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Here is a topic which really bugs me lately, and I have not seen it discussed anywhere: Suppose you had a fat chunk of inheritance to leave, for argument's sake say a quarter million. And the nearest relatives will be nieces, nephews and the like -- they didn't have too much money wisdom in their upbringing. We would like to improve their lives monetarily but believe dumping a windfall in their laps, at any age, will create difficulties in money management. In other words, people have some tendency to waste it unless they are the "Millionaire Next Door" types already.

A trust would serve to attach conditions to an inherited amount, but how many conditions are really wise to apply? I don't want to change their life to playboy status, I really don't want to buy their Corvette or other wasteful squandering. Instead would like to amplify whatever life choices they make, while keeping them working so they will have the skills to earn a living no matter what eventually comes.

I'm toying with the idea of something analogous to the Earned Income Credit in the IRS tax code. Matching some portion of income they already earn, with the modest social engineering goal of strongly encouraging them to get and keep paid employment. Perhaps 50% matching like a 401-K system, up until an arbitrary income ceiling -- and it would be OK if the trust ran out of money after 5-15 years. By that time they would already have learned to save and invest for themselves, or they would probably never learn.

The main point of my wondering is, what would be the unintended consequences for such rules? Would it be even possible to have a simple set of trust rules which would help and do no harm? I am interested if anyone has heard of any book on the philosophy of such giving, or if I am supposed to get all my education from an attorney (yech!).

Any comments would be very welcome. -- C44
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You want a living, generation skipping trust so that a lump sum is never handed to them. If you skip enough generations, just the income will be used. YOu can leave a lot of discretion to the trustee, or tell him exactlyl what you want, but generally just stating the facts in the trust and tell the trustee to use his judgement. After all, one of them may really need a lot of help.

You don't have enough to make a corporat/bank trustee, so you'll have to find one or more individuals you trust, and then provide for successor trustees. It's not easy.

ed
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(C44:) Matching some portion of income they already earn, with the modest social engineering goal of strongly encouraging them to get and keep paid employment. Perhaps 50% matching like a 401-K system, up until an arbitrary income ceiling -- and it would be OK if the trust ran out of money after 5-15 years. By that time they would already have learned to save and invest for themselves, or they would probably never learn.
__________________________
I'm not sure how much "social engingeering" you can do without making things really complicated. If you were thinking of giving them a "bonus" distribution based on earned income, that would be counter-productive, in that it would act to deplete the trust in the years they make the most money from other sources - not what you want(?)

I'd suggest something like giving them annually:

(1)the trust's income, which could be based on a unitrust amount (a % of trust assets, regardless of actual cash income; and

(2)an additional amount, from principal, but capped at a fixed amount, say $20,000. This would keep them from blowing the principal too soon.

It gives them the incentive to invest the trust funds prudently, and not to rely on it for too much of their living expenses.

Bill
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I would consult several different professionals(attorneys and a really good accountant) to get ideas. Trusts can be very simple or complex, it's up to you. But I agree, one of them may become disabled or whatever and have unexpected needs, the trustees need to have flexibility and yet have guidelines (to protect the trustee) in case one of the "kids" turns out to have a drug problem, etc. This does happen. And they may actually need the money more as they get older so 5-15 years may not be the best idea. I am re-designing revocable trusts for my kids so these issues are fresh in my mind. My best professional ally has been a fabulous accountant who has kids and understands the real life issues of drugs, divorce, disability(physical or mental), laziness,etc. Attorneys that specialize in estate planning should also consider these issues also. Free (short) consultations may be the way to go, I have actually run into attorneys that understand.I think it is good that you are thinking this through carefully, so as not to do more harm than good. Annrose555
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>>If you were thinking of giving them a "bonus" distribution based on earned income,
>>that would be counter-productive, in that it would act to
>>deplete the trust in the years they make the
>>most money from other sources - not what you want(?)

That is JUST the kind of thing that I DO WANT. My concern is not to provide them a stipend that lasts forever. One of the lessons I most want to convey is to look out for themselves, to OWN their own future. This will be better served by a series of impressive gifts based on their productive behavior, and they should expect it will run out at some uncertain time in the future. Just like everything else in real life.

If you will be so kind, I am more interested in exploring the philosophy than the mechanics of how it is done.

Do you all know the bones of the "Millionaire Next Door" story? My nutshell synopsis -- if a person can learn to curb their material consumption, they will live below their means and every year can add to savings. It scarcely matters how much income they have, over a few decades of compounding a person can become a millionaire. Albeit one who probably will not appear so to their neighbors.

On the other hand there is no limit to a person's ability to waste, to spend 101% of their income every year. I would call it a mental problem, we might name it "stuffitis". Such a person will always have fear in their lives from just how close they are to financial ruin. I would be most proud if I could influence people to steer their lives the farthest away from that course.

