Inheritance

[Anonymous]

Anonymous wrote:

Anonymous wrote:My parents are in their mid 70s and I’m 40. They are quite wealthy as in ultra high net worth. I’m sure I will inherit a large sum but we are very focused on planning for ourselves. What I do inherit will likely benefit my children and someday my grandchildren. My parents never inherited a meaningful amount of money. My parents have already been very generous so I’m very lucky.

If your parents are “ultra high net worth” they shouldn’t be leaving it all to their children. A percentage should skip the children and go directly to the grandchildren
in individual trusts. Helps with the children’s eventual estate taxes too.

Yes and no. If they are over the allocation exemption for generation skipping transfer taxes, leaving to grandchildren could be very costly. That's a 40% tax on top of any other tax for distributions to "skips".

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP, you really need to reframe this scenario because the additional details you've shared show that it's not really about the inheritance.

Here is the fact pattern:
You have $10M in assets, are married, and are around 50 years old.
Your HHI is $500-700k/year and you plan to work an additional 10-15 years.
You've been saving $50k/year in a brokerage account, in addition to tax-advantaged saving for retirement.
Your parents are 80+ and you expect an inheritance.

Here is your question:
Given the facts above, can you spend the $50k/year instead of continuing to add savings to your brokerage?

And the answer is 100% yes.

OP here - thanks for reframing. other than we want to only work for 5-10 years this is the way to think about it.

Does retiring at 55-60 make the answer still 100%?

Because I do understand that if we keep working till 65 then i know we can spend the extra $50k. It's really spending the $50k
AND retiring in 5-10 years.

Yes, it's still fine. If I were in your shoes, I'd make sure tuition payments were over before I retired, but I'm pretty conservative. I'd also rather work for an extra year or two and really enjoy my money (and get weekly massages / go on great vacations with my teen and college aged kids) than kill myself budgeting and trying to make my big pot of retirement funds bigger.

Kids have gotten money over the years from the grandparents and that should cover part of college. My belief is that the grandparents want to fund all of the college (so grandkids can know the GP paid for the education versus just some nebulous pot of $$ they don't know about).

NP. My ILs are like this too- they've provided some for the grandkids college accounts but keep hinting at wanting to cover the bulk of it. But we can't wait around and not save until they figure it out (SIL's kids are already in college and she had gotten the same story, now they are saying they may pay for grad school instead). All in all they have ~5 million so whatever is left of that + whole life insurance benefit would go to DH and his sister, but a lot of it is tied up in complicated investments subject to heavy taxation when it is inherited. Plus one IL will likely need memory care at some point, but they also have LTC that they think would cover the bulk of it (not sure how true that is though).

In contrast, I don't expect any inheritance from my parents, if anything we wil be supporting them.

[Anonymous]

Right- whatever you think your parents will have to pass on, how much of that will get eaten up by taxes?

[Anonymous]

I think of it as not part of my retirement planning at all. I money that goes to me will just get passed onto my kids eventually, so I basically consider it theirs.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP, you really need to reframe this scenario because the additional details you've shared show that it's not really about the inheritance.

Here is the fact pattern:
You have $10M in assets, are married, and are around 50 years old.
Your HHI is $500-700k/year and you plan to work an additional 10-15 years.
You've been saving $50k/year in a brokerage account, in addition to tax-advantaged saving for retirement.
Your parents are 80+ and you expect an inheritance.

Here is your question:
Given the facts above, can you spend the $50k/year instead of continuing to add savings to your brokerage?

And the answer is 100% yes.

OP here - thanks for reframing. other than we want to only work for 5-10 years this is the way to think about it.

Does retiring at 55-60 make the answer still 100%?

Because I do understand that if we keep working till 65 then i know we can spend the extra $50k. It's really spending the $50k
AND retiring in 5-10 years.

Yes, it's still fine. If I were in your shoes, I'd make sure tuition payments were over before I retired, but I'm pretty conservative. I'd also rather work for an extra year or two and really enjoy my money (and get weekly massages / go on great vacations with my teen and college aged kids) than kill myself budgeting and trying to make my big pot of retirement funds bigger.

Kids have gotten money over the years from the grandparents and that should cover part of college. My belief is that the grandparents want to fund all of the college (so grandkids can know the GP paid for the education versus just some nebulous pot of $$ they don't know about).

NP. My ILs are like this too- they've provided some for the grandkids college accounts but keep hinting at wanting to cover the bulk of it. But we can't wait around and not save until they figure it out (SIL's kids are already in college and she had gotten the same story, now they are saying they may pay for grad school instead). All in all they have ~5 million so whatever is left of that + whole life insurance benefit would go to DH and his sister, but a lot of it is tied up in complicated investments subject to heavy taxation when it is inherited. Plus one IL will likely need memory care at some point, but they also have LTC that they think would cover the bulk of it (not sure how true that is though).

In contrast, I don't expect any inheritance from my parents, if anything we wil be supporting them.

OP here - looks like a couple people are in the same boat. And yes, we save and have more than enough to pay for college.

[Anonymous]

My dad is 80 and still moving like he is 50. No waY I am tying my retirement to inheritance when this man looks like he will never die.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP, you really need to reframe this scenario because the additional details you've shared show that it's not really about the inheritance.

Here is the fact pattern:
You have $10M in assets, are married, and are around 50 years old.
Your HHI is $500-700k/year and you plan to work an additional 10-15 years.
You've been saving $50k/year in a brokerage account, in addition to tax-advantaged saving for retirement.
Your parents are 80+ and you expect an inheritance.

Here is your question:
Given the facts above, can you spend the $50k/year instead of continuing to add savings to your brokerage?

