UnThreaded | Threaded | Whole Thread (12) | Ignore Thread Prev Thread | Next Thread
Author: Jacketfan Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75340  
Subject: Passing on Assets to Heirs--Goal or Consequence? Date: 11/20/2001 11:13 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 4
Something I've been wondering about lately. I see in financial articles all the time where people being profiled say a goal, among others, is "to leave some assets (home, money, stocks, etc.) to children, grandchildren."

I personally view this as a necessary consequence of having enough money to live on comfortably throughout an undetermined length of retirement with an uncertain ROI. If things go according to plan, we'll have assets left when the last of us die because we'll have been living off the investment income to that point. My children, grandchildren are welcome to it, but to be honest if I could spend it all before I die (to include charity), I would.

To a lessor extent I view college savings the same way. I plan to have very small college savings available for my two kids (unless something unexpected happens and I get rich.) I'll be concentrating on retirement savings for myself in the mean time. If my kids get scholarships, they can go wherever they want. Otherwise they will go where we can afford given my small savings and financial aid applications.

My view probably comes from my upbringing which included (and does to this day) absolutely NO possible inheritence from anywhere. In fact, we'll probably end up supporting at least one of my wife's parents later in their life. And I used scholarships/financial aid for college. Heck, we even paid for our own wedding (though I plan to cover that for my daughters.

So just wondering what other's feelings on this are. Looking for replies from different age groups (I'm 31 w/ two 3 year-old kids.) And looking for some background on why you feel the way you do (upbringing, etc.)

Thanks in advance,
- Tom
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post Back To Top
Author: decath Big gold star, 5000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 32592 of 75340
Subject: Re: Passing on Assets to Heirs--Goal or Conseque Date: 11/20/2001 11:36 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
I am with you all the way! Here is how my wife and I plan on taking care of the two points you mentioned:

College expenses: I'll give them guidance, allow them to live at home and of course take advantage of scholarships and tax credits/deductions. But they will have to come up with the rest. We are blessed with having several community colleges and 3 universities within 30 – 60 minutes from our home so they could easily live at home. Also, our 1st two are in high school and standout athletes and will have a shot at scholarships. There are so many ways to get around the high cost of college without getting loans such as military service. If they decide to become doctors or lawyers then they will have to figure something else out. In our case, my wife has been home with them all these years so there just was not enough left over to put into a college fund. Because of the other ways to pay for college, we opted to fund our retirements instead. I worked in a restaurant 3 years in HS and 4 in college and graduated with a computer science degree debt free! I think Americans tend to spoil there kids by allowing them 4 years off goof-off time in college when we pay there way or get them loans. Then they pay for it dearly when they graduate with 10 –15 years of loan repayments.

Inheritance: My wife and I will not receive anything from anybody and take pride in the fact that we have accomplished what we have for the most part by ourselves. We should retire early in 10 years at the ages of 50 and 47. I plan on spending most of my money on us and what is unused will go to charities. We will leave a small % to our 3 kids. I want them to earn their own way in the world and feel the tremendous accomplishment of doing it on their own!


decath


Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post Back To Top
Author: pjh83 Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 32595 of 75340
Subject: Re: Passing on Assets to Heirs--Goal or Conseque Date: 11/20/2001 12:55 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
Hello Tom,

I suspect a person's age has a lot to do with the idea of passing on a legacy. This idea seems to become obsessive at about the same time one starts thinking about funerals and burial sites. I also know that the possibility of a bequest can become a disruptive family control thing. And what does it really accomplish?

I think financial planners are trained and ready to focus a lot of energy on this point. At least you don't have to worry about it unless you want to. As you suspect, if you duly plan for your own retirement in an uncertain world, you will most likely have some left over at the end. Try financialengines.com to get a concrete example for yourself.

Regarding college, that is a harder choice in my mind. Yes, your own retirement comes first. But I was lucky to have support for my own education and did put it to good use, despite all initial appearances and expectations. Therefore I would hate to lock out the option. If nothing else, I hate the idea of a new graduate saddled with a student loan - sets a terrible example. That being said, I suspect much of the college money spent nowadays is utterly wasted, I really don't care if my own kid goes or not even though the cost is not an issue, and a hard line approach is very defensible and possibly sufficient.

Two cents from the previous generation - good luck


Print the post Back To Top
Author: fsidgad Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 32599 of 75340
Subject: Re: Passing on Assets to Heirs--Goal or Conseque Date: 11/20/2001 2:12 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
If you want to read an interesting book along the line of what you are thinking, buy the book "Die Broke." I got it for Christmas last year and it makes for great reading about retirement and inheritances.

