View Full Version : Inheritances: when pearls are cast before swine
Sounds a little harsh and judgmental to say it that way, particularly because I'm going to point out some people I know and love. The analogy fits in a certain sense, but I'm not exactly calling out my family and friends as "swine."
We had a similar topic before, but I can't remember what it was called, but in it I talked about concerns of misuse of inherited funds. The sentiment I got back was, who cares? Certainly that's true. I don't believe that people who leave money behind are up somewhere looking down at their hard earned cash being spent in questionable ways.
And of course, it's a moot point for me, as I'm unlikely to have much money to give away, and especially split among 4 kids it will be a token amount based on a few bucks in the bank and a home sale.
But, in that former post, I talked about my DD's ex-BF who inherited a a couple of hundred thousand from his mother and he went on a month-long trip but said he couldn't afford a mattress. My DD updated me on vacation last week--citing concerns that he still has no job (voluntarily) and he's spending his money getting high on all kinds of drugs.
Also, my BIL, who as we all know, has held us hostage with his half of the house but who has come into a full reckoning of the fact that unless he makes more money he has to move. But he shared with me the other day he has gone through the 401k he had saved through his past retail jobs. He has gone through the money his mother left him. The house is his only asset. Once we sell that and he moves into an apartment, how long will that money last?? He seems totally clueless about the fact that unless his income equals or betters his outgo, he's not going to make it.
I keep thinking of his mother standing on her feet as a clerk at Macy's for 30 years, scrimping and saving; bringing tea bags to restaurants to save money; buying her clothes at yard sales to save money; clipping coupons and scanning her "lines" (receipts) for errors in the store's favor. All of that hard earned cash gone in the hands of a son who maxed out credit cards while shopping at the most expensive places in town. I truly hope she ISN'T looking down from somewhere.
Then there was my own stepfather who blew through an inheritance of $80,000 in 1970s money doing pills and alcohol after quitting his job.
I have my own disappointments in this regard but I'll keep that personal.
I know there's a lesson in here somewhere. Any thoughts?
If I were concerned about that sort of thing for my heirs, I would look into setting up a "spendthrift trust" to limit the damage they could do. I'd hate to think a legacy from me would actually harm them.
Warren Buffet once said something to the effect that he wanted to leave his children enough to do anything but not enough to do nothing.
Perhaps the bad/sad inheritances are balanced by the good ones. When my brother died the money he had inherited from our parents was willed to DD. It was used for her undergrad and some of her grad education. Had he lived, it probably would have been spent down quickly on things we deem worthless. So many mysteries in life...sometimes karma makes the most sense.
Chicken lady
8-8-16, 8:41am
I agree that if you are concerned about how the money will be spent, your only real option is to leave it in trust with restrictions.
i had a friend who was resentful at his lack of grandchildren. He told his sons he was going to get a parrot and teach it to say "where are my grandchildren?" And then he was going to leave all of his money in trust for the care of the parrot, who was to move back and forth between the two houses. If the parrot died, the son who did not have custody at time of death was to get the remainder of the trust.
We we think he meant it all in humor, but in any event, grandchildren did eventually arrive, so we'll never know....
iris lilies
8-8-16, 9:17am
My friend blew through $360,000 of an inheritence from another mother who scrimped and saved and led a simple life. This was mostly from New Jersey real estate. She sometimes laments her situation, knowing that her mother would be horrified that the money went so fast.
I inherited $60,000 and had fun with it, spending some of it to finish our house, giving around 20% of it to our favorite causes, saving 20% of it. My mother would have completely approved of how I spent every penny. She actually would have liked me to spend all of it, saving nothng, because she knows we save lots of our income.
ToomuchStuff
8-8-16, 9:32am
The lesson is to learn from others. You can't force your belief's/views on others, you can express it, but unless your going to be standing over them with a gun, you can't get them to do things the way you would.
It is also a lesson that shows an importance of proper estate planning. If you have terms and conditions for an inheritance your going to leave, it needs to be set up in some way with verification and a person to administer.
