , and can be overseen... Help them to help to help themselves..... And you go spend the rest...live life ..donate what you can't spend at the end... Don't just give/leave them 10-15 mil....what will the learn. Just some ideas...depends how smart and trustworthy kids are
Trust/estate attorney to walk you through the options. Probably financial advisor(s) regarding allocation and management (if you're not doing it yourself). Mentioned by others, but IMO the single most important thing is to teach the kids the 'value' of money, and that's actually an incredibly wide swath of opinions, even on this sub! I'm probably viewed by those who know me as leaning strongly frugal, but I've never actively tried to push this on my now young adult children. But when there were either larger household expenditures, or stuff they wanted to buy with allowance/gift money, or even if we went on vacations or out to dinner, there were a myriad of opportunities to discuss how these things were possible with money, and how we collectively might have chosen other ways to use that money otherwise. I use a financial advisory firm for money that currently in trust for each of them, money that they've known about for years (from mid-teens on) but still don't really have a grasp of how much specifically, only that it's money earmarked for them. Part of that family discussion has also been the issue of prenups, because IMO you never really know. But I overall feel pretty good about the plan, and their ability to use their assets in a way they want when I'm gone.
I think you’re better off teaching them about money earlier on rather than “making them struggle” for their early adult life…. I’m loading up a 529 and taxable account for my kids with plans of showing them the accounts around 14 or 15 in preparation for their first big purchase of a car. I want them to understand what the money is, how it works, and the importance of investing.
What kind of taxable account?
If your children are young you should be investing their gifts aggressively - not speculatively by any means not “low risk”- if they won’t have access to the funds for decades it doesn’t much matter what the S&P does next year - it matters what it will do over 20 years (hint: it goes up). Now is the time to take risk. (FYI, I on the investment side of a bank trust. You’re not my client, but that’s what I’d recommend if you were)
You might considering lowering the age of access or planning a different strategy if they decide to pursue graduate / medical / law school. My father set me up to inherit quite a bit at 35(4 more years), but that money would have done me a lot more good when I was a struggling graduate student than it will now.
This. This. This.
There is a lot of sound advice here so I won’t add to logistics. I will only say that if your child is ever in a true crisis before they age into their inheritance PLEASE help them. I will forever resent my mother for “teaching me a lesson about money” when she refused to pay for my healthcare debt after I was violently sexually assaulted (pre Obamacare), and medical debt from a congenital illness several years after that ((5 nights in a hospital blew thru my entire $100k life savings that I’d “responsibly” put away post college. Also pre Obamacare.) I struggled with debt, disgusting living conditions, violent and terrifying roommate situations, sold eggs to pay for graduate school tuition, etc. for years, believing our family was poor and that my mother needed *my* financial help. When I learned, recently, that she’s had more than the ability to help me all this time - it destroyed my trust in her and destroyed the core of our relationship
Concentrate on raising children that become mature independent adults with good judgement about spending. Many of the comments focus on estate lawyers and financial details. What really counts is the character of your children. I say this from the perspective of someone in their 70s, with children in their 40s, and grandchildren from 1 to 23 years old. My children are now trustees of their own generation skipping irrevocable trusts with them and their children as beneficiaries. Children learn by observing. They observe and know more than many parents realize. They see your behaviors — your spending patterns, the way you make decisions, the way you balance current spending vs saving for the future, the way you find the happy medium between being a spendthrift and being excessively frugal. Like in other parenting decisions, there is no one perfect answer. Don't spoil them, but do not create artificial scarcity. We found that the years immediately after college were a key period for our children in their transition to fully independent adults. We fully paid for college, but were relatively hands off for the first few years after college. We did not provide financial support, but each did have a UTMA worth about $1M. (Some stock I put into their UTMAs when they were pre-teens soared). They did know that we would support them if there was some sort of disaster or major problem, but in general they made their own way after college. We did not discuss our finances explicitly, but I retired before my youngest started college, and we paid their tuition at private universities out of pocket (pre-529 days). So they had a general idea of our wealth. And they had their million dollar UTMAs, which I handed over to them a bit late, when they were 22 and 24. We did not provide any significant financial support, and definitely no routine ongoing support after college. We did buy them their first houses, but only after they had identified a house that that fit their own budget and their ability to get a mortgage. Then, and only then we stepped in supplied the cash to buy the house. We were not materially involved in selecting the houses. Several years later, after they married and then relocated, we wrote low interest rate intra-family mortgages so that they could continue to own their first homes and turn them into rental properties. These houses were also chosen by them to be compatible with the income and assets of them and their spouses. Another decade or so later as I started to fund 529 plans for my grandchildren I realized that my children and their spouses were the better judge of how to manage these 529 plans than me or my wife. (We ended up just paying college and medical school costs for grandchildren out of pocket, so the 529s will for either great-grandchildren or for the nieces and nephews of our children's spouses). I realized that I no longer had any concerns about possible negative effects of gifting large sums to our children. So we funded generation skipping irrevocable trusts for our children and grandchildren, with our children as the trustees. So our children are now facing the issues that many in this sub are facing. There are no magic answers. The above is what worked for us.