JackBD

Print the post Back To Top
Author: JAFO31 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 32600 of 75340
Subject: Re: Passing on Assets to Heirs--Goal or Conseque Date: 11/20/2001 2:43 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
Jacketfan: "Something I've been wondering about lately. I see in financial articles all the time where people being profiled say a goal, among others, is "to leave some assets (home, money, stocks, etc.) to children, grandchildren."

I personally view this as a necessary consequence of having enough money to live on comfortably throughout an undetermined length of retirement with an uncertain ROI. If things go according to plan, we'll have assets left when the last of us die because we'll have been living off the investment income to that point. My children, grandchildren are welcome to it, but to be honest if I could spend it all before I die (to include charity), I would."


Well, you leave a bequest to charity (and little or nothing to you children and grandchildren), so I do not think that it is a "necessary consequence". I do agree that you will likely have an estate, given your explanation, but that does not mean you cannot spend it via will (or trust).

"To a lessor extent I view college savings the same way. I plan to have very small college savings available for my two kids (unless something unexpected happens and I get rich.) I'll be concentrating on retirement savings for myself in the mean time. If my kids get scholarships, they can go wherever they want. Otherwise they will go where we can afford given my small savings and financial aid applications."

I agree that saving for retirement should take precedence; as NellieD is fond of reminding us, lots of people will loan money for school loans, almost no one will loan you money for retirement. Or your kids my choose to borrow money if their preferred school is not covered by your "small savings and financial aid application," after all, they will have hit legal maturity by then.

"My view probably comes from my upbringing which included (and does to this day) absolutely NO possible inheritence from anywhere. In fact, we'll probably end up supporting at least one of my wife's parents later in their life. And I used scholarships/financial aid for college. Heck, we even paid for our own wedding (though I plan to cover that for my daughters)."

I am sorry, I just do not understand the I had it tough, so I want you to have it tough school of thought WRT to college educations. Like you I took advantag of scholarships and fincial aid, and I worked, and I borrowed money and my parents contributed some, too. I was appreciative of wha my parents did, I certainly appreciated the scholarships and unrestricted aid, and I also appreciated the loans, too, for they made some things possible for me that would not have been necessarily available to me elsewhere (or only with considerably more difficulty).

I also do not understand the wedding extravanga mentality, but I could never compete in the how low can you go LBYM weddings costs. If that is really the goal, then a license, a ring (or two), and a JP fee is all that is technically necessary; everything else (including a "wedding dress" or a reception is a want).

Regards, JAFO



Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post Back To Top
Author: walnutstreet Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 32601 of 75340
Subject: Re: Passing on Assets to Heirs--Goal or Conseque Date: 11/20/2001 2:50 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 2
Hi,
I thought that I would put in my thoughts,since you asked.

I was raised by wonderful parents who gave me all they could and it was a lot like what you propose for your kids.

I was financially able to do a little more for my kids. I paid for their college education. Mostly, because I thought of it as their 'great adventure'. I know they both appreciate the education and both did well in school and since in their work lives. I am not sure if it was the BEST thing for them, it did not appear to damage them.

I will leave them whatever my wife and I don't spend in our early retirement. I have been out now for a year and a half and the stock market isn't contributing to their estate very well right now.

Thats my story and I'm sticking to it. (-:

Pat


Print the post Back To Top
Author: lynch93405 One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 32606 of 75340
Subject: Re: Passing on Assets to Heirs--Goal or Conseque Date: 11/20/2001 4:32 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
I'm still fairly young (at heart at least). I am 27 and in grad school. First my parents: they won't be leaving me much; not b/c they are mean, but b/c they aren't financially savvy. They did help with school a bit, though most money came from scholarships etc.

I plan to leave two things for my children: assets and knowlege. I don't want my children (or grandchildren or greatgrand...etc.) to have to work. While I know I will be working for most of my life, I plan to accumulate enough passive income that my children might not have to. I will be very generous with my children - sharing my knowlege of how to manage money etc.

Sorry for the rambling. I'm a bit sleepy. Anyway, I want to pass on a large inheritance to my children. I hope to pass on most of it to them well before I die.

lynch

Print the post Back To Top
Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 32610 of 75340
Subject: Re: Passing on Assets to Heirs--Goal or Conseque Date: 11/21/2001 1:19 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 6
I guess I've got a bit different view. My parents paid for my college education, as well as my younger brother and sister. (We were all on our own for grad school.) But none of us took advantage of their generosity. We attended state universities, which really kept the costs down. My brother's was a bit more expensive - he did some work to pay for part of his education. I can't say that having our education paid for has ruined any of us.