Also, we all have our own disappointments in life. The important thing is to learn from them, so we don't repeat them.
iris lilies
8-8-16, 9:38am
Another friend inherited $210,000 at age 67 from another friend. She needs the money, her income is only Social Security. Her husband, much younger, has assets but doesnt work. I told her "I am so happy for you! Thats enough money to make a difference, but not enough to get into trouble."
The kind of "trouble" she would get into with $2 million rather than the lesser amount is real estate. I can see her buying an Italian villa and blowing through that money, thinking it is really a lot of money. When buying foreign real estate $2 million isnt all that much for purchase and upkeep.
Ultralight
8-8-16, 10:26am
I know this: I will be getting $0 in inheritance! hahaha
I know this: I will be getting $0 in inheritance! hahaha
Well, your parents have figured they've already given you hats, so that's quite enough.
Thanks for the replies--I guess the take-away is, unless you restrict the trust, who knows what people will do with the money. I am definitely a very liberal Democrat in many ways, but sometimes my fiscal Republican rises and I just realize that unless you earn it, you won't value it. "Mama may have and Papa may have, but God bless the child that's got his own."
but sometimes my fiscal Republican rises and I just realize that unless you earn it, you won't value it.
There's an ongoing discussion in my family on that very subject on paying for my daughter's college. Is it better to cover it all for her for a better, less stressful launch into life, or would she ultimately benefit more from having to scratch a bit on the "skin in the game" theory?
ApatheticNoMore
8-8-16, 12:31pm
I am definitely a very liberal Democrat in many ways, but sometimes my fiscal Republican rises and I just realize that unless you earn it, you won't value it. "Mama may have and Papa may have, but God bless the child that's got his own."
it just makes me more liberal. Useless do nothings can inherit money and go through it while people who worked hard all their life end up long term unemployed and facing poverty when they find they can't find work. grrr .... and then heaven forbid they should even have any government safety net for them. virtue is it's own punishment.
There's an ongoing discussion in my family on that very subject on paying for my daughter's college. Is it better to cover it all for her for a better, less stressful launch into life, or would she ultimately benefit more from having to scratch a bit on the "skin in the game" theory?
I actually funded all my kids' educations, probably because my grandfather funded mine. I don't feel I took it for granted, and I don't think my kids took theirs for granted either. Our agreement was that we did the undergrad, and any post-grad was on their dime. Two of them went for a post-grad degree. One has loans, and the other was able to get a law degree under a tuition remission plan because he worked for the University. GREAT to have a law degree and NO loans!
I keep thinking of the lifeguard scenario.
You can provide options for people to save themselves but always do it without risking yourself in any way. If they choose to ignore the safety options and drown, so be it. It may be hard to watch happen but you cannot protect people from themselves if they are deemed capable of making decisions, including really bad ones.
My kids paid part of their post-secondary education in some way whether by summertime employment or part-time work during the year. I paid my own way and really scrimped to make it through.
There's an ongoing discussion in my family on that very subject on paying for my daughter's college. Is it better to cover it all for her for a better, less stressful launch into life, or would she ultimately benefit more from having to scratch a bit on the "skin in the game" theory?
You all are on point for making this a major topic of discussion.
Would you mind if I weighed in?
You all are on point for making this a major topic of discussion.
Would you mind if I weighed in?
Feel free.
Feel free.
College tuition is oppressive these days. If you got the bread and you can help, I would say you ought to.
But I think you should require that she help to some degree.
I know parents who have all sorts of plans to get their kid to help pay. Some want to steer the kid to join the Coast Guard reserves or to create a savings account from age 6 onward or to simply make the kid work part time during college, with a set amount going to their own tuition.
Obviously it depends on your own style and how much you can afford to help.
My parents put up barriers between me and college. This did not help. They also did not inform me of the usury involved in student loans. This did not help.
From what I know of you on here, you'll be raising an infinitely more financially literate person then my parents did. I also think, from what I know of you, you will have enough money to pay for a 4 year degree, maybe more.
