Inheritance Tips So You Don’t Screw Up Your Child’s Life

If you've amassed a decent amount of wealth, you will likely want to leave some of it to your children. Let's discuss some inheritance tips so we don't screw up our children. Every financially-responsible adult who builds great wealth fears demotivating their kids.

One of the reasons why my 31-year-old neighbor still lives at home with his parents is because he expects to inherit a boatload of assets. His parents' home, alone, is probably worth about $2.6 million.

The great thing about my neighbor's living situation is that his parents only come to visit during the weekends. His parents have another home in the North Bay. He also rents out one of the rooms to his friend.

By continuing to live rent-free in his parents' house, my neighbor is not only saving a lot of money, but he's also laying claim to his future assets. When his parents eventually pass, surely the house will go to their by then 50+-year-old son who has been living in the home all this time. He is withdrawing from The Bank Of Mom & Dad with fury!

However, despite being in a position to inherit millions, my neighbor doesn't seem to be progressing in life. Although he graduated from college in 2015, he still works at a dead-end job. He's not in a relationship either. Instead, he's used much of his disposable income to buy and maintain two cars and two noisy motorbikes.

Awkward Neighbor

It would be one thing if he was cheerful and happy every time we cross paths. However, he never says hello and always seems angry.

One time, I was walking down the sidewalk pushing my baby daughter in her stroller. He decides to pull out one of his vehicles and block the sidewalk. He sees me, but doesn't say hello.

I stop to play with my daughter, assuming he would continue driving his truck into the street or reverse back into his driveway so we could pass. We wait for three minutes. Nothing happens. Instead, he decides to get out and leave his car in the sidewalk. Nice.

If I was his father, I would be concerned. As a parent, all we want is for our children to be happy and independent. I'm afraid that if we can't teach our children social skills or develop their emotional intelligence, then some of us will decide to just throw money at our children.

Millennials Are Going To Be The Wealthiest Generation

For all the talk about Millennials getting financially screwed over by Gen X and the Boomers, the Millennials seem to have it pretty good. Millennials get to benefit the most from their parent's prodigious wealth accumulation without having to do much on their own! 

By 2030, Millennials will have inherited roughly $68 trillion dollars of wealth according to one study by the real estate brokerage, Coldwell Banker. I've seen the figure range from $38 trillion to $68 trillion. Whatever the real inheritance number is, Millennials will be inheriting a crap ton of money! 

If you’re planning on leaving your children an inheritance, you likely want to do so in a way that doesn't turn them suddenly turn into lazy, spoiled brats. Instead of thinking you own the sidewalk by blocking it with your car, you move so the baby stroller doesn't have to go into the streets.

You’ve worked hard to build your wealth and raise your kids – the last thing you want is for them to start believing they are entitled to anything and everything. Don't let them start thinking they are better than everyone else!

Of course, you want them to live comfortably after you’re gone, especially if you were to pass prematurely. However, that's also what life insurance is for.

For you, it should be a top priority that your kids stay motivated and continue to work hard for themselves. Don't squash their motivation to earn and be somebody by giving them too much money.

Tips For Giving Kids An Inheritance While Still Keeping Them Motivated - Inheritance Tips So You Don't Screw Up Your Child's Life

Easier said than done? Although that may be the case with a lot of things when it comes to our children, you can still give them an inheritance and still keep them motivated with the following steps.

Inheritance Tips To Not Screw Up Your Kids

“Money isn’t everything, but it sure keeps you in touch with your children.” – J. Paul Getty

1. Educate your children about money management at a young age

The sooner you can get your children interested in money, investing, and building wealth, the better. Most schools are not required to teach lessons on personal finance topics, which is a shame. Don't wait until your kids are grown adults to have conversations about money.

Kids are often quite fascinated with money and how to get more of it. Take advantage of their curiosity! Talk about budgeting, saving, inflation, the importance of retirement planning, the power of compounding returns, and the opportunities that come with financial independence.

Share some of the lessons you've learned about managing your own money and don't be afraid to talk about your failures too. Help them learn from your mistakes so they don't have to make the same ones. Encourage them to make contributions and invest proactively throughout their lifetime as well.

Given so many of us are stuck at home nowadays, we've got a great chance to talk to our kids about money.

If you're busy working and your kids want to play, you can tell them that you need to work to make money. What a great way to explain to your kids how you need to make money to pay for the food they eat. Perhaps you can tell them that you hope to one day make enough money so you can play with them whenever they want.

2. Talk openly about your financial health

A lot of people hate talking about money, especially with family. It doesn't have to be an uncomfortable topic. The benefits outweigh the cons.

You have full control over the level of detail you want to divulge. If you're not comfortable sharing specifics like your salary or your net worth, focus on the general health of your finances. Share with your kids the reasons for your financial goals.