In my thinking there are relatives who grew up in families which have not taught this whatsoever, instead their parents have illustrated what not to do. Giving a bundle of money to a person who retains those habits, would be perhaps pouring it down the toilet. Hence my emphasis on taking productive behaviour and trying to subsidize that.

I can imagine some people saying there are other forms of productive behavior than sheer earnings. That is true. I would try to make adjustments to a degree, for that. 'Nuff said I hope.

Best wishes -- C44
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I'm toying with the idea of something analogous to the Earned Income Credit in the IRS tax code. Matching some portion of income they already earn, with the modest social engineering goal of strongly encouraging them to get and keep paid employment. Perhaps 50% matching like a 401-K system, up until an arbitrary income ceiling -- and it would be OK if the trust ran out of money after 5-15 years. By that time they would already have learned to save and invest for themselves, or they would probably never learn.

I think you are off to a very good start. This is your money so don't feel guilty or wrong for making it as complicated as you want it to be.

I hope to do the same one day with any wealth I have at the time of death - I want to create a legacy that will last for a generation or two. I want the money to be enough to be helpful and a reminder of what you can do if you save, and not enough so that they make any changes in their need to work for a living.

I like the idea of a match up to a certain percentage like a 401K. But at the same time, I would want to encourage them do what they love and not have the sole goal of making the most money - I would rather have them be a great and caring social worker making 30k a year than a miserable corp middle manager simply because it gives them 80k a year.

I would not be surprised if there are books available online that cover ideas for trusts of this nature. Best of luck in your search and keep us updated on what you learn.
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Perhaps 50% matching like a 401-K system,

--------------------

A 401k typically matches the first x% of what you contribute.

How about making yours start matching after the first x%, ie they must first save x% of their gross all on their own, then if they save more, your trust will match it dollar for dollar mabe up to some secondary limit.
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BigHairyDude -- your suggestion was unexpected. Thank you so much, finding unexpected ideas was my greatest hope for this thread.

Hawkin --
>>I would not be surprised if there are books available online that cover ideas for trusts of this nature.

If you find one, please please PLEASE post its title to this board and if you don't mind, check that box that gives me an email of that post. So far I have not found any, maybe that reflects badly on my ability to search.

>>...I would want to encourage them do what they love and not have the sole goal of making the most money - I would rather have them be a great and caring social worker making 30k a year than a miserable corp middle manager simply because it gives them 80k a year.

My figuring is that amplifying their earnings would allow for a *better* life as social worker if that's their choice. Someone who makes that a career is fully aware they are foregoing some income, so it is my thought that person would not mind foregoing some matching income. Additionally, some relatives might be handicapped and in that situation, the gift element might be more needed than otherwise.

>>I want the money to be enough to be helpful and a reminder of what you can do if you save, and not enough so that they make any changes in their need to work for a living.

Amen to that, exactly my thinking on this. One of my main worries is the philosophical question of how to write simple rules that don't have unexpected consequences.

>>I want to create a legacy that will last for a generation or two.

I am aiming instead for enough time to change someone's life for the good. If they know how to LBYM "live below your means", much of any windfall could be saved for the future and very well might. The dynamic of LBYM far outweighs the dollar value of what I can do. You can try to teach LBYM but perhaps a series of windfall gifts would teach better than words, probably rather better than a single windfall. If there is a multi-year series, one has an opportunity to do-over next year and do it better.

The future is inherently uncertain and I am not trying to change that -- therefore it is OK for me to use up the capital in 8-10 years. The business of trust (and retirement account) management means mathematically there is a very fine difference between lasting forever, and using up all your capital in a few years. A withdrawal rate of 4% annually is necessary to guarantee not eating up all the capital, however if one withdraws 8% there is (I am guessing) maybe a 25% chance of lasting a very long time. Since I am thinking of gifts and not a lifetime annuity, it seems appropriate to me to roll the dice and risk a shorter giving period. Life is not guaranteed, why should this be?

The right answer in my mind is, if the recipient learns to LBYM and save and invest, they will have much less risk of spending themselves into bankruptcy. There is survival value in worrying about the future but if they do, their older years can be way richer than otherwise.

Best wishes -- C44
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No idea if these would be helpful but you can look them up at Amazon.com

Spending Grandma's Inheritance
The Complete Book of Wills, Estates & Trusts: Third Edition
Special Needs Trusts: Protect Your Child's Financial Future
Inheritance (Mass Market Paperback) - available for as cheap as $.01
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Hi, C44

I really recommend Best Intentions by Colleen Barney & Victoria Collins. It doesn't go into the how-to's too much, but it has a lot of stories of how things can turn out differently than intended and makes you think about what your intentions are.

http://www.amazon.com/Best-Intentions-Colleen-Barney/dp/0793151961/sr=1-1/qid=1162433377/ref=pd_bbs_sr_1/102-6887678-0177734?ie=UTF8&s=books

maddiemcwa

p.s., I also read Beyond the Grave, which Amazon lists as a companion book, but I don't recommend that one.




