Inheritance Drama: You Got Any? Stories Wanted.

[RetiredAt63]

She's still learning budgeting and financial responsibility (and is actually making some progress) and it should be another 20 years or so before I kick off and the pension half becomes available.

Hopefully she will have some basic skills by that point.

GS, you are the most sensible level-headed person on here!!!!  You know you could be hit (fatally) by a bus tomorrow.

[TheGrimSqueaker]

She's still learning budgeting and financial responsibility (and is actually making some progress) and it should be another 20 years or so before I kick off and the pension half becomes available.

Hopefully she will have some basic skills by that point.

GS, you are the most sensible level-headed person on here!!!!  You know you could be hit (fatally) by a bus tomorrow.

Of course. In which case, the value of my pension will be zero.

Edited to add: if I kick off today, the only way anyone besides me would get a cent out of the pension would be if I were married. I'm not. I don't get to declare a contingent survivor until I actually retire.

What I'd really like to do is leave every cent, house and all, to my loyal Venomous Spaz Beast, who deserves to live out her life in comfort in the only home she knows. Trouble is, she needs a human to feed her, walk her, and fit in playtime around whatever other life they have. If I can find a reliable human, I'll leave them a paid-off house and an allowance, on the condition that the VSB lives there, sees the vet regularly, and lives out the rest of her natural life in comfort. If the VSB dies, the allowance stops but the caregiver gains title to the house.

[RetiredAt63]

She's still learning budgeting and financial responsibility (and is actually making some progress) and it should be another 20 years or so before I kick off and the pension half becomes available.

Hopefully she will have some basic skills by that point.

GS, you are the most sensible level-headed person on here!!!!  You know you could be hit (fatally) by a bus tomorrow.

Of course. In which case, the value of my pension will be zero.

Edited to add: if I kick off today, the only way anyone besides me would get a cent out of the pension would be if I were married. I'm not. I don't get to declare a contingent survivor until I actually retire.

What I'd really like to do is leave every cent, house and all, to my loyal Venomous Spaz Beast, who deserves to live out her life in comfort in the only home she knows. Trouble is, she needs a human to feed her, walk her, and fit in playtime around whatever other life they have. If I can find a reliable human, I'll leave them a paid-off house and an allowance, on the condition that the VSB lives there, sees the vet regularly, and lives out the rest of her natural life in comfort. If the VSB dies, the allowance stops but the caregiver gains title to the house.

Aha, I should have known you had the pension situation covered.

I understand fully re VSB - in my will Missy went to DD.  If for any reason DD wouldn't/couldn't take her, I had already cleared with a good friend who is wonderful with dogs that Missy would go to her, and a chunk of money would go with Missy.  Missy would have been fine with either situation, so that was definitely one thing I didn't have to worry about.

I would volunteer to take over VSB 's care if necessary, but I can just see the interview with the American border and immigration people - "you have no job, you are retired, and you are moving here to look after the dog of someone you only knew online?"  That would go over soooo well.    ;-)

Bank or trust company for asset management and someone you trust to look after VSB?

[TheGrimSqueaker]

Bank or trust company for asset management and someone you trust to look after VSB?

Something like that.

My mom wants to be the one to take her in, but I've got three major worries. The first is my sibling's cats, who are each more than twice the VSB's size, who have sharp claws and a territorial streak, and who are more than capable of killing the VSB if they teamed up. The cats are pretty much permanent residents of my parents' house because my folks have made a lifetime commitment to enabling said alcoholic sibling who lives with them and who has an ongoing history of harming small animals. (That's major worry #2). Major worry #3 is that VSB type creatures live 15-20 years and my parents aren't in the greatest health. I'm worried what provision *they* would make for the little squeakdog. My guess is that it will be fuck-all based on their current will, which they are in the process of drawing up. It makes no provision for my own kids (one daughter by adoption, one niece acquired informally because she's an orphan related to my daughter; I hope to finalize that adoption as soon as she's at an age where it won't screw her on the FAFSA). The will states that if I predecease them or die within 90 days of the last parent, everything that would have been my inheritance from them will go to my sibling. (This, by definition, would include anything inherited from me including the VSB.)

