Anonymous
Post 05/09/2024 10:54     Subject: How Much of an Inheritance is Too Much for Kids
Anonymous wrote:I am figuring out some aspects of my estate and retirement planning, and I'm curious how much people think is appropriate to leave as an inheritance for your kids. Is there an amount of inheritance that would level that would be too much for each kid? I plan to max out Roth IRA contributions until retirement and not touch this money to leave it as an inheritance for my kids. This means our Roth IRAs will likely have a total inflation-adjusted value of around 3-6 million when I turn 80.

Here's a summary of my projected retirement situation for context.
4,000 monthly pretax pension
2,000 monthly social security (assuming SSI benefits are cut substantially due to current funding issues. The actual amount will likely be around 4k between me and my spouse assuming a 20% cut in benefits)
$5,000 monthly pretax from 401ks (assuming a 4% withdrawal rate and worst historical returns from Cfiresims calculator)
Brokerage account
$2500 a month from our brokerage account (minimum estimate, will likely be more but inflation-adjusted value of brokerage account will certainly exceed 1M in retirement)
A few rental properties (combined value of around 1.4M. I am unsure about the amount of after-tax income so I'm ignoring them for retirement purposes)


Primary residence is worth around 850k, and the mortgage will be paid off before retirement.

In conclusion, if things go very badly, my kids will split an inheritance of at least 8M. However, if market returns are closer to historical norms (25th-50th percentile returns), they will inherit 15M+. I am only going to have 2 or 3 kids, so I am somewhat hesitant about whether this is an appropriate amount to leave my kids or if it is too much.


You are only going to have 2 or 3 kids? Have you actually had the children. I would start there and then focus on childcare and funding 529s and then when your children are 15+ come back to DCUM and ask again.
Anonymous
Post 05/09/2024 09:54     Subject: How Much of an Inheritance is Too Much for Kids
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:3-4 mil to each (assuming 2) and some generation-skipping trusts for the rest of the funds? Some charitable giving, too?


No charitable giving unless I end up being worth like 50M+. Need to ensure the next 2-3 generations of my family will not be in need of charity before I feel comfortable donating.


I wonder if this is a common way to think.
In my family, inheritances are small but charity is still important.


We are generous with family and our selected charities. But we don't see an issue with giving our kids and future generations $20M+ each. It will allow them to have careers that they love and that benefit society (if they choose) or a high paying career if that's what they want. We worked hard to earn our $50M+ (none was inherited, we both come from MC families) and plan to ensure it continues for 3+ generations easily. So far our kids are hard working, contributing members of society and not spoiled brats. We see no reason that wont continue with them and future grandkids.

We also contribute to charities that are near and dear to us---mostly local so we know the $$$ is going 99% to those in need, not overhead.
Anonymous
Post 05/09/2024 09:50     Subject: How Much of an Inheritance is Too Much for Kids
Anonymous wrote:Our kids are still school age so it is hard to tell who they will become. DH and I have had a lot of success and have a current net worth of about $40M. We have about another $10M in life insurance. We have 3 kids. No one needs that much money. If you earn it yourself that is one thing, but IMO it is too much to inherit.

For now our wills leave our kids the max that is not subject to estate tax. The excess is being donated. As the kids get older we will probably lower the amount in todays dollars.

By my estimate if we live into our 80s we will end up with a net worth of $100M+ in todays dollars.


Totally your choice. But why not help out your kids, grandkids and future generations with a portion of it. And neices/nephews/cousins/etc. We believe charity starts at home and are extremely generous with family.
Anonymous
Post 05/08/2024 21:01     Subject: How Much of an Inheritance is Too Much for Kids
Anonymous wrote:
Anonymous wrote:I am figuring out some aspects of my estate and retirement planning, and I'm curious how much people think is appropriate to leave as an inheritance for your kids. Is there an amount of inheritance that would level that would be too much for each kid? I plan to max out Roth IRA contributions until retirement and not touch this money to leave it as an inheritance for my kids. This means our Roth IRAs will likely have a total inflation-adjusted value of around 3-6 million when I turn 80.