If this will be your first time talking to your children about your financial status, prepare to be asked many questions. Here are some for your preparation.

  • When do you plan to retire and how much do you have saved up?
  • What's the balance on your mortgage? When will it be paid off in full?
  • How much credit card debt do you have now and in the past?
  • What's your net worth and how is it allocated?
  • Do you have a will or a trust?
  • Am I getting an inheritance? When? How much?
  • When did you start saving and investing?
  • What are your biggest wins/losses?
  • Did you get an inheritance from your parents?

3. Explain how you got to where you are today

Perhaps you worked extraordinarily long hours when you were young. Maybe you took on two jobs and went to night school to save enough for a downpayment. Or maybe you worked on a side hustle for three years at night while working a day job.

Your kids will want to hear about your career and work origins! They will want to know how you got to where you are today. Your kids want to know what type of sacrifices, if any, were made to achieve your goals. Giving kids perspective is one of the best inheritance tips.

There are only a couple things we can really control: 1) our attitude and 2) our work ethic. Therefore, it's best to instill in our children these two traits as early as possible before they go out on their own.

In addition, talk about the incredible feeling of fulfillment and accomplishment that you experienced with each financial milestone reached in your life. Discuss how it's much more rewarding to create something of your own or buy something with the money they've earned.

The main reason why I chose to attend The College of William & Mary for $2,800 a year instead of attending a private university for $20,000+ in 1995 was that I knew about my parents' background. I also learned about my great grandparents' struggles coming to America.

I knew what sacrifices my mother had made and how she wasn't very happy at work. As State Department workers, I also had a good idea of how much money they made. As kids, we are very observant of how our parents feel after they come home from work. I remember many days of frustrations.

4. Figure out if certain assets mean more to your kids than others

If you have a lot of assets, it's beneficial to know if certain assets mean more to your kids than others. For example, one of your children may be most interested in collectibles and jewelry. Another may be most interested in the childhood home he grew up in. Knowing your children's interests can help you better write your will or structure your revocable living trust.

Dividing assets up can be tricky. Talking about inheriting assets is also awkward. But it's worth having these discussions today, while still alive. Have the conversation over a nice meal and a glass of wine. Keep it light-hearted. As parents, you should be able to discern what your kids prefer. After all, you've known them their entire lives.

The better you know their needs and interests, the easier it will be to gain their support and pass down an inheritance in the most meaningful and efficient way possible.

5. Be clear that your financial status might change

Hopefully, your assets will continue to grow before you pass. However, as we all know, bad things can happen all time. There seems to inevitably be a financial crisis every 10 years as cycles shorten. Maybe next time around, there will be an asteroid that lands on Earth, carrying with in a new type of disease. Who knows.

Make sure your kids understand that your assets and investments may change in relative value over time.

In any case, it would be a shame for your kids to depend on a financial windfall to fund their financial goals and dreams. Instead, make sure they spend time focusing on achieving their own financial goals without relying on your assets. Don't let your kid turn into my neighbor who has no direction.

Just be clear that your financial situation may change over time. Maybe you have a health issue that is expensive to cover. Or maybe your investments will get rocked due to some random exogenous variable. Bad things happen all the time.

6. Get your documents in order and inform your kids

If you have accumulated a sizable net worth, I strongly suggest hiring an estate attorney to help you create a revocable living trust for the inheritance you wish to give your children. At the very least, prepare a will.

Once you complete your documents, make sure your kids know the contact information of your attorney, what type of documents you have and where they are stored.

This not only gives you peace of mind, it will help them too. Knowing who to call and where to go can help reduce stress and the loss of assets if something unexpected should happen to you.

7. Clarify any inequalities

If there are any assets that you don't plan to bequeath equally amongst your children or exclude, it's important to explain why to avoid feelings of resentment and jealousy. You can have private conversations or put your reasoning in writing or a video recording.

If you don't plan to divide assets equally, it's best to decide on how they will be distributed in advance. Your trustee or the child designated to divide up your assets after you're gone may not distribute your wealth the way you want if you don't provide specific instructions. That's not something you want to leave up to chance.

Inheritance Tips So You Don't Screw Up Your Child's Life

8. Utilize a phased distribution schedule

Consider transferring your wealth in phases per a set schedule or specific terms. Estate attorneys can help you get documents in place that clearly define when certain assets are to be distributed based on age or other circumstances. This can help tremendously if you are concerned about reckless behavior. You don't want your children to squander your wealth.

You can also make specific rules that prohibit a child from receiving any distributions if they are abusing substances, have engaged in criminal activity or are otherwise unfit.