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I've been following this thread since it started, and mulling over how I feel about it, and I finally have to throw in my two cents. I'm assuming that the nieces and nephews that Curmudeon44 will leave his money to are still not adults, which is why he doesn't know whether or not they will turn out to be responsible adults.

I'd like to suggest that 10 or 20 years will make a huge difference in everyone's circumstances and development. Trying to figure out how to give money to people years down the line based on how much we think they will deserve it is a big mistake. Boy, our son was a real horror as a teenager, but now, in his late 30's, he's a responsible adult with a terrific income. One of our daughters got her bachelors at Yale, graduated from Harvard Law School, and went on to get a PhD from Berkeley. She now struggles along financially as a professor of Sociology at a salary of about $50k/year - does she "deserve" to inherit less from me than our son because she earns less than half what he does?

I feel it's a tremendous mistake to try to control the people we love from our grave. For one thing, it's impossible! At worst, it'll create bitterness and discord between them.

If you want to influence the values and character a person develops as an adult, the time to accomplish this is to take an active part in his or her life while you're still alive. Pay his tuition or student loans. Help him buy a home or start a business.

My suggestion for now is this: take your "pile" and divide it in whatever proportion you want among the kids of your choice, but stipulate in your will or trust that they each get 1/3 of their inheritance at age 25, 1/3 at age 30, and 1/3 at age 35. You can change those ages if you want, but some money at 25 can help a kid get started in life, and by age 35 their character is pretty much as developed as it's going to be.

I also want to mention that Curmudeon44 is still alive and kicking, and that wills and revokable trusts can be amended any time he wants so long as he's competent. He can always eliminate a beneficiary from the list, or leave a little extra to someone he wants to.

Trini
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C44...GREAT TOPIC!!!

We too have been wrestling with this issue. It sounds like you are someone who has made it on his own and desires to instill the same values and drive upon your loved ones. We have all heard the horror stories of parents, while attempting to help financially, actually are depriving their offspring of the incentive to achieve…and the subsequent joys of success.

Like you, we are searching for answers. Let me share some of my personal experiences…

We appreciate the value of education and consider this as money well spent. We paid for all college fees for all our kids and have subsequently set up 529 education plans for the entire family. These are not limited to the traditional (under 21) box of education. These funds (accumulated & distributed tax free) can be used for educational (only) needs at any age.

Also, as one of your other responders has mentioned, tying inheritance reward to one's financial performance is not always a measure of deservedness (is there such a word?). All our kids graduated form elite colleges but have taken different paths. One has given up teaching to pursue full time firefighting, another gave up the opportunity to attend medical school to assist the underprivileged in 3rd world countries, the other started his own very successful law firm. All work hard and are “successful” in their own fields, but their incomes cannot be compared.

Instead, we make individual judgment calls, and assess needs accordingly. We view ourselves as the safety net. Our gifting is intermittent, lest they become dependent (ala the U.S. welfare system). We offer attractive loans for the purchase of homes and (AS DIFFICULT THAT IT IS) do receive monthly payments. Our guilt is vindicated by making annual contributions to charity.

It ain't easy. Perhaps we should all follow Warren Buffet's lead (decimal points moved a bit) and eventually turn this responsibility over to full time professional management that we trust.

Hope this helps…thoughts…comments???

Jo
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Dear Curmie:
I have faced what perhaps is a similar situation at least from what I gathered in your writing. I absolutely identify with your wish to make up for the recipient's lack (of maturity, impulse control, etcetera) by delaying the inheritance, or metering out the dough over time or by conditions met. This applies to my sister and my daughter (although my daughter has matured remarkabley since I began this line of thought). It was frustrating to think they might squander a windfall, in a brief period of Dionysian revelry or just a stupid investment.

On the other hand an unintended consequence of controlling the rate and timeliness of the money is the recipient can end up delaying getting 'on the ball' with their life. They figure someday "my ship will come in." so what me worry.

In this sense it might be better to give over the money and well, let them have at it. If they blow through it then they are probably still young enough to recover from their folly. But if they waited until their forties to take the brevity of life seriously in hopes of the big chunk of dough well then there they are. Of course all this is hypothetical without the characters involved. Ultimately my conclusion is that what our children do with their lives (and our money after we are dead) is what they do (including nieces and nephews). If you can't stand those thoughts then don't give them any money.

That's my two cents.
John G
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Bear in mind that no matter HOW well you plan, there is a limit to just how much you can do to protect a person from their own stupidity...


SG
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I would give them money in small doses, while you are alive, and have them put it into Roths. Then, talk to them about their investments, the long term potential of the investments, and teach them about investing.