And, yes, the disinheritance of my children *is* my parents' intention. They don't like my adopted daughter because she's gone through a bit of a violent bratty phase. Yet even at her worst the stunts she's pulled are small potatoes in comparison to what my sibling does and continues to do. They like my niece, who has never shown them or me the slightest disrespect. However, they have a rule about treating kids equally. That means that whenever one kid does something bad they're justified in punishing both. My daughter's been a bit of a brat, ergo both she and my niece are on the shit list despite the fact that my niece is considerate, kind, and a person who genuinely gives a fuck about what happens to me and to them (and who is capable of managing a lump sum windfall-- she may just have VSB guardian potential). I think the other reason my parents don't want to formally recognize my children is because my sibling doesn't have any, and recognizing my kids would mean that my sibling and I aren't being treated equally. I'm within an inch of telling my folks to just simplify matters and leave everything directly to my sibling, and I'll find other ways to set up the VSB and my human heirs. I've never really liked the idea of relying on family money to begin with, and as much as I enjoy my parents' company they've really gone down the rabbit hole with this codependency hobby of theirs.

My thinking is that if my parents are willing to cut out their only grandkids the second I'm not in the picture, which I think is an asshole move no matter how they rationalize it, they definitely can't be relied on to take care of my precious VSB.

Ooh! I think this means my family might have inheritance drama in the future.

[RetiredAt63]

Bank or trust company for asset management and someone you trust to look after VSB?

Something like that.
My daughter's been a bit of a brat, ergo both she and my niece are on the shit list despite the fact that my niece is considerate, kind, and a person who genuinely gives a fuck about what happens to me and to them (and who is capable of managing a lump sum windfall-- she may just have VSB guardian potential).

Isn't it amazing how clear things become when they are written out?  You have  found VSB's potential guardian.  No-one else qualifies, she does.

The rest of the nonsense - yikes.

[TheGrimSqueaker]

Bank or trust company for asset management and someone you trust to look after VSB?

Something like that.
My daughter's been a bit of a brat, ergo both she and my niece are on the shit list despite the fact that my niece is considerate, kind, and a person who genuinely gives a fuck about what happens to me and to them (and who is capable of managing a lump sum windfall-- she may just have VSB guardian potential).

Isn't it amazing how clear things become when they are written out?  You have  found VSB's potential guardian.  No-one else qualifies, she does.

Well, my niece has a gigantic and spastic puppy at the moment. Until that doggo mellows out enough to play nicely with the VSB it may not be a go. I'm definitely keeping my eye on the situation. Long-term, the potential is there.

The rest of the nonsense - yikes.

Normal codependent crap in a family with addiction and untreated mental illness, I'm afraid. I'd have succumbed myself if I hadn't buggered off to Yankistan. Oddly, they weren't at all messed up when we were little. They got that way somehow.

[RetiredAt63]

Well, my niece has a gigantic and spastic puppy at the moment. Until that doggo mellows out enough to play nicely with the VSB it may not be a go. I'm definitely keeping my eye on the situation. Long-term, the potential is there.

Well, absent the unexpected bus,  this is long term planning, right?  And wills made for the near future can always be adjusted as the situation changes. I find often that it's the big galumphy dogs are the ones that are best with small dogs.  I love the thought she has a gigantic spastic puppy.

[talltexan]

Things got a lot clearer to me when I realized VSB = Venemous SpazzBeast.

I was thinking it was Very Serious Boyfriend.

[Dancin'Dog]

I recently needed to shop for a corporate trustee and found that Vanguard's annual fee is a flat 0.55% for the first $5 million.  Also, the minimum size trust that they will handle is $500K.


Edward Jones' fee was 3 times more.


I don't have a "good story" to share, yet.  Hopefully never will.  ;)

[Ever_Anon]

My own VSB died a few years ago, but before he passed I used to worry myself sick with the thought of what would happen to him if I died. My parents were the ones I semi-rescued him from in the first place, so they were definitely out. My sister had three big dogs and two small children, which would not be ideal for a crotchety old chihuahua. I didn't have any friends in a position to take care of a dog. It was terrifying.

In the years since I've acquired both a cat and a wife, the latter of whom makes me far less concerned about the former. But we probably should make some provisions in case we both get hit by the same bus.

[merula]

I've insisted that my sister and BIL write down their intention for me to take their VSB, because I can see a custody battle in that situation.

Future custody battle participants:
-Our parents, who have eventually taken every dog they've ever had to a shelter
-BIL's mom and stepdad, who have two overweight and poorly-behaved beasts of their own. They don't believe in walking their SHELTIES because they don't think they need the exercise.
-BIL's dad, who doesn't particularly like dogs, but would fight for the sake of fighting

So you can see how my family of three dog lovers who believe in walking dogs might be the preference.

[partgypsy]

I've insisted that my sister and BIL write down their intention for me to take their VSB, because I can see a custody battle in that situation.

Future custody battle participants:
-Our parents, who have eventually taken every dog they've ever had to a shelter
-BIL's mom and stepdad, who have two overweight and poorly-behaved beasts of their own. They don't believe in walking their SHELTIES because they don't think they need the exercise.
-BIL's dad, who doesn't particularly like dogs, but would fight for the sake of fighting

So you can see how my family of three dog lovers who believe in walking dogs might be the preference.