Here's a summary of my projected retirement situation for context.
4,000 monthly pretax pension
2,000 monthly social security (assuming SSI benefits are cut substantially due to current funding issues. The actual amount will likely be around 4k between me and my spouse assuming a 20% cut in benefits)
$5,000 monthly pretax from 401ks (assuming a 4% withdrawal rate and worst historical returns from Cfiresims calculator)
Brokerage account
$2500 a month from our brokerage account (minimum estimate, will likely be more but inflation-adjusted value of brokerage account will certainly exceed 1M in retirement)
A few rental properties (combined value of around 1.4M. I am unsure about the amount of after-tax income so I'm ignoring them for retirement purposes)


Primary residence is worth around 850k, and the mortgage will be paid off before retirement.

In conclusion, if things go very badly, my kids will split an inheritance of at least 8M. However, if market returns are closer to historical norms (25th-50th percentile returns), they will inherit 15M+. I am only going to have 2 or 3 kids, so I am somewhat hesitant about whether this is an appropriate amount to leave my kids or if it is too much.


Then why are you even asking the question, OP?

If you're young enough that you don't have kids, you have no idea what lies in store for your life. Maybe you won't have that money to leave to your kids. Maybe you won't have kids.

You're ridiculous.


I really have to disagree! Good for him/her for planning and having goals
Anonymous
Post 05/08/2024 20:36     Subject: Re:How Much of an Inheritance is Too Much for Kids
Anonymous wrote:We set up irrevocable generation skipping trusts that will benefit our adult children and our grandchildren. We are hoping to use our full lifetime exemptions before it possibly gets reduced after 2025. So it’s a sizable amount! Our kids are very successful on their own and financially savvy and conservative so they will make good use of their inheritance for their kids and their grandkids….I hope. We are generous with them each year with annual gifting as well. What’s left we will either spend or it will go to charity as I have no desire to pay any estate taxes.



Yes, that is a good idea. You might as well use the higher exclusion before it goes down. I do not think the lifetime exclusion will be this high again unless possibly if Republicans get a trifecta. Even then it maybe won't to this level again.
Anonymous
Post 05/08/2024 20:35     Subject: How Much of an Inheritance is Too Much for Kids
Anonymous wrote:
Anonymous wrote:3-4 mil to each (assuming 2) and some generation-skipping trusts for the rest of the funds? Some charitable giving, too?


No charitable giving unless I end up being worth like 50M+. Need to ensure the next 2-3 generations of my family will not be in need of charity before I feel comfortable donating.


I wonder if this is a common way to think.
In my family, inheritances are small but charity is still important.
Anonymous
Post 05/08/2024 20:33     Subject: How Much of an Inheritance is Too Much for Kids
Anonymous wrote:Our kids are still school age so it is hard to tell who they will become. DH and I have had a lot of success and have a current net worth of about $40M. We have about another $10M in life insurance. We have 3 kids. No one needs that much money. If you earn it yourself that is one thing, but IMO it is too much to inherit.

For now our wills leave our kids the max that is not subject to estate tax. The excess is being donated. As the kids get older we will probably lower the amount in todays dollars.

By my estimate if we live into our 80s we will end up with a net worth of $100M+ in todays dollars.


You could set up a dynast trust. There are states that will let you set up a trust that lasts up to 500 or 1000 years now.
Anonymous
Post 05/08/2024 20:30     Subject: How Much of an Inheritance is Too Much for Kids
Anonymous wrote:Guessing this is a poor attempt at bragging lol


I'm not bragging and never said it was a lot of money. The question is solely to see whether people think there is a general amount of inheritance that is too much.
Anonymous
Post 05/08/2024 19:23     Subject: How Much of an Inheritance is Too Much for Kids
Guessing this is a poor attempt at bragging lol
Anonymous
Post 05/08/2024 18:54     Subject: Re:How Much of an Inheritance is Too Much for Kids
Op I don’t think it’s too much to leave your unborn kids. You are thinking 40+-50+ years in the future. With the value of inflation, 3-5 million won’t be what it is today.
Anonymous
Post 05/08/2024 18:43     Subject: How Much of an Inheritance is Too Much for Kids
Our kids are still school age so it is hard to tell who they will become. DH and I have had a lot of success and have a current net worth of about $40M. We have about another $10M in life insurance. We have 3 kids. No one needs that much money. If you earn it yourself that is one thing, but IMO it is too much to inherit.