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I appreciate all the ideas you have given me. One thing which makes me feel really uncomfortable is a form of gift giving which is translatable to "Net Present Value". If the heir can say "well when I turn 30 next year then I will have $XX,XXX" that enables them to live far beyond their means knowing a bailout is coming. It also could be the subject of a promissory note which probably would be a way of pissing it away in advance. If that were required, I would strongly consider leaving it to a charity instead.

Much of this thinking came about considering the future of a now deceased daughter, who was mentally handicapped and may well have had a career working at McDonalds or the like. My rough plan would be to let her live like her job paid $25/hr when she actually earned $7/hr (in her case the inheritance would be worth rather more than $250K). I would think her life much better lived if she got out of the house each day to work, and of course work through all the social interactions that implies.

Now looking over the nieces and nephews we have, some are so smart and well raised that I truly feel an inheritance would be pretty insignificant, and others are so poorly raised that it seems nothing financial could help them really. If a middle ground seems feasible, perhaps we could work with other relatives -- but I firmly feel that the lesson to LBYM would be worth far more than the dollar value of any gift.

The idea of a gift for a Roth IRA before our death, has appeal too. Of course the IRS rules for a Roth mean they have to have earned income. What do you think would be a second-best idea for a child too young to be earning?

Thanks and best wishes -- C44
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Curmudgeon44: "The idea of a gift for a Roth IRA before our death, has appeal too. Of course the IRS rules for a Roth mean they have to have earned income. What do you think would be a second-best idea for a child too young to be earning?"

529 Plan?

Regards, JAFO

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>>...I would want to encourage them do what they love and not have the sole goal of making the most money - I would rather have them be a great and caring social worker making 30k a year than a miserable corp middle manager simply because it gives them 80k a year.

---

C44 - I know you already responded to this, but I wanted to reiterate the point, since you asked about philosophy. What is your philosophy? To reward income? Or to reward hard work? They are not the same thing. And how would the social worker who got $5K feel knowing her sibling got $15K? Is that kind of inequality a lesson you want to teach? That somehow the higher earner deserves more of you money? Think about their feelings as well as the lesson.

Also, I was trying to frame my thoughts, and TRINI pretty much said what I wanted to say, and said it better than I could, so - thanks TRINI!

Think about unintended consquences of unequal payouts, for example:

- the kid who needs it most gets the least
- the kids resent you for a perceived lack of equality and fairness
- the kids have feelings towards each other that could range from guilt to resentment to superiority (depends on family dynamics, of course)

My other thought that wasn't mentioned yet - if you want to teach these kids/future adults lessons about saving and spending, WHY DON'T YOU DO IT NOW, instead of through a financial arrangement when you gone? Sit them down and talk to them about saving, investing, thinking long-term, and whatever other lessons you want them to learn. Personal interaction, to me, would be a much better solution than trying to manipulate their future behavior.

Just a thought.

Karen
(who, with no cousins, will get 1/2 of whatever my 2 aunts and uncles leave behind - hopefully for not another 30 years or so!)

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On the other hand an unintended consequence of controlling the rate and timeliness of the money is the recipient can end up delaying getting 'on the ball' with their life. They figure someday "my ship will come in." so what me worry.

In this sense it might be better to give over the money and well, let them have at it. If they blow through it then they are probably still young enough to recover from their folly. But if they waited until their forties to take the brevity of life seriously in hopes of the big chunk of dough well then there they are. Of course all this is hypothetical without the characters involved. Ultimately my conclusion is that what our children do with their lives (and our money after we are dead) is what they do (including nieces and nephews). If you can't stand those thoughts then don't give them any money.


Unfortunately, I have seen situations where the deceased gave money away to folks that both: 1) were waiting until that ship came in so that they could 2) blow all in a few months.

Recently a client that was living below his means passed away and left about 150K to his sister and his nephew. They had blown over 50K of it in a month by taking half the family to Disney World - first class air, stayed on the grounds in the 4-5 star hotel, for two weeks. I felt like crying for the dead client to see his live savings wasted so frivolously.

They could not even wait until he was in the ground to spend his money - they came were calling me about how to get it and actually came to my office the day of his funeral to see if they could get the money.

-----

I am still of the opinion that it is your money, make it as restrictive as you want it to be. They did not earn it and they should neither expect it nor need it.
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Whoa Nellie! Some posters are saying things which extrapolate too far. Just like the IRS Earned Income Credit, any proposed giving would probably have a ceiling. It should not be assumed Mr.100K is always going to get twice what Ms.50K receives. Part of this depends on what seems wise. Part from what my estate can afford.

A separate argument: if Ms.50K is limited in her ability to earn, or makes life choices that reduce it, what is wrong in gifting in proportion to the size of her life? I am trying to let the recipient pretend they live in a world where McDonalds pays $20/hr if that is the world in which they must work. There might not *be* any siblings, but if there are I would urgently want them not to fix the green eye of jealousy on what others have. Envy is pretty alien to the LBYM philosophy, if they cannot overcome it then I would prefer to give to a charitable organization instead.