I still remember dogsitting a friend's dog (who was obese) and asking what their walk schedule was, they said that (overweight dog) "doesn't like walks". I thought that strange because i've never met a dog who didn't like walks. Sure enough on her daily walks, she was super happy, and got some exercise to boot. But it was apparent they never gave her walks : (

[iris lily]

I've insisted that my sister and BIL write down their intention for me to take their VSB, because I can see a custody battle in that situation.

Future custody battle participants:
-Our parents, who have eventually taken every dog they've ever had to a shelter
-BIL's mom and stepdad, who have two overweight and poorly-behaved beasts of their own. They don't believe in walking their SHELTIES because they don't think they need the exercise.
-BIL's dad, who doesn't particularly like dogs, but would fight for the sake of fighting

So you can see how my family of three dog lovers who believe in walking dogs might be the preference.

I still remember dogsitting a friend's dog (who was obese) and asking what their walk schedule was, they said that (overweight dog) "doesn't like walks". I thought that strange because i've never met a dog who didn't like walks. Sure enough on her daily walks, she was super happy, and got some exercise to boot. But it was apparent they never gave her walks : (

You couldnt blast one of my bulldogs from her house. She practically laid on the ground, claws gripping the front door, when we had to take her some place, haha.

We always knew that if she disappeared it woild be because someone stole her, she would NEVeR just wander away.

She also had the most amazing muscle tone of all of our bulldogs, and we have had 30 of them (we foster, and we adopt senior dogs.) she slept 22 hours a day, never exercised, and could Probably pull a MACK truck from a rolling start if we could ever interest her in that activity.

 Ut yeah, most of our bulldogs like a bit of walkies but we dont take them. She was the exception, Noooooooooo! To leaving home.

[Zamboni]

@GreenEggs: thank you for the Vanguard Recommendation. Since they are holding most of my money at the moment, probably easiest to just go with them. That is also the lowest rate I have seen quoted in my research. Why didn't I think of that?

@TheGrimSqueaker: great, now I am worrying about what to do with the Shephound if I kick off. At least I have better options for her than I have for managing my money, but I should make a designation to prevent her from just ending up in the county shelter where I found her in the first place. Anyway, thank you for making me think about this as well. Not going to make any arrangements for the fish (how are they even still alive after all of these years?) Hope you can figure out a good action plan for VSB.

[Sibley]

I did my will, etc last year. As part of it, I also did a trust that specifically provides for my cats (nonspecific cats, depending on what ones I have if I kick the bucket). And then I wrote up a nonlegal document which specifically laid out what I want done with my house, stuff, cats, etc.

[sol]

My partner has heard me talk about this thread, and she suggested I contribute her current family drama.

She has a much-older half-sister who has never been financially stable due to addiction and mental health issues.  She and her long-term boyfriend are both on the mortgage for her house, but the boyfriend finally walked away from the crazy and left her with a mortgage payment far in excess of what she can afford.  There is a family crisis unfolding!

She asked her siblings and parents for money, but everyone involved seems to recognize that a bailout is only a temporary solution.  Any money she receives will only forestall the inevitable foreclosure, because what she really needs to do is either sell the house and move somewhere cheaper, or find a new roommate or three.  The problem is that she's a little too crazy for roommates to work out, based on past experiences, so everyone is trying to find a solution that doesn't involve her being homeless again.

The current plan is for her parents, who are stable because they live modestly but are not at all rich, to BUY HER HOUSE for her, and then lease it back to her on a rent-to-own basis.  When they die, whatever unpaid balance remains is supposed to come out of her share of the inheritance, assuming there is any left.  If there's an interest rate on that loan, I have no idea what it might be.

My wife is the executor of their will, and this sounds like a nightmare scenario to me.  Her parents aren't exactly the most organized people, and I'm pretty sure their idea of tracking the payments is going to involve a yellow notepad with handwritten notes on it, if they remembered that month.  Without a good record of the payments, she'll have no idea how to divide the estate.  If there's not enough left over to clear the balance, are we going to have to sell the house again and boot her out?  Because in that seemingly likely scenario, she's just going to be homeless then instead of now, which I guess is still the preferred solution?

Maybe all of the siblings are fine with foregoing their inheritance in order to support their addict half-sister that none of them really talk to or interact with in any way?  The rest of the family is pretty normal, and not in danger of homelessness with or without an inheritance, but most of them are not so well off  that few tens of thousands of dollars would be an easy thing for them to let go.