And the answer is 100% yes.

OP here - thanks for reframing. other than we want to only work for 5-10 years this is the way to think about it.

Does retiring at 55-60 make the answer still 100%?

Because I do understand that if we keep working till 65 then i know we can spend the extra $50k. It's really spending the $50k
AND retiring in 5-10 years.

You have $10m in invested assets, with a NW of $12m. You could retire tomorrow and start drawing down, and be completely fine.

JFC, OP.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP, you really need to reframe this scenario because the additional details you've shared show that it's not really about the inheritance.

Here is the fact pattern:
You have $10M in assets, are married, and are around 50 years old.
Your HHI is $500-700k/year and you plan to work an additional 10-15 years.
You've been saving $50k/year in a brokerage account, in addition to tax-advantaged saving for retirement.
Your parents are 80+ and you expect an inheritance.

Here is your question:
Given the facts above, can you spend the $50k/year instead of continuing to add savings to your brokerage?

And the answer is 100% yes.

OP here - thanks for reframing. other than we want to only work for 5-10 years this is the way to think about it.

Does retiring at 55-60 make the answer still 100%?

Because I do understand that if we keep working till 65 then i know we can spend the extra $50k. It's really spending the $50k
AND retiring in 5-10 years.

You have $10m in invested assets, with a NW of $12m. You could retire tomorrow and start drawing down, and be completely fine.

JFC, OP.

Yes, this was informative thread. appreciate all the commentary.

[Anonymous]

We are supposed to inherit ~$1.2M of my father's $3.5M. That said, assisted living is pricey and he's paying about $130K per year. Our financial advisor said for us to plan for heavy medical expenses in the coming years, so who knows what we'll actually get. That said, we like to dream about it but we're not changing our strategy for retirement.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP, you really need to reframe this scenario because the additional details you've shared show that it's not really about the inheritance.

Here is the fact pattern:
You have $10M in assets, are married, and are around 50 years old.
Your HHI is $500-700k/year and you plan to work an additional 10-15 years.
You've been saving $50k/year in a brokerage account, in addition to tax-advantaged saving for retirement.
Your parents are 80+ and you expect an inheritance.

Here is your question:
Given the facts above, can you spend the $50k/year instead of continuing to add savings to your brokerage?

And the answer is 100% yes.

OP here - thanks for reframing. other than we want to only work for 5-10 years this is the way to think about it.

Does retiring at 55-60 make the answer still 100%?

Because I do understand that if we keep working till 65 then i know we can spend the extra $50k. It's really spending the $50k
AND retiring in 5-10 years.

Yes, it's still fine. If I were in your shoes, I'd make sure tuition payments were over before I retired, but I'm pretty conservative. I'd also rather work for an extra year or two and really enjoy my money (and get weekly massages / go on great vacations with my teen and college aged kids) than kill myself budgeting and trying to make my big pot of retirement funds bigger.

Kids have gotten money over the years from the grandparents and that should cover part of college. My belief is that the grandparents want to fund all of the college (so grandkids can know the GP paid for the education versus just some nebulous pot of $$ they don't know about).

NP. My ILs are like this too- they've provided some for the grandkids college accounts but keep hinting at wanting to cover the bulk of it. But we can't wait around and not save until they figure it out (SIL's kids are already in college and she had gotten the same story, now they are saying they may pay for grad school instead). All in all they have ~5 million so whatever is left of that + whole life insurance benefit would go to DH and his sister, but a lot of it is tied up in complicated investments subject to heavy taxation when it is inherited. Plus one IL will likely need memory care at some point, but they also have LTC that they think would cover the bulk of it (not sure how true that is though).

In contrast, I don't expect any inheritance from my parents, if anything we wil be supporting them.

My widowed mom also kept hinting that she was going to help pay for law school, but never actually did anything about it. It was frustrating because my dad would have been right on the ball. The next time she mentioned helping, I asked when she planned to do it as our son was entering his final year. After that, she spoke with her advisor and then sent a check directly to the school to cover part of the final semester. I appreciated it but I didn't appreciate the uncertainty of it.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:My parents are in their mid 70s and I’m 40. They are quite wealthy as in ultra high net worth. I’m sure I will inherit a large sum but we are very focused on planning for ourselves. What I do inherit will likely benefit my children and someday my grandchildren. My parents never inherited a meaningful amount of money. My parents have already been very generous so I’m very lucky.

If your parents are “ultra high net worth” they shouldn’t be leaving it all to their children. A percentage should skip the children and go directly to the grandchildren
in individual trusts. Helps with the children’s eventual estate taxes too.

I'm quite sure that we are ultra high NW and the trusts we have set up are generation skipping trusts so our children will benefit from the income but most of the principal will go to our grandchildren. Our children will have rights to use the principal for a bunch of reasons. We have set up 529's for all of the grandchildren and utilize annual gifts to our kids and spouses but they are all focused on their own retirement planning. We don't want them to rely on us for their retirements but I believe we have a nice balance between being generous now and again in the future.

Honestly how comfortable would your child be withdrawing from the grandchildren's trusts even though technically it’s most of your child’s assets.

[Anonymous]

Anonymous wrote:Right- whatever you think your parents will have to pass on, how much of that will get eaten up by taxes?

Federal tax doesn't hit until $15m for an individual and $30m for a couple (and the $30m carries forward after the first spouse dies). Many people will not have any federal estate tax. If you stand to inherit in excess of $30m, you will likely be okay even after inheritance taxes. Hopefully your parents are getting good tax advice!

[Anonymous]

Anonymous wrote:You are 50 yo and thinking about someone else’s money is so sad (doesn’t matter who that someone else is)

*nods grimly*