Which brings me to the other thing that causes me to swallow hard. My ESTATE. I am not *done* with it yet, and it just goes against the grain to make millionaire type gifts when I don't know how long I will live, what major medical expenses might come my way. My philosophy is L.B.Y.M. but I want my "M" to be large too. Sure it's selfish, but I want to own the lion's share of my estate as long as I live.

While there is much virtue in trying to tutor a relative 10 states away, and making large gifts now, I think it may be discreet not to make a big argument of LBYM in front of parents who clearly don't. Getting into quarrels with parents about how to raise their children is an option I prefer not to take. In my opinion I must assume some point in the future when these children will be without parental support. Hence the estate concept.

I very much appreciate people's ideas both contrary and otherwise, there is a cacophany of people's philosophies, for what it's worth I am trying to stay close to the LBYM philosophy.

Best wishes -- C44
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I realize the difficulty with trying to teach LBYM now so I propose a letter upon your death.

In that letter, you should express your feelings of love for them as a family memeber as well as whatever strenghts you can already see in their personality. Then, tell them the same things (and more) that you told us about the millionaire next door - better yet, include a copy. Tell them the importance of not keeping up with the Jones, because the jones seem to just have more and more wealth the harder you work to keep up. Tell them why it's important, what's important about it, and HOW to do it.

Tell, them you think it's so important that you have set aside money for them to help them learn the value of saving and investing wisely. Encourage them not to squander the money you worked so hard to earn and save. Personally, that letter would mean a lot to me and thinking of it as money you earned and worked hard to earn and save would make me think twice about spending it frivolously.

I still think you need a plan so it's not all dumped in their lap too soon or at too early of an age, but the letter would help no matter how you decide to do it.

It sounds like you are looking for someone with your values to make judgement calls to determine who gets money and when and how much. The problem is, you don't seem to have anyone that will outlive you that you can trust to do that and a document can't do it for you.

keep brainstorming and hopefully people will come up with more ideas here too! I understand you want your handicappped relative to live better than the amount they are going to be able to make working - however, there must be other ways to do that. Maybe, money in a trust just for medical bills (if you forsee that being a drain) or a trust for rent?

I'm a SAHM, I appreciate all of the money i have. I work very hard to raise my children as best as I can. I live BMM and try and instill that value in them. I try and stretch the dollars by shopping sales and I single handledly manage all of our brokerage/401(k)/savings/checking accounts. I am hard working, ethical, and trustworthy - but based on your system, I'd get no inheritance because I have no earned income. That doesn't sound fair to me.

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>>> My philosophy is L.B.Y.M. but I want my "M" to be large too.

Exactly. The reward for years of LBYM should be treating yourself to those things you want and deserve. I can see leaving assets you depended on for income or as emergency funds, such as real estate (your house) or dividend producing stocks, to a trust or such, but excess cash should be enjoyed.

And when you decide to distribute, do so as you wish, not worrying about others' perceptions of 'fairness'. Play 'favorites' or 'most deserving' or 'most needy' as you wish, to do good. It was your sacrifice that led to the accumulation.

Matthew 20:15 "Is it not lawful for me to do what I wish with my own things? Or is it evil in your eye because I am good?"

Good luck,
Dave
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>>I'm a SAHM, I appreciate all of the money i have. I work very hard to raise my children as best as I can.
>>I live BMM and try and instill that value in them.

I need help with the acronyms please, beyond IRS and LBYM I get kinda fuzzy.


>>...based on your system, I'd get no inheritance because I have no earned income. That doesn't sound fair to me.

Unless I made a mistake, I didn't say "earned income" as if it were the only form of income. Certainly I would wish to support savings, education, marriage, etc. with my gifts appropriately. One consideration is income (including retirement plans and a couple other things) can be found directly on IRS forms, with pretty good fraud protection built-in -- that part keeps things simple. This is all so undeveloped to me, that I may need help figuring out what rules would not sabotage something perfectly worthwhile.

Thinking maybe I could imagine a half-dozen life themes starting with "working stiff", "stay at home mom", "altruistic worker", "long time student" and everything else until 99% of peoples' lives are covered. Viewed that way, perhaps simplicity is not out of reach. I hope.

Best wishes -- C44
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i have read through all of these very interesting responses and philosophies, and i must say sir, you have certainly given yourself
an apt screen name.

sincerely,
sashamore

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Curmudgeon44:

>>I'm a SAHM, I appreciate all of the money i have. I work very hard to raise my children as best as I can.
>>I live BMM and try and instill that value in them.

"I need help with the acronyms please, beyond IRS and LBYM I get kinda fuzzy."

Ask and sometimes you receive.

http://www.acronymfinder.com/
http://www.bized.co.uk/glossary/acronym.htm
http://www.irs.aber.ac.uk/acronyms/

And you know more than you think!