And I'm not even sure how this proposed plan would work out, logistically.  Can the parents legally buy their daughter's home without an open competitive bid process, in which they might lose the house or bankrupt themselves to acquire it?  What happens when the daughter fails to make payments, if anything?  If the payments are based on below-market interest rate, they'll be depleting the inheritance for every kid, in order to support just one kid, and I'm pretty sure that is not their intention.

The whole situation is F'ed up.  I consider myself lucky that my household doesn't struggle with debilitating health issues, addictions, or emotional problems.  The whole MMM philosophy is great for well-adjusted people who can hold down a steady job and stay functional, but lots of people aren't so lucky.  It's those marginal cases where the idea seems to break down.  Some people are just destined to be poor, it seems, no matter how easy the FIRE math looks to the rest of us.

[I'm a red panda]

And I'm not even sure how this proposed plan would work out, logistically.  Can the parents legally buy their daughter's home without an open competitive bid process, in which they might lose the house or bankrupt themselves to acquire it?  What happens when the daughter fails to make payments, if anything?  If the payments are based on below-market interest rate, they'll be depleting the inheritance for every kid, in order to support just one kid, and I'm pretty sure that is not their intention.

Unless you live in a weird market, house sales don't have to have competitive bid processes. They never have to be "on the market" to be eligible for sale. They don't have to sell at market rate even.

And while I get family drama, I think it is a mistake to think of parent's money as your inheritance until they are dead. They can spend it anyway they choose while they are alive, including supporting a black sheep member of the family. Heck her parents could decide the siblings are all solvent and all the money goes to addict-sister.

Sounds like a bit of a nightmare.

[Dancin'Dog]

Addiction & mental illness is a struggle for many families.  Parents really go through so much stress trying to decide what to do.  Often "helping" only makes them codependent and can often drains resources. 


There's no "right choice" when you're dealing with people that are wrong in the head.  They just seem to cause pain and stress for the whole family, especially their parents.


I'm living with it on both sides of my family, have a sibling & a sibling-inlaw that have caused a lot of worry & stress for our parents, the other siblings, and grandchildren.  Money just seems to complicate things because there isn't a fair way to give or withhold it. 


It's really hard not blaming people with mental issues or addictions, but we don't blame people with cancer or who are victims of other things. 

[PathtoFIRE]

Unless you live in a weird market, house sales don't have to have competitive bid processes. They never have to be "on the market" to be eligible for sale. They don't have to sell at market rate even.

I don't know the answer to this, but there's got to be some tax/gift/inheritance issues if there is a transfer of the property at non-market rates. But hey, selling real estate at really inflated values to launder money is a thing that apparently many people and presidents get away with in this country, so maybe not! I know some mortgages are assumable, in which case that may not qualify as a sale and a taxable event.

[talltexan]

The parents buying the house from the daughter sounds smart.

Figuring out a fair rent to charge the daughter is more difficult.

Deciding how to balance that help for that daughter against the rest of an estate decades from now is the hardest, but it's also a problem so far away that I cannot say it should be a worry right now.

[talltexan]

What if the parents own the house, and the rent from the daughter goes to the other children?

[Sugaree]

MIL's father was one of those who changed his will the way most people change their socks.  Whoever hadn't slighted him lately got it all.  And by all, I mean a 15 year old car and a house that literally required a hazmat team to clean before going on the market.  There might have been some cash, but one of his caretakers had been writing check to herself for awhile.  MIL got cut out of the will for pointing that out.

In the end, at least three different 20-something "caregivers" showed up at the funeral with a copy of the will that showed they got everything.  His lawyer managed to come up with a copy that left almost everything to BIL.  MIL got a few token dollars.  DH got the gun that his GF used to shoot himself (hence the need for the above hazmat team). 

Of course, BIL/SIL sold the house and the car and blew through that money in a few years.  They've now asked for, and received, "advances" on their inheritance from MIL/FIL to move to Europe for a couple of years.  Had a handful of kids that they couldn't afford.  It's probably going to be pretty ugly when MIL/FIL go.  MIL will either spend everything and leave nothing for anyone or will leave more to BIL under the guise of "he needs it more" (read:  he is the goldenchild that continues to make bad decisions).  FIL is afraid that BIL will sell the family farmland ASAP, and he's probably not wrong.  So, he'll try to put impossible demands on us and make DH the executor of the estate.  In either case, we'll end up having to go through 3 or 4 storage units of "antiques" or just let the units go. 

[markbike528CBX]

Massive snip.........
In either case, we'll end up having to go through 3 or 4 storage units of "antiques" or just let the units go.

mmmm... is there some way that the storage people could take possession faster than: failng to pay the bill and having to wait some period of time before auction or other disposal?