But...
I think that making the kid help pay is a good character-building experience and will make the degree feel more like it is truly hers.
College tuition is oppressive these days. If you got the bread and you can help, I would say you ought to.
But I think you should require that she help to some degree.
I know parents who have all sorts of plans to get their kid to help pay. Some want to steer the kid to join the Coast Guard reserves or to create a savings account from age 6 onward or to simply make the kid work part time during college, with a set amount going to their own tuition.
Obviously it depends on your own style and how much you can afford to help.
My parents put up barriers between me and college. This did not help. They also did not inform me of the usury involved in student loans. This did not help.
From what I know of you on here, you'll be raising an infinitely more financially literate person then my parents did. I also think, from what I know of you, you will have enough money to pay for a 4 year degree, maybe more.
But...
I think that making the kid help pay is a good character-building experience and will make the degree feel more like it is truly hers.
My current thought is to set aside enough to cover a State school. If she wants a private school, she pays or borrows the difference. If she goes State, and works, borrows, etc. to get through for less than budget, she gets the difference for start-up capital. If she enlists or gets into a plumbing apprentice program, we renegotiate (perhaps I use part or all of it to fund annual Roth IRA contributions for her). My wife isn't sure it's fair to expect an 18-year old kid to think long term, and she may be right. I think it may be a good learning experience. And if every scholarship or job dollar goes right to her bottom line, it would give a smart kid both an incentive and a learning experience.
My current thought is to set aside enough to cover a State school. If she wants a private school, she pays or borrows the difference. If she goes State, and works, borrows, etc. to get through for less than budget, she gets the difference for start-up capital. If she enlists or gets into a plumbing apprentice program, we renegotiate (perhaps I use part or all of it to fund annual Roth IRA contributions for her). My wife isn't sure it's fair to expect an 18-year old kid to think long term, and she may be right. I think it may be a good learning experience. And if every scholarship or job dollar goes right to her bottom line, it would give a smart kid both an incentive and a learning experience.
For what it is worth, I think you all are on point with these ideas.
For what it is worth, I think you all are on point with these ideas.
There are risks. I lose a bit of control. For instance, if she gets a full ride scholarship package and I wind up handing a 22 year old kid a six-figure check on graduation day without having the incentive effect I hoped for. Or she decides to borrow to the hilt to leverage a start-up investment portfolio and it all goes South in a hurry. Or she focuses so much on working to pile up a big payout that studies suffer.
To be a father is to worry.
I guess I feel a gift is a gift, after it is given what one chooses to do with the gift is their business. I would imagine that people generally know the person well that they are leaving money too, so they probably know how it will be spent.
There are risks. I lose a bit of control. For instance, if she gets a full ride scholarship package and I wind up handing a 22 year old kid a six-figure check on graduation day without having the incentive effect I hoped for. Or she decides to borrow to the hilt to leverage a start-up investment portfolio and it all goes South in a hurry. Or she focuses so much on working to pile up a big payout that studies suffer.
To be a father is to worry.
This your first kid? Only kid?
This your first kid? Only kid?
First and only. I'm one of those trendy older dads you sometimes read about. If I had five kids this type of arrangement would be out of the question.
First and only. I'm one of those trendy older dads you sometimes read about. If I had five kids this type of arrangement would be out of the question.
I admire your restraint. You waited for the right woman and the right time in life for you. Not a lot of folks do that anymore.
iris lilies
8-8-16, 3:44pm
There are risks. I lose a bit of control. For instance, if she gets a full ride scholarship package and I wind up handing a 22 year old kid a six-figure check on graduation day without having the incentive effect I hoped for. Or she decides to borrow to the hilt to leverage a start-up investment portfolio and it all goes South in a hurry. Or she focuses so much on working to pile up a big payout that studies suffer.
To be a father is to worry.
If she gets a full ride, she will have to work to maintain it. She is EARNING it, she is being paid to do very well in school. She has skin in the game in that situation.