9. Use as many tax exemptions as possible

In 2022, the federal estate tax exemption is $12.06 million per person, a significant increase from prior years. Thus, married couples can take advantage of $25.12 million in tax exemptions. That is a hell of a lot of money! However, the stepped-up basis loophole might be eliminated, so beware.

In addition, the 2022 federal annual exclusion for gifts is $16,000. There is no limit on how many people you can gift and couples can each give $15,000 per individual. That means each of your children can get $30,000 from you and your spouse combined.

Historical estate tax exemption amounts

Also note the step-up function with your assets that get passed down. Essentially, when you pass away and an asset is transferred to an heir, the cost basis is based on current value, not your original purchase price. This can reduce the amount of capital gains tax your children have to pay.

For example, let's say you bought a house a long time ago for $100,000 and it’s worth $1,000,000 when you die. The cost basis for your children is $1,000,000 not $100,000. The value is “stepped up.” If your children later sell the house for $1,500,000 their capital gains would be $500,000 ($1,500,000 – $1,000,000) rather than $1,400,000 ($1,500,000 – $100,000).

Related: States With No Estate Or Inheritance Taxes

Inheritance Tips Conclusion

The fact that you're reading about inheritance tips is worth celebrating. Your kids are lucky to have such a thoughtful you! You've worked hard to provide for your family. Now you want to make sure your kids lead comfortable lives after you're gone.

Inheritance tips so you don't spoil your children

How much you want to leave your children is up to you. In general, I think leaving up to the estate tax threshold limit is a reasonable guide. Leaving any more will face a ~40% estate tax, which is a waste of money. If your estate is on pace to surpass your estimated estate tax threshold when you pass, I encourage you to spend more money while living.

I've always been afraid of raising spoilt and lazy kids. Maybe the reason for my fear is due to having seen some of my middle school and high school friends waste their lives, despite having so much wealth and opportunity.

However, due to three years of coaching tennis at a private high school, I've gotten to know some children from wealthy families. Most are respectful kids who take instruction well and practice diligently. However, there are always 1-2 kids who would benefit from more discipline. But that's probably true in all socioeconomic groups.

The more we teach our kids about the complexities of money at an early age, the better. We should not make money a taboo topic in our households. Spoiling our children is a fear as we get wealthier. However, I've come to the conclusion the fear of making our kids rotten with money is overblown.

As caring parents, we will have taught our kids the importance of hard work, saving, and investing. Further, by the time we give our children money in their late 20s and beyond, they will have experienced the hardships of life already.

Let's Keep Talking About Money

I truly believe our kids will better appreciate the value of money if they know how their parents made it.

If money is just too difficult a subject to talk about, here's my final suggestion: Send your children an article about inheritance tips and other financial topics you'd like to discuss.

Children sometimes don't want to listen to their parents. If the money advice is coming from someone else with the relevant experience, maybe your children will have an easier time listening.

Print out an article and discuss the topic during your next family meal. I'm sure you'll have some great moments of discussion.

Related posts about inheritance tips:

The Importance Of Feeling Consistently Uncomfortable For Personal Growth

Recommended 529 Plan Amounts By Age

Using A 529 Plan For Generational Wealth Transfer Purposes

Readers, are you planning to give your children an inheritance? If so, how much? How much inheritance is too much? I'd love to hear more inheritance tips from all of you. Inheritance Tips is a FS original post.

For more nuanced personal finance content, join 50,000+ others and sign up for the free Financial Samurai newsletter. Financial Samurai is one of the largest independently-owned personal finance sites that started in 2009. 

54 thoughts on “Inheritance Tips So You Don’t Screw Up Your Child’s Life”

  1. Sam, youre always ragging on your 30 year old neighbor. Don’t you think your judging him a bit just because he does not have a high paying profesdional career? It can be impossible to afford a house or rent in Sf.

    1. Yes, I am judging him and his family. But I am not sharing his name or any private details. Every writer needs examples for his work. My neighbor so happens to be a guy I’ve seen get babied by his parents for the past seven years with no progress.

      It would be one thing if he was a nice guy who said “hi” and was respectful. But he never says “hi,” rides around in multiple new loud motorbikes with aftermarket pipes, and cycles through cars he cannot afford.

      But I am very thankful for him b/c he motivates me to be a more attentive father who will teach his son about the importance of hard work, appreciation of money, and more.

  2. EightDigitFI

    We have one son who I’ve been concerned over the years of him doing his “personal best” in life. And like you mention, we do not want to enable any laziness or entitlement – but at the same time we have the money to give him every opportunity in life.

    So we have set up an estate plan which is intended to motivate him (and our subsequent heirs). Most of our wealth is going to charitable causes but we have set aside a sufficient amount for him (and all our subsequent heirs) to provide a “helping hand” in to perpetuity based on their individual effort. Our goal is for no trust fund babies but to give everyone a significant leg up if they to put in their effort.