[sol]

What if the parents own the house, and the rent from the daughter goes to the other children?

It's a complicated situation.  The idea is for the daughter to "rent to own" so that she can continue to live in the house that currently owns, but cannot afford, without sending that money out of the family.  Sending it to the other children directly would a) probably breed resentment on the part of the daughter, having to pay her siblings to live in her own house when her siblings didn't do a damn thing for her, and b) probably cause the other siblings to re-evaluate their financial expectations about their parents passing on, because it would effectively be kind of like getting your inheritance early.  They would get "rent" now but then nothing upon their passing, and the unstable daughter would get a free house out of the deal.

I think it is a mistake to think of parent's money as your inheritance until they are dead.

I'm in favor of any remaining inheritances skipping at least one generation.  Preferably, I would like to use my parent's unused money to pay for my grandchildren's college education.  I don't want any money from my parents for myself, in part because I expect to be old and long-since retired by the time it might come my way, but I see value in using family wealth to help the next generation have a head start.

So if there's one person in the family who desperately needs financial support, even if that person is 55 years old and kind of a fuck-up, maybe that's kind of the same thing?  The older generation gets to allocate their money wherever they think it will do the most good, and if they think it better to enable a drug-addicted adult (to keep her off the streets) rather than send a bright young kid to college (because that kid is going to college either way) then who am I to argue?

[talltexan]

There's a macro- and micro- way to think about the issue.

From the micro-perspective, leaving your estate to grand children ensures that assets go through probate every 50-60 years instead of every 25. Less tax exposure. Back when families were bigger, it would have also meant dividing it into smaller pots, which is difficult for indivisible assets (like a house) and produces pots of money that are smaller, hence less life-changing. BUT, I'd argue that grandchildren are more likely to have significant choke points in their life (college, early child-raising expenses) where the money could make much more of a difference.

From the macro-perspective, I think it gets into all of these issues with estate tax, inherited wealth, and an aristocratic class that are best left to another thread.

[sol]

From the micro-perspective, leaving your estate to grand children ensures that assets go through probate every 50-60 years instead of every 25.

The transfers would happen every time a generation dies, regardless of who the inheritance goes to.

Yes, I agree that it would mean smaller pots of money if there are more grandkids than kids.  That's part of the plan.  Each grandkid would theoretically get two (smaller) grandparent inheritances earlier in life, though, instead of one (bigger) parental inheritance later in life.

From the macro-perspective, I think it gets into all of these issues with estate tax, inherited wealth, and an aristocratic class that are best left to another thread.

Conceptually I agree with you here, but my life is small.  I'm talking about giving a bunch of 25 year olds $25k each to pay off college debt or buy their first house, not bequeathing them a trust fund that means they will never work a day in their lives.  It's still a head start in life that perpetuates wealth inequality, but it's designed to lift people out of poverty and into the American middle class instead of building an impenetrable wall that separates the middle class from the wealthy elite.

[Dicey]

Is the house appropriate for her situation?

Could she get a roommate?

There is also the issue of maintaining the house. Who's going to pay for that?

The deal could be structured so that she continues to make mortgage payments until the loan is paid off. Atfer your parents  eventually pass away, the payments would be distributed among the siblings, less her share, which she would presumably inherit.

[financialfreedomsloth]

It's a complicated situation.  The idea is for the daughter to "rent to own" so that she can continue to live in the house that currently owns, but cannot afford, without sending that money out of the family.  Sending it to the other children directly would a) probably breed resentment on the part of the daughter, having to pay her siblings to live in her own house when her siblings didn't do a damn thing for her, and b) probably cause the other siblings to re-evaluate their financial expectations about their parents passing on, because it would effectively be kind of like getting your inheritance early.  They would get "rent" now but then nothing upon their passing, and the unstable daughter would get a free house out of the deal.

it's not complicated at all; the parents are going to subsidize one daughter so she can maintain a lifestyle she can not afford. The parents hope this will be corrected with the inheritance when they die. This will not happen. When it is time for the inheritance there will be a lot of drama and the end result of all of it will be that the one daughter will have gotten a bigger share of the inheritance then the other siblings. The family will probably splinter because of this with siblings no longer speaking to each other.
It is their money and the parents can do with it whatever they want. But these will be the ultimate consequences if they chose this particular path. If they are fine with that, great. If not, they might better look for another solution.

[AMandM]

From the micro-perspective, leaving your estate to grand children ensures that assets go through probate every 50-60 years instead of every 25.

The transfers would happen every time a generation dies, regardless of who the inheritance goes to.

If assets go to grandchildren, the time interval between testator's death and heir's death is roughly twice as long as if the assets go to the testator's children.