If she gets a full,ride, she will have to work to maintain it. She is EARNING it, she is being paid to so bery well in school.She has skin in the game in that situation.
That's a good point. Assuming it were to happen, I'm pretty sure it would be an academic scholarship, in which case she'd have money for grad school. I love my little Jelly Bean, but she's no athletic prodigy.
There are risks. I lose a bit of control. For instance, if she gets a full ride scholarship package and I wind up handing a 22 year old kid a six-figure check on graduation day without having the incentive effect I hoped for. Or she decides to borrow to the hilt to leverage a start-up investment portfolio and it all goes South in a hurry. Or she focuses so much on working to pile up a big payout that studies suffer.
To be a father is to worry.
I think your overall concept sounds good. Maybe you could tweak the cash incentive part to be something along the lines of, 100% of the savings up to $5000, 50% of the savings beyond that, up to $10,000 and 25% (or perhaps nothing) above $10,000. That would still provide a strong incentive to look for scholarship money but limits the cash payout to a more reasonable level. And maybe a side offer of, if there's a larger cash savings than $5000 per year it can all be collected at 100% if used for grad school, to incentivize further education.
My parents, 30 years ago, had agreed to provide up to the cost of instate tuition. If I wanted to go out of state I would have to figure out how to pay beyond the $6,000 or so annual tuition, room and board that the U of Colorado was charging at the time. No offer was made of a cash payment if I spent less than that. I ended up getting a full tuition scholarship to a private university far away. My parents paid the $4,000ish annual room and board but I had to find money for everything else like books and airplane tickets to get to and from school. Sure it would have been nice to have had $8,000 upon graduation but I was happy enough that I'd gotten the education and graduated without debt.
iris lilies
8-8-16, 3:52pm
I thnk it is important to specify how long you will pay for college, how many years she may take to finish.
Going straight through 4 years any more isnt as common as it once was. 5-6 years to get a Baccalaureate degree may be the thing now.
I admire your restraint. You waited for the right woman and the right time in life for you. Not a lot of folks do that anymore.
To be honest, it wasn't like I had squadrons of women breaking down my door. I'm what you'd call an acquired taste.
To be honest, it wasn't like I had squadrons of women breaking down my door. I'm what you'd call an acquired taste.
Amen. Me too, obviously.
But... as David Lee Roth once said:
"I don't get all the women I want. I get all the women that want me!"
I think your overall concept sounds good. Maybe you could tweak the cash incentive part to be something along the lines of, 100% of the savings up to $5000, 50% of the savings beyond that, up to $10,000 and 25% (or perhaps nothing) above $10,000. That would still provide a strong incentive to look for scholarship money but limits the cash payout to a more reasonable level. And maybe a side offer of, if there's a larger cash savings than $5000 per year it can all be collected at 100% if used for grad school, to incentivize further education.
My parents, 30 years ago, had agreed to provide up to the cost of instate tuition. If I wanted to go out of state I would have to figure out how to pay beyond the $6,000 or so annual tuition, room and board that the U of Colorado was charging at the time. No offer was made of a cash payment if I spent less than that. I ended up getting a full tuition scholarship to a private university far away. My parents paid the $4,000ish annual room and board but I had to find money for everything else like books and airplane tickets to get to and from school. Sure it would have been nice to have had $8,000 upon graduation but I was happy enough that I'd gotten the education and graduated without debt.
That's a good idea. That way she's thinking of further education rather than a world tour.
I've also been considering some kind of grade-related incentive, but would be a little worried that might steer her toward less challenging courses.
Chicken lady
8-8-16, 4:02pm
My oldest got a full ride. We were just able to surprise her by offering to pay for her dh's last semester because - thanks to that full ride - the pretax education savings account has more money in it than the baby will need in the next two years.
she is very grateful. (I can tell, because I've talked to her three times since and every time she brings up how she didn't expect this and how much they appreciate it, and how huge a stress relief it is. - makes my mommy heart happy!)
I thnk it is important to specify how long you will pay for college, how many years she may take to finish.