    There are three pillars (with a lot more legalese than written here):

    1) Education – Trust will reimburse all tuition and room/board fees at a state school level for all A and B grades (can be for university or trade school). If you want to go to an Ivy league school, great but take out a loan for the extra costs. If you want to earn a graduate degree, you’ll have to take out a loan too. If you don’t get an A or B grade then you’re out of pocket for that money. If you keep your grades up, then everything is paid for for you to earn your BS degree (or trade) beyond you having to save for the 1st semester costs….

    2) House – Trust will match dollar for dollar up to 20% down payment for your house. This benefit can be repeated every 5 years. Good for primary or 2nd home only – no assistance for buying rental properties (but I hope they do!).

    3) Income Match – Trust will match at a 10% rate all income you earn up to the annual IRS tax free transfer limit. Income value is based on reported AGI on annual tax returns. This is paid every year, forever. Yes, free money but the harder you work and higher income you earn, the more the trust pays you… At some point, this benefit will max out but at that income level they don’t need more ‘help’.

    Not perfect but I think a unique attempt and giving our heirs every opportunity to be successful in life with a significant “leg up” from our trust – but with the requirement that they put in the effort to make something of themselves… No free hand outs.

      1. EightDigitFI

        Our son is 27yo and still finishing out his bachelors degree. I think he has finally found some level of ‘dedication’ to making something of himself but I am still concerned he would become too lazy if money simply ‘came his way’.

    1. How difficult was it to set up the three pillars into your Estate Plan? Did you have your Attorney actually ‘write these specific instructions’ into your plan? How do you handle giving your children money (gifts) during your lifetime? Do you give the $15K per child from each parent per year (in other words $30K to each child while you are alive to watch them enjoy it?)

      Thanks for any input and advise you can provide.

  3. In December of 2005, I started a weekly excel worksheet for both of my children with columns for each of them. They were born in 1995 and 1997, so 10 and 8 years old when I started.

    I constructed it so that if they came to me each Sunday and said “Compound Interest”, I would add $10.00 to that week’s row. In the second column was the interest earned on their cumulative balance so that they could see the effect of compounding. I used a rate of 1% per month. If they forgot a Sunday, they didn’t get that $10.00 entry for the week (they never forgot). They were amazed how that weekly amount of interest accrual just kept getting bigger and bigger.

    I told them that they could withdraw any amount of their accumulated balance at any time for anything they wanted.

    The first week, they each earned $0.02 in interest. By September 2011, they were earning $10.00 per week in interest.

    In October of 2013, my youngest withdrew $29.95 to buy a video game.

    I stopped this in December of 2015 when I set up accounts for them at Charles Schwab, but as of that date, the older one had $10,200.51 and the younger one $10,161.47 (that video game purchase made the difference).

    We then started giving them $1,000 per month each into their Schwab account (automatic purchase of S&P 500) with the caveat that we would continue until such time that they made a withdrawal. Upon successful college graduation, we now contribute $2,500 each month to each of them.

    They each now have over $100k in their respective accounts.

    By 55, they will each have over $2.5MM if they only earn an average 5% per year (@ 8%, $5.0MM), aside from their IRA’s and other savings.

    When my oldest was a freshman in his personal finance class, the first day the professor asked, “Does anyone know the most important concept in finance?”

    He was the only one to raise his hand and answered “Compound Interest?”

    The professor looked at him and said “G*d Damn Right.”

      1. Oldest working in finance, and the younger one in software engineering. The only thing I have asked of my kids is to provide their kids with the educational and financial literacy opportunities that I have provided them.

        I really could go on and on, but on the fairness to heirs aspect, I am getting ready to finance my oldest a house. 3% interest only with a 5 year balloon up to $400k (DFW Market). He has to put at least 5% down. The way I look at it, I will have an above market rate on what I would be carrying in a money market (I will still maintain 5+ years of cash liquidity), and in 5 years, hopefully, the increase in the equity will make it easy for him to refinance. If not, I will revisit then.

        1. Gotcha. Oh I love the topic of parents buying their kids houses!

          Do you think it’s a good idea for their sense of accomplishment though? I’m afraid that if we buy our children houses, they will take it for granted. What about allowing your son to save up for the 20% down payment and let him buy 100% on his own? It’ll take longer, but his sense of accomplishment will be much greater and he’ll appreciate it more.