Thinking maybe I could imagine a half-dozen life themes starting with "working stiff", "stay at home mom" [a/k/a SAHM]," "altruistic worker", "long time student" and everything else until 99% of peoples' lives are covered. Viewed that way, perhaps simplicity is not out of reach. I hope."

Regards, JAFO
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If I felt I was being 'socially engineered' in order to recieve an inheritance, I'd feel quite resentful. Might even tell you/your estate to stick it. No one likes to be told how to live their lives let alone feeling like you're trying to manipulate them from the grave.

At best I would do the bare minimum to get my cut, and I'm not sure that leads to the end you were looking for.

Maybe set up a family scholarship for the minors, but for adults I'd give it as a gift with my love and wish them the very best.

If you're not comfortable with that, then perhaps a charity would be your best bet.

Jim
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Thinking maybe I could imagine a half-dozen life themes starting with "working stiff", "stay at home mom", "altruistic worker", "long time student" and everything else until 99% of peoples' lives are covered. Viewed that way, perhaps simplicity is not out of reach. I hope.

Hi, C44

Instead of trying to foresee every possibility, you could form different plans tailored to each beneficiary that would fit each person now and update them as their lives change. Whatever it's at when you die would be where it stands. Probably a similar scenario would fit several people, simplifying things a little.

You could also start having conversations with them now and even let them know that you were thinking of leaving some money to them and what your concerns are. By talking to them, you could gain a lot more insight into their attitudes and willingness to adopt a LBYM philosophy. LBYM is not a concept that is very prominent in our culture, so they may not have had much exposure it. It sounds like they could use financial/lifestyle mentor other than their parents--so the conversation could be the start of something more important than getting money.

Just a thought,

Maddiemcwa
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>>If I felt I was being 'socially engineered' in order to recieve an inheritance, I'd feel quite resentful. Might even tell you/your estate to stick it.

You might well resent the IRS but in the tax code there is social engineering woven throughout. Have you ever looked at the Earned Income Credit? Are you aware that 401K matching is directly a result of the tax code? Charitable contributions? Credit for teacher expenses? Child tax credit?

If you told me you rejected a tax benefit written into the IRS tax code, I would have a very hard time believing you. People just don't work that way.

My earliest idea was to do something like matching a person's earned income, or their investment gains, or something like that. Not exactly a heavy hand, is my intention (although even that may be too complex and expensive to administer). People will do what their lives what they will, and make personal choices about how hard to pursue the almighty dollar, and I would like to just give them more of what they choose.

But no, I have seen and heard enough tales of pissing away any amount of money straight down the toilet, that I am very wary of a big dollar windfall. ESPECIALLY for someone I love. Anything that weakens their ability to earn and learn and live their own life, such as a windfall enough to live on for 10 years, could be not actually doing them a favor in the long run.

With the alternative of leaving an estate to charity, at least there is some solid assurance that 80-85% of it will do good! Is that so hard to understand?


Regards -- C44
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"if i felt i was being socially engineered......i might even tell the
estate to stick it....no one likes being told how to live their lives
let alone...be manipulated from beyond the grave...."

BRAVO JIM!!!


happily i was in a financial position to be able to do that.

sasha


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Hi,

There is an entity known as Crown Financial Ministries that talks (on the radio) alot about leaving an inheritance to your kids without causing them to disintegrate. I know they have a web site but can't remember what it is. I believe they have a book or two on this subject.
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You might well resent the IRS but in the tax code there is social engineering woven throughout. Have you ever looked at the Earned Income Credit? Are you aware that 401K matching is directly a result of the tax code? Charitable contributions? Credit for teacher expenses? Child tax credit?

I would have more children just so I could have a greater child tax credit?

I take credits/benefits as they apply, but I don't change my life around so that I qualify. No social engineering in that.



With the alternative of leaving an estate to charity, at least there is some solid assurance that 80-85% of it will do good! Is that so hard to understand?

Not at all. I even suggested that it might be preferrable.



I'm not saying that your desires are right/wrong. But I am suggesting that giving consideration to potential emotional reactions may assist you in reaching your goal.

Jim
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c44:

thank you for your email... i am publicly apologising for my rudeness
in taking a swipe at your user name... that was uncalled for, and rather
childish.....i'm afraid that i took what you had to say far too personally, and no doubt my situation is quite different from that of
your heirs....

i must say that it disturbs me however, that you ASSUME the inheritance
will be, to use your words, pissed away... i understand that these are
not your children, and while it is extrememly generous of you to wish to
include them in your will, perhaps you dont know them well enough
to recognise that they may be people of character; ergo, you feel safer
exercising strict control...

my father was afraid i would either buy a ranch in my beloved kenya and move there, or else that i would fall prey to some dastardly fortune-hunter, or both, and so left me in an incredibly tight trust--(i was
48 yers old) with my mother as my trustee until she died 20 years later
at age 96.