Going straight through 4 years any more isnt as common as it once was. 5-6 years to get a Baccalaureate degree may be the thing now.
Now that you mention that, our flagship State U. is so crowded that a sizable percentage of the students have trouble scheduling the courses needed to finish in four. I was thinking of a shrinking fund based on four years of expenses, but maybe I'll need a contingency clause.
To be a father is to worry.
I think your kid is going to turn out fine.
My oldest got a full ride. We were just able to surprise her by offering to pay for her dh's last semester because - thanks to that full ride - the pretax education savings account has more money in it than the baby will need in the next two years.
she is very grateful. (I can tell, because I've talked to her three times since and every time she brings up how she didn't expect this and how much they appreciate it, and how huge a stress relief it is. - makes my mommy heart happy!)
Thus perhaps illustrating the advantages of helping your kids when they need it most over waiting until you're gone and they're perhaps in less need?
I think your kid is going to turn out fine.
Some days I think that. Others I think she's "one lab accident away from becoming a super villain". You can't help worrying about the worst case scenarios.
Some days I think that. Others I think she's "one lab accident away from becoming a super villain". You can't help worrying about the worst case scenarios.
Nothing will stop you from worrying. But I think you got this one under control!
Nothing will stop you from worrying. But I think you got this one under control!
If you're not worrying you're doing it wrong.
ToomuchStuff
8-9-16, 1:18pm
Something else to think about. I have heard it best said, that money accentuates, and rarely changes a person.
Something else to think about. I have heard it best said, that money accentuates, and rarely changes a person.
That is something to think about..... Hmmmm, I would tend to agree. Spendthrifts spend, savers save, frugalistas are frugal and thoughtful spenders, investors invest, simple livers live simply...
Teacher Terry
8-9-16, 5:34pm
Some people are made lazy by inheritances and quit working, etc. Then the $ runs out and they have to return to work and face reality. I have seen a few people do this. What a waste! They then have nothing for retirement.
Some people are made lazy by inheritances and quit working, etc. Then the $ runs out and they have to return to work and face reality. I have seen a few people do this. What a waste! They then have nothing for retirement.
I don't personally know anyone who inherited enough to afford to become lazy but I can see how that might happen. Personally I don't think that would have happened to me because I've never been especially lazy and I've always been somewhat frugal. By the time I inherited money when my father passed away a couple of years ago I'd already figured out how much money I felt that I needed to save for retirement. The inheritance combined with what I'd already saved still left me short of that goal so I just put that money away and continue to work and save. It's not as though I was living paycheck to paycheck or depriving myself of luxuries that I felt that I wanted or needed, so it didn't really occur to me to do anything different. If my parents had died 25 years ago when I was just getting out of college perhaps I would've made a different decision.
We really can't control anyone except ourselves. I don't bother with what others do with an inheritance. That's their choice. It doesn't effect me in any way. If they want to waste it according to my belief system - so what. People make decisions different from my beliefs all the time. The source of their money is irrelevant to me.
I also find it silly to try to control how ones own estate is handled after death. We're obviously gone and will have no control nor knowledge of it.
It's best to gift ones estate before dying, over a period of time, if one wants to control it. Otherwise, why bother with it. You're not there so why does it matter?
ToomuchStuff
8-9-16, 11:53pm
I also find it silly to try to control how ones own estate is handled after death. We're obviously gone and will have no control nor knowledge of it.
So no will then, and you don't care if the government takes a big chunk of what you leave for taxes or administrative fees?
No I didn't say not to have a will. I simply said that it's silly to worry about exactly how people spend the money once you're gone. And if you really care about how they spend it, then give it to them with stipulations before you're gone.
We really can't control anyone except ourselves. I don't bother with what others do with an inheritance. That's their choice. It doesn't effect me in any way. If they want to waste it according to my belief system - so what. People make decisions different from my beliefs all the time. The source of their money is irrelevant to me.
I also find it silly to try to control how ones own estate is handled after death. We're obviously gone and will have no control nor knowledge of it.