          1. I agree that he would appreciate it more, and he currently does have the funds to put 20% down and get it financed on his own. Houses in this area are under contract in +- 10 days and with COVID, approvals with credit providers are very slow. A friend of mine refinanced with the same lender, and it took him three months. My son has been living at home for the last year hoping that when his brother graduated one year later they would both live together. Younger got a job out of state, and time for Older to move on. He can put more than the 5% down, but I told him that he can always prepay with me so that he could keep liquidity and not liquidate any of his investment account. I am looking forward to his appreciation of mowing his own yard, general maintenance, and costs of being an adult on his own. Being at home over the last year, he has saved 90% of his earnings, and is very responsible. When I got out of the Army in 1979, my dad lent me the money for my first house (at that time 16% apr) and I have always been a homeowner. Paid off my house (and all debt) 10 years ago, and have been snowballing wealth ever since. I think both of my kids are pretty financially literate, as they even funded their 2020 Roth IRA’s the same time that they funded their 2019s when preparing their taxes (in March luckily).

  4. Great post, Sam! Just one quick thing: in section 7, you recommended that parents explain the reason for any inequalities to their kids, and suggested they might put their reasoning in writing or on a video recording. I would be VERY careful about doing that. I’m all for keeping kids in the loop and explaining estate plans in advance–I think adding “sunshine” to the process helps stave off at least half of all probate/trust disputes after the parents’ deaths. But I would be really careful about putting explanations like that in writing, because that might be a toehold for someone to challenge the trust later.

    Example: parents say in trust that they’re providing 40% of the estate to kid 1, 40% to kid 2, and only 20% to kid 3, and explain that “kid 3 has a successful career and doesn’t need as much support.” Parents later die, and kid 3, who had a successful career as a doctor at the time the trust was written, quit his/her career early and made horrible investment decisions, and is now in the same financial boat that kids 1 and 2 are in. Kid 3 might challenge the trust on grounds that the parents were mistaken about what kid 3’s financial situation would turn out to be, and that because of that mistake of fact, the trust allocation should be voided and the kids should get equal shares. Oops.

    It’s possible the parents would have changed their minds and wanted the kids to get equal shares after kid 3’s flameout, but it’s possible that the parents were thinking “hey, we put kid 3 through med school, and kids 1 and 2 didn’t get that benefit. If kid 3 effed up their financial picture despite the head start we gave him/her, that’s on them.” Who knows. But having the reason stated in writing or on video gives kid 3 more ammunition to alter the parents’ estate plan after the fact.

    I would have them talk to the kids in person about it. They might be able to more fully explain that it’s because kid 3 is doing well, and because they put kid 3 through med school and didn’t incur a similar expense for kids 1 and 2. Kid 3 could still argue later that things should be different based on the explanation, but it will be more difficult because it’s not one sentence in writing that a judge could read decades later and interpret totally differently from how the parents intended it.

  5. Thank you for the post. Having been the recipient of an inheritance, I can tell you it has been hard knowing what to do with the money. Like some of the comments, my mother raised me with awareness to earn my way and I have been successful. However, the inheritance has allowed some splurges for my family that probably would not have come until later in life. It also allowed me to make donations on my mother’s behalf to organizations that represented my mother’s interests. There can be a lot of guilt for kids who inherit money early, esp. when they would rather have their loved one back. So, for those kids who are over achievers, make sure you give your kids some ideas on what you might want them to spend it on and not spend it on. I know it is all based on an honor system, but having some guidelines can still allow you to parent and guide from afar. I try to keep in mind what my mother would have wanted me to spend the money on, esp. when it came to her grandkids. That has helped, but it has been 3 years since my mom’s passing and I still think about am I doing a good job with how I am using my inheritance. So, screwing up your kids by leaving an inheritance may not mean what you think. It can mean they are frozen and unsure of how best to honor you. Make sure they know…it will go a long way.

    1. “There can be a lot of guilt for kids who inherit money early, esp. when they would rather have their loved one back.”

      Wow. Your comment is so packed with insight and perspective. Thank you for that. I’m so sorry about the loss of your mom, and it sounds like you’re doing her proud with how you’re managing yourself and the inheritance in her absence. :)

  6. “Inherited money makes people lazy and entitled!” … “Here’s how to maximize the money your kids inherit!”

    I think this is a really interesting topic. I think that, and you’ve said this before so you’ll agree, that every generation should have to earn their way. In my ideal world, the only inheritance that would be allowed is enough to cover a child’s living expenses up to 18 and college education (in the event, for example, that parents pass away when a child is young and still needs care until they are an adult.) I firmly do not believe that children should inherit large sums of money (or any really.)

    Now the reality: I fully understand that this is an unpopular opinion and will likely never be reality. And I likely won’t behave in that way when get an inheritance and eventually pass one on. I’ll borrow more practical thoughts from another blog that I follow:

    “The fundamental point is everyone pays their own way and we do not create incentives to consume more.