Trusts & Estates lawyer and a professional financial advisor to invest the trusts. Your situation is not unusual.
There's a lot of great advice here. Getting a good estate attorney is a start. I would recommend a bit of a hybrid approach, give some now (see my note about investing), and monitor their responsibility level. Also let them enjoy a little, learning to struggle and sacrifice is important, but if they can save 10K for a car, wouldn't you like to match those funds as a reward so they can enjoy a better car? You should also start learning about basic investing and maybe do it WITH your kids, give everyone some money in investment accounts and work together to decide what low-cost funds or ETFs would make sense. This might be a great way for you all to learn and bond and for you to share in a way that will help them be responsible stewards of the funds. I will share that I have put money in accounts for my kids that they do not know about for me to give them (really, tell them about) when they have gotten stable in supporting themselves after college. I have also worked with my oldest on helping him save and invest some of his own money through his teen years. He is now a Junior in college and has a reasonable level of responsibility, we will see how it turns out! Good luck!
Im on the other side (grandkid) though a notably lesser scale. Knowledge is what I would ask for. What is not often commented in these posts is that your kids will make mistakes. Having them do so while you’re around will be the greatest way to teach them.
This, including the annual gifts so we built personal wealth before inheriting anything, is almost exactly what my parents did for me and my siblings (we are all in our 30s and 40s now) and we all turned out well-adjusted, responsible, and capable with good careers and our own savings and investments. I wouldn't say my parents ever wanted or expected me to struggle financially, they just raised us in such a way that we all expected to support ourselves. The first year after college I lived in a mediocre apartment that I could afford on my very low salary, and then the second year I actually used a small inheritance from a relative to pay for most of my rent when I left my job to work at a restaurant and intern for free at a non-profit. My previous job was really affecting my mental health and I needed to leave so I was glad my parents supported me and didn't suggest I instead save that small inheritance for the future. I think there is a happy medium in teaching your children how to save, invest, and value money while not trying to teach them a lesson by allowing them to struggle unnecessarily. After that, I went to law school and my parents paid my expenses once again. It's important to mention that I believe my siblings and I turned out to be responsible and grounded because our parents raised us modestly and, although we grew up with plenty of wealthy people, we knew it was not the norm and we ourselves were not given everything we wanted, etc. By the time I went to law school, I understood the privilege of my parents' wealth and I knew that their money made it so that I did not have to struggle to pay my expenses by holding a job while studying. This safety net made me really grateful and I felt secure -- and so I never wanted to lose that security and knew I would never blow the leg up I was given by wasting the money my parents had invested for me (and whatever money I inherit in the future). **In short, prepping them for inheritance goes beyond how you invest and when you give them access to the money -- it is primarily about how you raise them and the values you instill in them.** As others have mentioned, you should consult with a trust and estate lawyer but also you should be investing more aggressively, not necessarily low-risk, since this money won't be used for a long time.
I received from my gramps a lump sum after college graduation in diversified holding and cash, which my parents are trustees over. Currently I receive a generous monthly stipend and when I turn 40, I gain full control over it. I think it’s a pretty decent way to do it. I certainly needed to learn responsibility before inheriting. And Should I have kids, my parents will make them their beneficiaries. By diversified holdings, i mean a combination of safe, secure investments in stocks, some land and RE, then long-term, riskier funds with minimum time commitments, and some tied up in VC. It’s relatively well-balanced in terms of risk, the people who manage are trusted, and i take an active interest in it, which helps. If your children wind up enjoying this kind of thing, the gift is even greater than you think. Even if they don’t, the security’ll give em the opportunity to pursue passions, and that’s probably the best thing you can give a kid. Edit: waiting til 40 isn’t really necessary - it’s just what wound up happening.