It's best to gift ones estate before dying, over a period of time, if one wants to control it. Otherwise, why bother with it. You're not there so why does it matter?
It matters. I think we have a certain duty of stewardship for the wealth we accumulate that includes planning to do the most good we can with it after we're gone. Whether that includes trying to guarantee the best outcomes for our loved ones or helping causes we believe in, a little planning beforehand has the potential to do a lot of good. And as ToomuchStuff points out, minimizing the friction of taxes and administrative costs can be very important in that planning.
Solipsistically deciding that it doesn't matter what happens if I'm not there to see it strikes me as somewhat short-sighted.
Then why not give it away while you're still alive so you can control how it is used? It is true that once you're dead you lose complete control no matter how philosophical you are about a responsibility in that regard.
My larger point a few posts up is that we have no control nor responsibility for how others spend an inheritance that they have received, while we are simply watching it unfold. That's how this thread originally started – what to do about those who waste an inheritance. Well, that is someone else's saga, and I have no control over that so I don't waste my emotions over those situations.
Then why not give it away while you're still alive so you can control how it is used? It is true that once you're dead you lose complete control no matter how philosophical you are about a responsibility in that regard.
My larger point a few posts up is that we have no control nor responsibility for how others spend an inheritance that they have received, while we are simply watching it unfold. That's how this thread originally started – what to do about those who waste an inheritance. Well, that is someone else's saga, and I have no control over that so I don't waste my emotions over those situations.
Gifts during your lifetime are fine, but unless we know the exact date of our death many of us will still leave this life with some residual wealth to be disposed of. Why not exert oneself with a little planning to protect heirs who may have special needs, drug issues or even just poorly developed coping skills? I don't see caring for them as a "waste of my emotions".
Gifts during your lifetime are fine, but unless we know the exact date of our death many of us will still leave this life with some residual wealth to be disposed of. Why not exert oneself with a little planning to protect heirs who may have special needs, drug issues or even just poorly developed coping skills? I don't see caring for them as a "waste of my emotions".
Tammy is not saying, IMO, not to make special provision where there is a need. In fact, she is stressing to make provision and donations while one is alive as one will need to do to ensure that those with special needs do get the benefit. Plan ahead so that whatever is left is disposed as one wishes as part of one's will! Don't let oneself get upset if someone has failed to do so. It will change nothing.
I agree with her completely that once a person has died, all opportunity to control use of funds by those who inherit is gone if no preplanning thought is taken. Even with care, some people who inherit funds who have little skill in managing such benefits will still misuse and abuse.
If you see other family members or friends fail to plan regarding inheritances, don't stress if the heirs abuse or fail to appreciate their largesse. That's what I got out of Tammy's posts which is in line with the thread as started by the OP.
I started this with just an observation that it's a shame that what others build through incredible hard work over time sometimes just disappears, and of course it's true that if you can't take it with you, it's going to disappear in one way or another. I guess I feel it's almost disrespectful to the person who entrusted you with their leftover life energy to just blow it.
In terms of how to prevent lack of proper stewardship (which is a great way to put it, LDAHL), I think some safeguards are appropriate. I mentioned that my grandfather funded my college education--he had instructed in his will that the money he bequested to family members under 30 could ONLY be used for either health or education. His rationale is, people are probably more likely to be careless with money in their 20s. Of course, irresponsibility is not just for 20 somethings--but this was his way of trying to minimize his money being spent on superfluities.
Teacher Terry
8-10-16, 2:52pm
As for my 2 friends that really wasted their inheritances it does not stress me out, etc-I just think it was dumb. One guy was able to not work much at all (self-employed) for 10 years and then had so little $ and work that he asked to move into our guest room for awhile-hell no. someone else felt sorry for him and gave him 2k which allowed him to rent an apartment and then he hustled for enough clients to pay his bills. He was 59 at this point. now a few years later he is doing ok but his uncle is in his 90's and now giving him 10k/year. I hope he learned something from the past.
Razz - good job explaining my thoughts.
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