    Any capital that become multigenerational is managed in a custodial capacity.

    What does that mean?

    It means you take care of things you didn’t create so others can enjoy them. ”

    I really love the idea of managing the things you didn’t create. If you didn’t work to earn it, then it shouldn’t be yours to consume. The idea that being lucky enough to be born to parents wealthy enough to pass on an inheritance is not a form of earnings.

  7. We just updated our estate plan since our youngest turned 18, and we moved to FL from NY. In addition to updating our paperwork, we also created power of attorneys and health proxies for our children b/c even though the 18-year old is still a dependent, as a legal adult, we don’t have access to her health records should something happen to her. Estate planning done right is about so much more than just the money piece, though I agree with the items you laid out as well — especially explaining any inequalities. We are still 50/50 on what we’re leaving the kids, but with the oldest having gone to college on a full tuition scholarship and the youngest going to private college at a total cost of almost $200k (she got some scholarship money but her place was more expensive) that’s a significant discrepancy. BUT there are other places where it goes the other way, so we’re still going 50/50 for now!

  8. I think giving your children the gift of self reliance is the best gift you can give. I’ll leave them what’s left when I die but I’m not trying to hand them millions of dollars.

  9. So important. I know lots of kids whose parents have money. I’ve seen one brag about how this will “all be hers” in seducing a guy. Also went to expensive private schools to study 100% of absolutely nothing. Then private graduate school to work for ten an hour. Her brother is a similar loser who basically gets himself in terrible situations knowing that his parents will eventually bail him out financially. The insousiance and enabling of the situation made me see the parents in a while new light and I kind of distanced myself from them socially.

    That kid living next door to you is a jerk and his parents should be embarassed. The fact they did nothing to raise a proper kid says a lot. I get now why Warren Buffet doesn’t hand out money to his family.

    1. I just wonder if maybe he has aspergers or is on the autism spectrum for the inability to say hi or be courteous. It’s just hard to know without knowing someone personally.

      1. I’m ambivalent but I didn’t see the correlation between the lack of having a relationship and financial irresponsibility.

    1. No. Lots of people chose to be single. But there is something wrong with people who can’t bond with others. I’m sure he has tried and potential mates have encountered the same rude behaviour he displayed with FS. So while it’s not a precursor to progression, the fact be probably can’t because he is so selfish and spoiled speaks volumes.

      1. Well, I guess it is a good thing if people think I’m a loser for being single. Stealth wealth, right?

  10. “Money isn’t everything, but it sure keeps you in touch with your children.” – J. Paul Getty

    Great book that includes advice on preparing children for inheritance: “The Thin Green Line: The Money Secrets of the Super Wealthy” by Paul Sullivan. Spoiler alert: give them enough so they can do ‘anything’, but not so much that they can do ‘nothing’. Naval Ravikant recently noted that people he encountered earlier in life with the most potential, never came close to actualizing it when they inherited substantial money.

    FS, that neighbor situation is horrible, I’m so sorry. The 30 year-old has learned a lesson, and made a business decision. He doesn’t have to make his own financial way, doesn’t have to get into a relationship (which requires empathy, compromise, and sacrifice), and he doesn’t have to be nice. It seems possible that his parents are the ones who prefer to live away from him, and they have zero leverage now to force him to be independent and provide for himself. Avoid!

    1. Great quote! I’ve got to use it.

      My neighbor situation isn’t horrible. Perhaps I wasn’t being too melodramatic. His character is just interesting to me and just always makes me wonder what happened.

      My 20s was extremely fulfilling… it was some of the hardest, but most exciting and best of times. I cannot imagine being single and living with my parents for 7-8 years after college and having no direction. He is buying toys to fill his day.. but we all know these material things don’t provide lasting fulfillment.

      I think I’ve got to have a heart-to-heart with him before I leave and ask him what’s up.

  11. Unfortunately we will not inherit anything, but at mid career we are starting to think about what we will leave to our kids. Our kids are still little and we are trying to educate them on how to earn and the value of money. These lessons will grow over time. We are also trying to teach them about investing, I have also been secretly buying Disney stock for them, which I will use as an educational tool.

    I think all of these suggestions are great. While growing up money was such a taboo subject in our house. I want my kids to understand how to use money to their advantage

  12. We have more than enough money to put our kids through college on our own dime, but I’ve noticed that people tend to lack appreciation for things they have been given when compared to things they’ve earned on their own.

    I recall a day during my undergrad years when a professor cancelled class at the last minute for some reason. Most of us were happy to have some time “off”, but the older students were decidedly morose. I asked one of them about the difference in attitude, and she said it was because, unlike most students, she was paying the full cost of every class directly out of her own pocket. As a result, she knew the exact price of every hour of instruction.