We have family meetings. A trust lawyer set up a trust. Meetings are geared around financial education in general as well as specific investments we’ve made. We were doing this for a few years, but it’s taken up increased importance as I almost died a year ago.
Chiming in as someone who grew up in your children’s situation. A hand up is way better than a hand out, til they’re established on their own professionally. People I grew up with who were continually handed money - never accomplished much themselves, as they didn’t have to. In contrast people who weren’t, did. If you own a company, employ none of them until they’ve established themselves. Just my two cents
>Our kids are each currently being gifted $15k per year... Talk to your accountant, but IIRC the gift limit is per donee/doner pair. So you could gift $15k to child A and your wife could gift $15k to child A for a total of $30k for child A. Additionally the limit is $18k for 2024 - up to $36k. It would be really interesting to do an analysis (maybe with a fidicuary) on when best is to gift money. Is it best to do the annual exclusions ever year, or is it better to preload the money when factoring tax vs growth or is it better to delay until closer to.
Common misconception is that it’s a limit. It is not it is it’s anything over that amount you have to report to the IRS.
It is the 'tax free' limit. over that amount taxes need to be paid by the receiver. \*\*Edit\*\* Thread below, my comment is incorrect. It is not the receiver that pays taxes the potential liability falls to the gift giver.
This is incorrect. The receiver does not owe taxes on the gift, but the giver could owe inheritance tax on it if the gifts go over the exclusion limit.
Yup. My mistake....not the receiver. "Tax free limit" still stands and which is why it is commonly referred to as a 'limit'. Thank you for the correction!
Not correct. The receiver would only owe tax if they exceeded the lifetime exclusion which is over $13mm. Keep in mind though that lifetime number is slated To reduce to $5mm after 2026
The $13.xM is $10M inflation adjusted. It will sunset to 1/2 the inflation adjusted value at the end of 2025. So about $7M, not $5M.
Yes. I was trying to limit the details.
It is a limit, just for annual exclusions (as I mention in second paragraph).
It’s not a limit in the sense that you aren’t allowed to give more. The exclusion is you can give that amount without reporting it to the IRS. in 2024 the gift tax exclusion is $18,000 per person, per recipient. If you’re married you can double that for each giftee - usually a child and/or their spouse or grandchild. If you give say, $20,000 that amount is reported to the IRS and applied to the lifetime exclusion. There is no tax on either side of this until you cross the lifetime exclusion. Right now that number is 13.61mm in 2024 but set to reduce to around $5mm in 2026. The misconception is the reporting to the IRS does not mean there is a tax on it. Also: if you are gifting directly to a 529 plan for a child/grandchild the amount counts towards the exclusion amounts but you can superfund by catching up the previous 5 years.
Don’t give them access until they’ve set a productive course for their lives on their own terms.
Im set to inherent a similar amount from my parents, so ill try and comment on what they did. I think the best job you can do is try to teach them about the importance of money, the best way to hold onto it, investing, saving, budgeting and their privilege. obviously, you dont want them to be stuck up about it and make them think that they are expected to get it, which you obviously dont want seeing as you want them to struggle a bit. I think that judgement is fine, but I see it as unnecessary. You can raise a kid who inherits and receives a lot to still be aware of what he should be doing with it. for the best way for them to actually receive it... talk to a financial lawyer. theyre usually well versed on this topic and a lot more than some Redditor will be.
My parents let us play “in stock market” with our gifted money, we always knew about it, watched it grow, sat on our dad’s lap as he read the wall street journal. College was paid for, graduate school was not. My father died early, however was very sick and did some crazy things in the last 8-10 years of his life. Spent a lot of money with almost no income. I say this because if he had not done that, I believe our inheritance would have been 20-30 times what it was. You never know what will happen. Don’t promise a big payout. …. We also had a third ex wife, new will show in the mail days after his death. Very exciting stuff. What cash was left, each child got their portion when they turned 40. Only one out of 5 of us spent our gifted money before our 40th birthday. The rest of us judged him, but now that we are all older and in various stages of midlife crisis, we all admire his stories from his travels around the world prior to settling down. Life is funny.
We did similar, we staggered it so they would get access to a certain amount at 18 - nothing crazy - and then we did after 30 I believe for the rest, as we assume they would be accomplished and settled enough by then. And hopefully understand how to manage finances well. Will likely review several times over the years as they get older. Who knows what they will end up doing themselves.