For now our wills leave our kids the max that is not subject to estate tax. The excess is being donated. As the kids get older we will probably lower the amount in todays dollars.

By my estimate if we live into our 80s we will end up with a net worth of $100M+ in todays dollars.
Anonymous
Post 05/08/2024 18:29     Subject: Re:How Much of an Inheritance is Too Much for Kids
We set up irrevocable generation skipping trusts that will benefit our adult children and our grandchildren. We are hoping to use our full lifetime exemptions before it possibly gets reduced after 2025. So it’s a sizable amount! Our kids are very successful on their own and financially savvy and conservative so they will make good use of their inheritance for their kids and their grandkids….I hope. We are generous with them each year with annual gifting as well. What’s left we will either spend or it will go to charity as I have no desire to pay any estate taxes.

Anonymous
Post 05/08/2024 17:40     Subject: How Much of an Inheritance is Too Much for Kids
Anonymous wrote:I just don’t think living off an inheritance is so terrible. As long as my kids are doing something productive and are healthy and happy and good people, I’m fine. But we all have different priorities.


This 1000%

Anonymous
Post 05/08/2024 17:35     Subject: Re:How Much of an Inheritance is Too Much for Kids
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:Enough to do anything they want with their lives. Not so much that they can do nothing.


This is the truest statement. So the answer, Op, is $2-3m. They would still need to work - but could live incredibly well even on a teacher or hairdresser's salary if that's the field they chose. More than $5 million and believe me, they will do nothing. My most worthless manchild cousins are the ones who received $10M -- unemployed, not involved in the community, and still cry to mommy for more.


Thank your giving thoughtful feedback. But how do I discourage them from taking a low paying job and making up for it with the inheritance. If they are not capable of working in a higher paying jobs it’s fine, but I don’t want a lazy smart kid to rely on the money.


You seriously have nothing better to do with your time? How sad that a man with no kids in his thirties is spending his time like this. Me? I’m in my 50s and am a parent, so I have an excuse. Once you actually make real money, you will go to a lawyer who specializes in estate planning like all the rich grown ups do. She will tell you what her other rich clients do and the pros and cons of structuring trusts. You will learn that you set up trusts with conditions, etc. For now, why you do something more productive.

I already know about trusts. I used to do consulting for people that had SLATs, GRATs, etc. They would leave their kids like 20-30M+ each and it honestly didn't seem to affect behavior of the kids much. They were still going to medical school or working at startups and stuff like that. It just made me hesitant be because it seems like about 75%-80% of the clients kids were fine. However, for the the 20% that turned out badly having access to this wealth absolutely ruined them.


There are far more kids like that---who know they have big trusts, who have college and needs (living/car/travel) fully paid for who "excel at life" and are not lazy. Some are lawyers/doctors/engineers/high paying jobs, others chose to pursue careers they love that don't happen to pay quite as well.

We put plans in place to determine when the kids will get the money. For now, our kids are smart, motivated and fairly frugal and working hard, so they get a portion yearly now to maximize gifts. The trusts will give them a portion at 25 and beyond, with always having access for medical and education. Basically, our kids are 26 and 21, 26 is gainfully employed, 21 is well on their way with college. At this point, we are 99% certain them having $5M will not make them ungrateful, lazy adults (should we drop dead soon). We also have 2 trustees we trust in place to make decisions should it be needed.
Anonymous
Post 05/08/2024 14:16     Subject: How Much of an Inheritance is Too Much for Kids
Anonymous wrote:OP, I have thoughts on your actual question but am not going to provide them. Your premise and calculations make no sense, and you also sound like a terrible person.


Also do you have any suggestions for improving the calcs. What would you use instead?