    I’ve always remembered that.

    That’s why we are planning to pay a portion of the kids’ college/post-grad educational expenses… but not the whole thing. Whether they have to work, take out loans, earn scholarships, or do something else for that money, well, that will be for them to figure out.

    1. A good plan! You definitely appreciate something more when you have to pay for it. It’s the same thing with buying an e-product versus consuming one for free. If you have to pay for the product, you take it much more seriously.

    2. @Ron
      Totally agree with having the kids have skin in the game paying for college. We will have 529s for them, but no where near enough to cover all costs. They will get to decide how they spend it and how they make up the rest, with our guidance if they’d like. It will be more than I received!

  13. We’ve always talked to our daughter about money and investing. We have always made her save 10 percent of her allowance or income. At 20 years old she’s up to 30k in her Roth. Some of that was help from us but the majority is from her and gains.

    We too were worried that if my wife and I died early she would receive to much money. We set up a trust that will give her a distribution at 35, 45, and 55 years old. We figured at 35 she would be responsible enough and long enough into her career that a large amount of money won’t screw her up. We haven’t told her about this or our net worth. We’ve always told her mom and dad are going to spend every penny we have and if she wants a good life she better work for it herself. In reality when we die she’s gonna get a large sum of cash. Hopefully my wife and I live long enough to see how her life turns out. If it’s good we’ll leave her our money. If she screws it up we’ll leave it to charity. Fingers crossed!

    Thanks, Bill

    1. Those are some impressive trust age distribution levels! What was your thought process behind the age of 55? I’m thinking most of us will be able to figure things out by the age of 40. Is it kind of like an insurance mechanism just in case of page 55 things are going well for her?

      Perhaps it really is much better to spend way more money on our children while they are alive then after we are dead.

      In such a case, buying a property for our children after they graduate from college or high school, and a car, and all sorts of stuff seems to make more sense because it provides the parents more satisfaction while living then after they are dead.

      1. 55 years old was just a random number. Starting at 35 was the most important number for us. We decided to do 10 year increments just in case she made a bad investment or married the wrong person and blew it all.

        I have mixed feelings about giving her the money while we’re alive. For selfish reasons my wife and I would love to buy her a house. I’m just worried we would rob her of the satisfaction and pride of doing it herself.

  14. The key here is to talk about money with your kids early on (like at age 6 on wards) and show them your money decisions in day-to-day life. They will pick up your attitude towards money real quick and once that has sunk in, you can let them cruise and make their own money mistakes – in the US, parents tend to avoid money talks at all costs and the results are unpleasant surprises.

    I don’t quite get how you can get over a 11 million estate (to each of your kids!). As a parent, you should never get there and spent your money way before that – its literally the 1%ers that have a networth north of 10 million.

    For everyone else (99% of us), a simple will from an attorney will do just fine.

    1. I think if you can create a revocable trust, is worth it. I’ll always remember what our estate planning lawyer said: the less assets you have the more important it is because probable court is expensive.

      That said, that’s her business, so of course she would be biased for more people making trusts.

      How much money do you think it’s too much money to leave one child?

  15. We updated our will and created a trust last year. Our three children are all adults and the two oldest are well into successful careers. We divided everything equally- but I had second thoughts about that because our youngest is in medical school and we are paying the entire thing- it is quite a large amount. I felt that perhaps he should receive less than the other two children because they weren’t as “expensive “. My husband vetoed that idea and said everything had to be equal. As an aside the older two are doing very well financially and so it probably wouldn’t make a difference to them anyway. Equal is always best.

    1. I don’t think equal is always best. What if you equally to give your state to one child who is already a multimillionaire, and another child who is making close to minimum-wage at a shelter home? And what if the wealthy child was mean and never did anything for anybody?

      Dividing amounts equally I think is a way for parents to feel better about their decision or a lazier way to go because it may be too expensive or time-consuming to change a wheel or a revocable trust mandate.

      1. spaceassassin

        What if? Sounds like the multimillionaire and minimum-wage child both have equally more. Not a bad thing.

        Not sure I want the last thing my kids to think about me is that I structured the trust based on a need basis and meanness scale.

        If someone is driving to the trust attorney to update their trust because they realize their eldest is mean and self-serving in adulthood seems a little questionable and I’m not sure we have to dig to deep to unravel the source of the child’s problems.

        1. Sure, feel fee to do what’s best for you.

          Equality is fine, no matter how good or bad, spoiled or loving each child is.

          If one of your children is an ax murderer or never visits or cares for you in your old age, and you still give them as much as your other child who takes care of you every day for years, then that’s up to you.

          Going the equal route is definitely the easier route. We all like easy.