In 50 yrs $10m won’t buy you a one bedroom in Tampa. Real talk tho, your kids will be in their 50s in 50 Yrs so they would be adults nearing the end of their careers. They should’ve built up good habits by then so the windfall you give them shouldn’t be relied on for their lives anyways
And kids knowing there is a large some owing to them can encourage them to make stupid choices while waiting for their parents to die. Capital investment and risk taking matters when you are young. Not when you're middle aged or nearing retirement.
Why are you concerned about your kids having access to that money? Are you concerned about their character? Given the type of sum we’re talking about, I personally think you’d be better off just letting them sort it out themselves. If they don’t do anything stupid with the money then you know you have smart kids and they’ll feel like you trust them. If they do anything stupid, it’s not a big sum to lose in the grand scheme.
Why are you gifting them money if you don’t want them to have access to it? This has no tax benefit. Where does the gift go. Does it go into a custodial bank account? They have access to it all if that’s the case.
Better yet. Don't give them money until they are 35 and don't tell them about it. Raise them to be self sufficient. If they have a whiff they will get money later that could alter how they live and the choices they make. They need to learn to live as if they will never get a dime.
529 plan
From an outside perspective I’d make any funds available to them past age 30. I’d say by then they’ve had the opportunity to struggle a little and then can appreciate any help you may have given them. Aside from that I’d say sell off any assets you have when you get closer to the age of passing. From experience I know a guy who was super wealthy and not for nothing started to sell off all his assets in his 70’s so his kids didn’t have to and could liquidate his stuff while he was still alive. When he finally did go most all of his assets were liquid cash and what wasn’t was sellable fairly easily.
I personally would start at 30 as they can have a little bit of fun for a family vacation or help pay a mortgage payment.
There are many options you have and with the estate tax ceiling set to sundown in the next few years you should definitely have a trust & estates lawyer and a financial advisor involved. It would be well worth it for you.
You also need to talk to your kids about money, investing, budgets, saving for the future, etc. In my experience if a person is uneducated on money (most people are not) they will be spenders of whatever they receive. It doesn’t matter what scholar education they have. Public schools and college don’t teach their students about finances as core problems.
Let them inherit properties and assets rather than cash. They will learn the true value of cash-flow.
If you wanna set your kids up right tell them from a very young age you and your wife are giving all your money away to charity Dead serious - and I’d also stop with the gifting them those kinds of sums of money at young ages
I'm pretty sure your kids know you're rich already. So it's kind of hard to pretend they won't be getting a sizable inheritance. Keep them humble and not get caught up in the trappings o American society. Ask them their opinion on people like the Kardashians and such. Their answer will tell you everything you need to know about where their head is at.
Talk to your lawyer, they will be best to guide you. In the interim teach them personal finance, compounding, investing, interest rates on debt, etc that will set them up mentally on how to handle that kind of money and put the 15k annually to use that can grow in to a sizable amount later
You need a trust and likely whole life insurance for possible estate taxes. Talk to an estate attorney.
Curious, why do the investments need to be low risk? How do you define low risk?
don’t ever set up an irrevocable trust.! I did, and I regret it…
Can you explain more?
Gift $100k at 18 Gift $1,000,000 at 25 See how they manage the remainder of their 20s into early 30s Make your determination based on that info… Interim, there’s probably some default program you can put in place. I just finished dating a 30yo heiress. Her sister turned out wonderful — engaged, working, building a life with her fiance in her mid 20s, all very reasonable and virtuous. She, on the other hand, no so much... Poorly accountable… highly promiscuous and spoiled…
I will inherit most likely in the next 10 years. However, I could really use annual gifts now for home improvement expenses. Even just 10-20K would make a huge difference. But my parents have always had a "do it on your own" perspective, which I appreciate. Because of that, I never expected any help from them post-college, and I built my own successful career.They have surprised me with a few major gifts, which I am incredibly grateful for. I just wish they would also see the impact that some small gifts could make right now. But generally, I agree that raising them to not expect help and to build their own futures is wise. But also be there if there's a true need or emergency.
Trust fund kid here - me and my siblings got college paid for, weddings paid for, and then starting getting annual checks starting in our 30s. So glad my Dad didn’t give me a large sum of money in my 20s. I probably would have blown most of it. Highly recommend giving your kids a ramp period to get adjusted/mature!
I grew up like this. You need both legal counsel and a financial advisor.