[mm1970]

From the micro-perspective, leaving your estate to grand children ensures that assets go through probate every 50-60 years instead of every 25.

The transfers would happen every time a generation dies, regardless of who the inheritance goes to.

If assets go to grandchildren, the time interval between testator's death and heir's death is roughly twice as long as if the assets go to the testator's children.

Hmm...I need to think about his a bit.  Way above early in this thread, I mentioned my grandfather's widow.  His will left $ to his children, but not until she died.  And she was still kicking.  She died at 98.  I think 18 years after my grandfather died.  In any event, as my  mother and aunt pre-deceased her, their inheritance went to their children.

I suppose it matters how much $ we are talking about, also.  I think I ended up with ...  $15k?  Can't remember.  About that.

[Paul der Krake]

It's a complicated situation.  The idea is for the daughter to "rent to own" so that she can continue to live in the house that currently owns, but cannot afford, without sending that money out of the family.  Sending it to the other children directly would a) probably breed resentment on the part of the daughter, having to pay her siblings to live in her own house when her siblings didn't do a damn thing for her, and b) probably cause the other siblings to re-evaluate their financial expectations about their parents passing on, because it would effectively be kind of like getting your inheritance early.  They would get "rent" now but then nothing upon their passing, and the unstable daughter would get a free house out of the deal.

it's not complicated at all; the parents are going to subsidize one daughter so she can maintain a lifestyle she can not afford. The parents hope this will be corrected with the inheritance when they die. This will not happen. When it is time for the inheritance there will be a lot of drama and the end result of all of it will be that the one daughter will have gotten a bigger share of the inheritance then the other siblings. The family will probably splinter because of this with siblings no longer speaking to each other.
It is their money and the parents can do with it whatever they want. But these will be the ultimate consequences if they chose this particular path. If they are fine with that, great. If not, they might better look for another solution.

Yeah for whatever reason people are weird about housing, and it somehow doesn't count as a subsidy to which you're supposed to assign a dollar value.

[shelivesthedream]

From the micro-perspective, leaving your estate to grand children ensures that assets go through probate every 50-60 years instead of every 25.

The transfers would happen every time a generation dies, regardless of who the inheritance goes to.

If assets go to grandchildren, the time interval between testator's death and heir's death is roughly twice as long as if the assets go to the testator's children.

Consider, though, that we're talking about a whole train of generations. So gen1 passes on to gen3 rather than gen2. Then gen 3 to gen 5, etc. So it looks like there's half as much probating and so on. But gen2 passes on to gen 4 who passes on to gen6... Any individual pot of money gets passed on half as often but the pot is effectively halved because it's split over two generational sequences.

[talltexan]

This longer time interval should allow for assets to remain invested in higher-risk, higher return assets as well.

[I'm a red panda]

From the micro-perspective, leaving your estate to grand children ensures that assets go through probate every 50-60 years instead of every 25.

The transfers would happen every time a generation dies, regardless of who the inheritance goes to.

If assets go to grandchildren, the time interval between testator's death and heir's death is roughly twice as long as if the assets go to the testator's children.

Consider, though, that we're talking about a whole train of generations. So gen1 passes on to gen3 rather than gen2. Then gen 3 to gen 5, etc. So it looks like there's half as much probating and so on. But gen2 passes on to gen 4 who passes on to gen6... Any individual pot of money gets passed on half as often but the pot is effectively halved because it's split over two generational sequences.

I think one also assumes though that the "family money" is large, and odd number generations are getting that- many millions.  Whereas the individual money is smaller, maybe only a few hundred thousand. 


People should remember they have no entitlement to an inheritance. Anything you get is a bonus. The owners of said money can blow it away however they want while alive, and will it all to their dog if they feel like it when they die.

[iris lily]

It's a complicated situation.  The idea is for the daughter to "rent to own" so that she can continue to live in the house that currently owns, but cannot afford, without sending that money out of the family.  Sending it to the other children directly would a) probably breed resentment on the part of the daughter, having to pay her siblings to live in her own house when her siblings didn't do a damn thing for her, and b) probably cause the other siblings to re-evaluate their financial expectations about their parents passing on, because it would effectively be kind of like getting your inheritance early.  They would get "rent" now but then nothing upon their passing, and the unstable daughter would get a free house out of the deal.

it's not complicated at all; the parents are going to subsidize one daughter so she can maintain a lifestyle she can not afford. The parents hope this will be corrected with the inheritance when they die. This will not happen. When it is time for the inheritance there will be a lot of drama and the end result of all of it will be that the one daughter will have gotten a bigger share of the inheritance then the other siblings. The family will probably splinter because of this with siblings no longer speaking to each other.
It is their money and the parents can do with it whatever they want. But these will be the ultimate consequences if they chose this particular path. If they are fine with that, great. If not, they might better look for another solution.