I hope to do the same for my son. But he's got bigger issues to deal with. He'll be 2 in a couple of months and was recently diagnosed with cerebral palsy. We don't really know what his ultimate ability level will be yet, although he is noticeably less involved than many of the other children we see at his various therapy sessions.

I don't know how well he will be able to care for himself or earn a living. So our current plans are to leave as much to him as we are able. It looks like his grandparents from both sides will help out, as they did a good job planning for their own retirements and will likely leave some legacy (many years from now!! - I'm not in a rush!!).

I can't help but think of the Proverb: A good man leaves an inheritance for his children's children, but a sinner's wealth is stored up for the righteous. (Proverbs 13:22 if you're interested)

--Peter

Print the post Back To Top
Author: Jacketfan Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 32612 of 75340
Subject: Re: Passing on Assets to Heirs--Goal or Conseque Date: 11/21/2001 10:59 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
Thanks for all the opinions. Just trying to get some discussion going. And maybe the tone of my post was a little harsh. To address one reply's concerns, I don't so much subscribe to the "I had it tough, so you should too" mentality. Just that since I was able to get by, my kids should too IF it becomes necessary. I actually plan to do all I can to help them through college, as long as it doesn't interfere with my retirement plans.

I didn't mention they'll be private schooled up to that point. My wife is a firm believer in it (even though she went on financial aid while we'll foot the bill ourselves.) So given that the cost of 13 years of private school will be paid by me, I certainly won't feel bad if they have to kick in some for post-secondary.

Thanks again,

- Tom

Print the post Back To Top
Author: donbellphd Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 32632 of 75340
Subject: Re: Passing on Assets to Heirs--Goal or Conseque Date: 11/25/2001 3:17 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
I don't understand the positions espoused by jacketfan and decath. Having children is not a requirement. They could have remained childless and used all their funds for their own purpose. We sure don't need the population increase, so they' re not doing society any favor.

A primary consequence of education may be employability, but I hope that's not seen as its only or even most important value.

Obviously my opinion.

db

Print the post Back To Top
Author: wisenlucky One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 32639 of 75340
Subject: Re: Passing on Assets to Heirs--Goal or Conseque Date: 11/26/2001 10:12 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 2
donbellphd:

I don't understand the positions espoused by jacketfan and decath. Having children is not a requirement. They could have remained childless and used all their funds for their own purpose.

Actually, I understand jacketfan's and decath's positions much better than those who hope to provide so well for their children and grandchildren that they won't have to work.

I don't think that requiring a child to provide (at least partially) for his or her own education is punishment in any way, or that it represents selfishness on the parents' part. Quite the contrary, it would allow the child to start productive life knowing that achievements are worth striving for. How much help to provide is a very personal decision, but I agree with those who hold that the parents' retirement savings must come first. If you want to place a drag on your childrens' lives, just make them have to provide for you in your retirement (spoken from experience as regards my spouse's parents).

As to other funds provided, either financial help beyond an education or providing an inheritance, I am firmly on the side of holding back. I have read too much about how this can actually damage the adult child's ability to provide for themselves. Inherited wealth seems difficult to hold on to, and I think that's because the skills to manage wealth are highly correlated to the skills to obtain it. I would much rather teach a child how to save than to maintain.

Again, just my opinion.

WiseNLucky



Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post Back To Top
Author: donbellphd Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 32652 of 75340
Subject: Re: Passing on Assets to Heirs--Goal or Conseque Date: 11/26/2001 11:03 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
WiseNLucky,

While I mostly agree with your comments, I do think parents have a responisibility for the education of their children, and I would hope most parents want their children to achieve more than they could, i.e., stand on their shoulders. I suppose all of us can drag up visions of spoiled rich kids, squandering the family fortunes, but I prefer a vision of children who use their parents' accomplishments to accomplish even more.

If you experienced aging parents who had not planned or provided for themselves, that is indeed unfortunate, but a narrow premise for reasoning. As a parent, you could always fall back on the notion that you needed to preserve all your money to fund however an elaborate retirement you might imagine, and let your kids fend for themselves--self made men are tougher, and all that cant.

I would like couples think more about the responisilbity they are assuming before they have children, and that responsiblity includes not only providing for the education of those children, but ensuring also that they will not be a drag on them. As in most things, moderation is probably the answer.

db

db

Print the post Back To Top
UnThreaded | Threaded | Whole Thread (12) | Ignore Thread Prev Thread | Next Thread
Advertisement