          1. spaceassassin

            Actually now that I think about it, I might go the other route. I might set up a rewards-based trust based on hours spent with us and quality of care provided. Maybe $25/hug, $500 for an hour of time and $2,500 for taking my grumpy old self to Denny’s.

            Not nearly as easy, but a lot more fun and transparent. And we will get a lot more out of them since they know they got millions riding on it.

  16. Sam, I think this post is a great example of using your anger to power creative work. It worked for Terry Prachett. The sardonic humor is always appreciated.

    But what happened to the farmland investment post? I wanted to find out more but couldn’t get around to it yesterday.

    1. Thanks. It’s not anger, it’s frustration and more a curiosity. I often wonder to myself: what happened to this guy?

      And it could very well be a syndrome or some thing that I have no idea about. His father is a little awkward as well, but respectful and takes the time to chat.

      I just have these concerns that I don’t want to raise a son like that. At least be kind and respectful to your neighbors. Be considerate.

  17. This is a great article. I have seen inheritances break apart families as assets arent clearly defined. Money is a very taboo subject it seems but it shouldnt be as it causes more issues in the long run.

  18. When my parents passed everything was split 50-50 between my brother and me. I don’t think it is necessary to try to figure out which of your kids wants jewelry and collectibles, they can figure that out after you are dead. For instance my mom had $20,000 of diamond jewelry. We got it all appraised and I told my brother you rank what you want and I’ll rank what I want. Ended up we picked separate pieces for our first few picks, so we got what we wanted then we took turns picking out of what was left until it was gone, worked great. I’ve also seen people recommend handing down investment and tax sheltered accounts based on your kids different tax brackets and I would let them deal with that too. Just split every asset in equal pieces. Anything that isn’t equal may be perceived as less than fair to someone. As for ruining your kids, if you did a good job with them the first ten years of their lives that won’t happen, they will become responsible adults. If you didn’t, well, the money will be the least of their problems. In your case there’s no doubt you are an exceptionally engaged parent, I can’t imagine your kids not being solid citizens and productive adults, like their parents!

    1. My in-laws had a good system. Each kid had $10,000 virtual dollars to bid on Items the parents left. They could us it all on one item, or across as many items as they wanted.

  19. Such an important topic Sam. We have thought this through, and they are getting nothing beyond educational costs and livings expenses (in the event of our early deaths) until 40. Money ruins people if they get it without being earned. Both Mr. Plastic Picker and I worked when we were younger, and I think this is so important. I don’t have a business like my father that I can employ them, but I’m having them do climate work with me and treating it like a job. We have meetings and divide up tasks. So so so important. I’m sure your kids will turn out great if you have that perspective. That’s my one angst about sending them to private school, they are growing up with more of the over-priviledged set. Through the parent gossip-mill, I know a large set of parents of our fancy private school don’t even pay the tuition – the grandparents do. Mr. Plastic Picker and I are a decade younger than the other parents and both work pretty much full time, pay tuition and also support his parents. Anyway, the kids have good solid friends and avoided that crowd so far. Drives me crazy. More money equals drugs, vaping and mouthy kids too. My nightmare is my son marries someone like that. I’m praying he falls in love with a hard-working person with middle-class values. Back to the beach!

      1. Thank you for asking. That is very kind of you. We are still in our early 40s so we have at least another 1-2 decades of earnings and we actually love our jobs which is why it is so crazy how easy it is to build our net worth. We are trying to focus on saving the earth right now, but it a fiscally responsible and impactful way. The amount of environmental scams out there is horrible and so much greenwashing. We don’t really plan on spending any money on ourselves more than we are, because honestly we have everything we need. We have our forever home near the beach, and I walk along the ocean for fun and make trash art. Blogging cost only $25 a year? I shop at Goodwill for clothes now because I new clothes cost the earth so much water and carbon. If we spend more money on them, they get more than enough already, it will just ruin them. I guess we’ll donate here and there strategically, and figure out what the state of the world is. We’re focused on climate change for the next 15 years, so it’s nice to have the professional freedom to to advocacy work by not having financial stresses. I’m still buying rental properties and going to refinance since the rates are so low right now. We will certainily leave them a sizeable chunk but we haven’t decided yet. It will prbably depend on what kind of people they end up being. But I am really proud of them. Their moral characters are solid, and they don’t value material things. I’ll probably hang up my hat and just take care of the grandkids when either one starts a family. I plan to take my grandkids to pick up litter too and make trash art. Great for building character!

  20. I plan on educating my kids about personal finance throughout their childhood. For now it’s very basic stuff like “this is a quarter, that is a dime” and “mommy and daddy work to make money to buy your toys”. And slowly I plan to evolve into more and more practical and important concepts and topics. Great post!

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