This is right on the money.

[plainjane]

From the micro-perspective, leaving your estate to grand children ensures that assets go through probate every 50-60 years instead of every 25.

The transfers would happen every time a generation dies, regardless of who the inheritance goes to.

If assets go to grandchildren, the time interval between testator's death and heir's death is roughly twice as long as if the assets go to the testator's children.

This is similar to what our lawyer recommended. I was trying to decide whether to give our estate to siblings or in trust for nieces and nephews. Since all the siblings are fine economically that just means they'd be taxed at a higher rate. So it is better to do the next generation who have lower income and assets.

[Dancin'Dog]

I'm not a Trump fan, but it is nice that the estate tax threshold has been raised.  No state estate tax here either.


I think individual circumstances, like total amounts involved and the ages of the various generations have an impact on how these decisions "should" be made. 


My grandparents lived to be quite old (mid 90's), and left everything to their 2 sons who were in their mid to late 70's.  It was the standard simple way to pass their assets, but really didn't benefit anyone that was young enough to enjoy, or even handle the finances, at that point.  Sadly, interest rates were so low dad just cashed the check & piled it all in a safe...it would have tripled if he'd known about VTSAX. 


There's definitely a valid argument about not leaving it to those who are too young, but also to those that are too old.  I doubt many wills & trusts are adequately engineered to deal with the ages of the beneficiaries, because it's just too complicated to deal with for most people.




 

[sherr]

I'm not a Trump fan, but it is nice that the estate tax threshold has been raised.  No state estate tax here either.

Really? The TCJA doubled the exemptions from $5.5MM per taxpayer ($11MM per couple) to $11MM ($22MM per couple). Is estate tax really something that anyone on this forum would ever have to worry about?

[shelivesthedream]

I don't know what it's like overseas (and am not sure I understand it here!) but my parents are in their sixties and diligently over-saved before retiring. I believe they are planning to write something like a writ of disbursement so that when my grandmother dies, their portion of the inheritance passes straight to me and my brother. As I understand it, that means that for tax purposes it's as if my grandmother willed it straight to us. They don't need the money and we're in our twenties so even if it's all spent way down on end of life care, even a few thousand would make a difference to our lives while my parents wouldn't even notice it. Assuming the age situation is similar when my parents go, I would probably do the same.

[Dicey]

I'm not a Trump fan, but it is nice that the estate tax threshold has been raised.  No state estate tax here either.


I think individual circumstances, like total amounts involved and the ages of the various generations have an impact on how these decisions "should" be made. 


My grandparents lived to be quite old (mid 90's), and left everything to their 2 sons who were in their mid to late 70's.  It was the standard simple way to pass their assets, but really didn't benefit anyone that was young enough to enjoy, or even handle the finances, at that point.  Sadly, interest rates were so low dad just cashed the check & piled it all in a safe...it would have tripled if he'd known about VTSAX. 


There's definitely a valid argument about not leaving it to those who are too young, but also to those that are too old.  I doubt many wills & trusts are adequately engineered to deal with the ages of the beneficiaries, because it's just too complicated to deal with for most people.

When my grandfather died in the late eighties, he gave my family $50k - $14k to my parents and $6k to each of the six kids. The rest of his estate was divided evenly among his three elderly sisters. I thought this was fantastic. Each grandkid got a boost (I added it to my DP fund and finally pulled the trigger on my first house). More importantly, he gave his sisters financial security in their old age. What an amazing legacy!

ADD: That would be $105k in inflation adjusted dollars. Still a nice gift.

[RetiredAt63]

I'm not a Trump fan, but it is nice that the estate tax threshold has been raised.  No state estate tax here either.

Really? The TCJA doubled the exemptions from $5.5MM per taxpayer ($11MM per couple) to $11MM ($22MM per couple). Is estate tax really something that anyone on this forum would ever have to worry about?

Farmers?   They are usually land rich and cash poor.

[SwordGuy]

I'm not a Trump fan, but it is nice that the estate tax threshold has been raised.  No state estate tax here either.

Really? The TCJA doubled the exemptions from $5.5MM per taxpayer ($11MM per couple) to $11MM ($22MM per couple). Is estate tax really something that anyone on this forum would ever have to worry about?

Farmers?   They are usually land rich and cash poor.

Then don't include actively farmed land in the estate tax and include everyone else.

[Dancin'Dog]

I'm not a Trump fan, but it is nice that the estate tax threshold has been raised.  No state estate tax here either.