my parents disapproved of my life style and tried to maintain tight control....(my mother used to say that the only way they could control
me was thru money)... but even with a restrictive trust they couldnt..

i had divorced my husband and took no alimony (just wanted out)..they disapproved..i left a highly prestigious job to open my own business with the 2 years severance pay i received, they disapproved,... sold my expensive park avenue apartment to buy a small affordable apartment in a less statusy neighborhood,..they disapproved.....PS: my biz is successful and i have lived very well and happily ever after.....
i have 3 warm and wonderful children, all in their 40's,` and i am
providing for them in ways that will give them opportunities to grow
and use their inheritances wisely as well as enjoyably.....there are no restrictions...i trust them and their integrity...

but i still resent the distrust and disapproval of my parents, and obviously that played a part in my irritation at you.

once again, i apologise for my rudeness in mocking your name.
but please, i urge you to loosen your grip a little...they will appreciate you more, and......
...managing money can be character building, y'know.

sincerely,
sashamore









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C44

I have been reading this thread with interest and thinking .... if your nieces and nephews are underage? This may be the best time to have some real influence on their lives as regards finances - which seems to be your intent.

I understand that some of them (one family) are several states away and have values which concern you. I assume that there is another family(s) with values of which you approve. (Personally, I hope that you treat them all equally as regards your will.) I also understand that you wish to retain your monies for your own unforeseen needs in the meantime. Completely reasonable and prudent. Do I have it right so far?

But back to those young people that you wish to influence? IMO, the time is NOW. Not later. And that influence may not require big bucks if they are currently underage. Under 20 years old would be great! (And in my mind it would not require equal treatment currently between those families (children) who hold your values and those that do not. Trying to influence NOW is different than inheriting later - as regards all those cousins.)

Anyway, my thought would be to consider matching THEIR savings. Paper routes, babysitting, lawn mowing, grocery carry out, whatever. Maybe set up savings accounts in EACH of their names - at a bank in their home town and fund each account with $100(?). With the idea that you'd match $ for $ any savings that they contribute to the account. That would require a letter from you to them. Laying out your plan. Your love and hopes for them. And keeping in mind Sashamore's comments. Nothing that would offend the parent's - because the parents will have to support (transportation, etc.) any jobs that the kids take on. It may not work.

Let me give you an example. I know "fellas" who have matched $ for $ any savings that their caddies (golf) make. There are fantastic success stories. But the parents get the kids to the course. That's huge in itself. And many days, caddys sit around for hours waiting for a job that doesn't come. That's awful. But, they better be back the NEXT DAY, or they're out of the loop. Little kids, fat kids, HOT days, tough members sometimes ...

But the "fellas" have ongoing contact with the caddies. Influence on a daily/weekly basis for a number of years. Put that savings incentive into place? - and a lot of times it takes hold. But there is already a work ethic of sorts in place. Right? And somebody getting the kid to the JOB. It's great training. And contacts.

I don't know how YOU can have real influence re kids and their values being 10(???) states away. But my advice FWIW is to try to influence their direction NOW. While you're living.

Leaving $250K later(?) is down the drain. And won't do diddly squat anyway. As you know.

Much tougher to think about how YOU can impact and influence their lives NOW. That's the tough stuff. Not the $$$ later. Too late, IMO.

Best and good luck ..... Lethean




















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My husband and I are working on our plan. We came up with a rough plan and decided to run it by our 4 kids (ages 18-25). We've now talked to 3 and and started talking to the 4th before getting interrupted. What is interesting is that they all think there should be stricter controls than what we came up with, which was them getting control at age 25.

Maddiemcwa
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well said, lethean......

//s
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My grandfather left a trust that grew huge (at least in my country bumpkin eyes) and part of it was because he was a great stock picker and part of it was because my grandmother was a VERY good steward of the money in the trust until she died at age 93. Until she died, I had no idea my Gram was wealthy and to be honest, I still don't know the size of her estate because money just isn't discussed in my family. My mom and dad (still living) got half of her estate and my 8 cousins shared the other half, since my uncle pre-deceased my gram.

Some of my cousins were careful money managers, some bought a life long dream (ie: a cottage on Keuka Lake) and some of them frittered most of it away on "stuff". It's been interesting to watch.

My parents have chosen to give their daughters small to large monetary gifts over the last several years. We never know when the money is coming and we never know how much money they're sending which adds to the fun of getting these windfalls but it also makes sure we don't depend of them for regular living expenses.

I think I've made good choices with my own income and the windfalls my parents have given me. (ie: fully funded Roth IRAs and no consumer debt except for my mortgage) I come from LBYM stock but no one ever talked about the importance of managing your money instead of it managing you so I've had to read LOTS of books, money magazines and probably most importantly, I bought a membership to the Motley Fool.