Really? The TCJA doubled the exemptions from $5.5MM per taxpayer ($11MM per couple) to $11MM ($22MM per couple). Is estate tax really something that anyone on this forum would ever have to worry about?

Just because the majority of the members on this forum are trying to retire young doen't mean all of our parents and/or grandparents understood the concept.  It seems that a lot of people who build businesses enjoy "being the boss" and enjoy watching the money flow in.  Instead of saving 70% of their salaries and investing it in index funds they invested in their own companies.  Their investments often beat the S&P 500 each and every year (but it wasn't passive).  When you hear stories about successful companies you only hear about the ones that got big, but there are millions of companies that are very successful that never even wanted to grow beyond a handful of employees and a single location.  The owner made plenty for himself and didn't want the headaches of going after more.  I've met plenty of small business owners that told me that they were happier and made more money when they had fewer employees. 










Think about high earners that continue(d) to work into their 60's or 70's.  Look how long this bull market has run.  $5M in VTSAX since 2009 would probably be $15-20M now. 

[Paul der Krake]

The estate tax is a misnomer, it's really a poor stewardship tax. Twenty minutes on the internet or the estate section of any bookstore or library will make it clear that it's totally avoidable.

Members of Congress know this, they either avoid the tax themselves or have friends who do. Nevertheless, it's used as a political signal by the right (we're with farmers!) and the left (down with the rich!) alike because it gets the non-decamillionaires riled up.

[Goldielocks]

Canada has zero gift and estate taxes.


You are deemed to dispose of property at Fair Market Value when you die, and your estate pays any taxes due before your heirs get the remainder.   Your heirs then inherit at the current FMV, reducing their tax burden when they sell.   If the property (e.g., a cottage) is transferred and not sold, then taxes are paid from the remainder of the estate.

Exceptions:
Rolling over registered retirement investments or joint property to your spouse.
Farm property to family (son/ grandchildren)
Fish Property to family (family fishing boat and licensing).
Income attribution rules apply to gifts made to spouse / minor children while you are living.

It is a very clean system that allows the government to get any capital gains taxes before too many decades pass, and allows the heirs a clean ownership of the asset, and especially avoids any arbitrary estate tax.
 
Loopholes are reduced, although incoporation and company trusts are still options for loopholes, they are also taxed eventually in other ways. 

[Catbert]

I don't know what it's like overseas (and am not sure I understand it here!) but my parents are in their sixties and diligently over-saved before retiring. I believe they are planning to write something like a writ of disbursement so that when my grandmother dies, their portion of the inheritance passes straight to me and my brother. As I understand it, that means that for tax purposes it's as if my grandmother willed it straight to us. They don't need the money and we're in our twenties so even if it's all spent way down on end of life care, even a few thousand would make a difference to our lives while my parents wouldn't even notice it. Assuming the age situation is similar when my parents go, I would probably do the same.

You can do that here in the US also although I *think* the disclaimer doesn't get to pick who it goes to.  It goes to whomever the original person designated as a backup.  As a practical matter generally if the parents disclaimed their children would be the back up.

[PhilB]

I just had an interesting phone call that made me think of this thread.  My parents are in their eighties, moved house 3 years ago and haven't done anything with their old house (value about £125k).  When I called them this morning, my Dad told me he wanted to gift the old house to my SIL so she can rent it out - her income is low enough she would pay little or no tax on the rental income, whereas he would pay 40% if he did it.  SIL is freaked by this and worried it will destroy the family unless my wife and I get an equal gift.  She has relatives no longer talking to each other because their parents decided their inheritance would go straight to the grandkids as the kids didn't need it - but they have different numbers of grandkids so everyone is bitching about how it should be split.

My brother and SIL live nearby and do a huge amount for them - including doing up the old house to get it fit to sell / rent.  I feel guilty that we aren't able to do anything much for them as we live 3 hours away and have young kids.  We are also much better off than they are and are FIREing in less than 4 weeks.  I said of course he should give the house to SIL as they totally deserve it.  After the call ended my wife made me contact him again to make sure he knew that she was completely happy with it too.  My only problem now is feeling guilty about the fact that I feel I can now use this as an excuse to stop feeling so guilty..,

[Dicey]

^Love this!^

[iris lily]

PhilB is a prince amoung men!

[okits]

@PhilB - once you are FIREd make a bigger effort to be present for your parents.  Even with young kids, three hours isn't so bad if you stay overnight if neither you nor your spouse has to work a job.  This will be better than feeling guilty and will help your parents, brother, and SIL, too.

Good for you and your wife, recognizing the value of the caregiving done by your brother and SIL.  And congratulations on your upcoming FIRE!