I love the ideas the people on this board gave about educating your nieces and nephews while you're still alive and possibly encouraging them to become more fiscally aware by matching their savings. I agree that this should be done in a small way since you should enjoy the fruits of your labor while you're still alive. But how about giving them their own subscription to Motley Fool if they're old enough or maybe give them financial classes at their local vo-techs? A financial education is a powerful tool.

They need to learn the power of managing their money and the differences between want and need while they're young. There's no time like the present and financially, it's a very small investment for you to make right now. As a totally hare brained scheme, how about an "Uncle Curmudgeon Summer Camp" where you add to their financial wisdom and as the big event, match what savings they've made through the year?

OK--I'll just put that little idea away for when my future grandchildren are old enough to attend camp.

Maureen5554
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Sashamore, I am really awestruck and humbled by the bigness of of your apology. And giving the basics of your story help us understand what awful experiences you must have gone through, and some of your feelings. If I had been a main actor in interfering with a grown woman's important life choices like that I would have a lot to feel guilty about. It must have been a horrorshow.

This feels awkward but needs to be said IMO: I believe you have introduced a toxin to this thread that cannot be eliminated. I see this thread as having run its course and now is in the phase of subject drift well away from its original intent. Unless something really remarkable comes up and surprises me, I will say goodbye to this thread.

Regards -- C44
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dear C44,

first let me say i am more than grateful for your generous and kind-
spirited first paragraph....i'm not sure i deserve so much good will--
i was, after all, rather a brat...

i am truly sorry that you feel my remarks poisoned the thrust of your
thread.....it distresses me greatly because i think there was so much of
value in the careful and attentive responses throughout....i learned some lessons, clearly you did,too; and in fact, i think each of the
contributors gave and received quite a lot.......

as for me, life was not so VERY difficult....i was an only child and only grandchild on both sides of a prominent family, and was well-off enough,thanks to various grandparents, that money per se was
not sa much of an issue as getting out from under and becoming my own person was...so, okay, i had to make certain choices, but every grown
up person does...

i ca hope that you found enough value in this thread to diminish any negative thoughts i regrettably placed in your way.

yours sincerely,

sashamore
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One good thing that has come from this thread is a couple of on-target book recommendations. Having read each of the two below, I can recommend them wholeheartedly as full of clues. They don't supply answers exactly, that must be assembled according to your own thoughts and wishes. But they each provide glimpses into how other people have faced challenges and dealt with them, sometimes successfully and sometimes not.

1) "BEST INTENTIONS -- Ensuring your Estate Plan Delivers both Wealth and Wisdom", by Colleen Barney and Victoria Collins. ISBN: 0793151961

2) "SPENDING GRANDMA'S INHERITANCE -- A probate lawyer's journey through estate planning and probate", by J.Mark Fisher. ISBN: 0977026205

The first one is the more linear book, with an overall sequence of 10 chapters and several brief stories in each, illustrating how people might see things in a surprising way. Titles are minimalist like "Ray's Story" or "Annie's letter". The stories seem to be slightly fictionalized which is not a bad thing, just a style choice. The authors appear to be relatively young (and inexperienced), which suggests to me they are projecting their own opinions more the next author. But the book is valuable overall and gives one some seeds for thought.

The second book begins simply with 78 anecdotes which pretty much speak for themselves, all apparently clients of the attorney. Titles are amusing one-liners like "Who owns my house?" and "Honey, the sheriff wants you". I call them "anecdotes" instead of "stories" because some illustrate lessons, and some are unfinished, as in "...and I never saw that person again". After each anecdote the author then spends a paragraph or two commenting from a lawyer's point of view. In a brief section at the end of the book, the author spends a chapter describing his clients, their children, and the spending vs. saving habits of several generations of Americans, the emotional values each appears to consider important, etc. This author evidently has enough experience that he only needs to echo the experiences and opinions of his clients. For what it's worth, the clientele is plainly described as belonging to the Florida panhandle, traditional families (often stay-at-home-Mom), divorce uncommon, 90% with children, more frugal than their children, etc. You would not expect this to be representative of every region in the country.

Both these books are highly recommended by me, because they are easy to read and nearly the only books in their category. You can find each on Amazon.com, where you can read reviews of both editors and ordinarly readers.

Relative to the original thread topic, neither book presents anything like a clean answer to giving sums without harm. If an heir is already frugal, their financial needs will be minor already, and if an heir is un-frugal, it would be like giving liquor to a drunk. The problem is still right at the edge of human difficulty, and in my own case I think a 501-C type charity might deliver good to the world with more reliability.

Best wishes -- C44
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- I'm sorry for the loss of your daughter.

- Thanks for the book rec's.

- You might be interested in the following:

http://www.ricedelman.com/planning/estate/assetsgrave.asp

- You've compared social engineering via wills to social engineering via the tax code. One difference is the tax code changes every year, partly in response to feedback from the people who are affected by it; whereas with a will, if things don't work out the way you want, it'll be too late to do anything about it.

- I agree that a charitable donation might be the most effective strategy.
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