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If You’re Waiting for an Inheritance, You Are a Sick, Entitled, Teat Sucker

My Fathers Funeral
Not the time to celebrate a windfall

“A son can bear with equanimity the loss of his father, but the loss of his inheritance may drive him to despair.”
–Niccolo Machiavelli

I remember reading a book called Die Broke (#aff) by Stephen Pollan and Mark Levine sometime shortly after it came out. I don’t remember all of the details of the book (perhaps one of my readers who read it more recently or has a better memory than I do can fill in the gaps), but I do remember that the main premise of the book was to convert assets into annuities to create a lifetime income stream.

I was moved by the book. Not necessarily by the notion to convert all of the assets into annuities – I was far too undereducated to have an analytical evaluation of that notion – but by one notion which stuck in my head. I honestly don’t remember if I read it in the book (I probably did) or came up with the idea on my own (I probably didn’t), but it really resonated with me. It resonated so much that I asked my parents to read the book and to live by the strategies, or, at least, the intent behind them. Also, I remember well my grandmother not being happy at receiving an inheritance. The idea was…

If You’re Waiting for Someone to Die to Get Their Assets, You’re One Sick Puppy

Yes, I called you a sick *******. I’d tell you what I really thought if I didn’t think the SEC would hop all over me. You want to know why?

  • You are waiting for someone to die. Yes. You’re waiting for someone to die. To cease their existence on their earth. Just so you can benefit from their material assets. You can benefit from their hard work, frugality, and intelligence, but only when they’re dead. So, in effect, you’re hoping that they die so that you can get what was theirs. That’s a sick, sick form of envy.
  • Your parents raised you for eighteen or so years. They don’t owe you anything. It’s their money. They get to choose what they want to do with it. If they want to give it all to the Society for the Betterment of Sock Lint, then that’s their choice, not yours.
  • You have a crazy sense of entitlement. For some reason, you think that because you were born unto this earth and didn’t yet die yourself or kill anyone along the way, you deserve your parents’ money. This is just one step along many others in a slippery slope which could lead you to not thinking that you have to work to earn your way in this world and that the government will take care of all of your whims and desires without you lifting a finger. Good luck getting people to fill your tin cup.
  • They might live longer than anyone thinks. Averages are just that – there are higher numbers and there are lower numbers. So, if the average life expectancy is 80, there’s a decent chance that they’ll outlive that number, and they’ll need “your inheritance” for their living expenses. Do you want them to live like paupers so that you can live high on the hog?
Suckling
Waiting on an inheritance? This is you. Except you’re not that cute.

Apparently, there’s a disconnect between parents and kids when it comes to the subject of inheritance. A recent article in USA Today showed that 40% of people aged 13-22 expect to receive an inheritance while only 16% of parents expect to provide one. Granted, I don’t expect a 13 year old (or even, necessarily, a 22 year old) to have the wisdom to understand what expecting an inheritance really means, but it does show that there is a disconnect with both the expectations of what they will receive and with what it will really take to be successful in the world. There aren’t many family dynasties or dynasty trusts out there, so chances are that Junior or Juniorette are going to have to make it on their own.

What to Tell the Kids About Their (Lack of an) Inheritance

For some reason, a lot of families don’t feel comfortable about talking about inheritances or what’s in the will. They expect some grand reading of the will like is portrayed in the movies rather than a horrendous inheritance fight and family pier 6 brawl (nobody came up with fighting terminology like Gordon Solie) like is described in John Grisham’s The Testament (#aff). Failure to set expectations both properly and early will just lead to festering resentment and downright fighting and squabbling if the expectations aren’t later met.

Here’s some things to think about when discussing the inheritance with the kids:

  • It’s your money. There is absolutely nothing wrong with wanting to bequeath a lasting gift to your children. I think that it’s a pretty common parental desire, if not instinct, to want to take care of the kids for as long as possible and leave them with something when you’re not around. Still, as long as you’re around, it’s your money, not theirs, and if they don’t expect anything, then they’ll be that much happier if there is something to leave behind…if that’s your plan.
  • They need to go out and work. The average life expectancy in the United States is about 78 years old; adjust for childhood mortality, and it’s closer to 80. The average age of a first-time mother is about 25 years old. That means that if the average first child enters the workforce at age 22 with a shiny new bachelor’s degree, he’s going to have to work an average of 33 more years before getting that inheritance. That’s a long, long time to wait while living on ramen cakes. Chances are that the inheritance won’t cover the accumulated debt, even if he can find a loan shark gullible enough to lend him money for that long. So, waiting on the inheritance is not a good financial planning strategy.
  • Gifting is a very viable option. There are multiple benefits to gifting while you’re still alive. First, you get the money out of your estate, reducing potential estate tax liabilities. Second, you get to enjoy their enjoyment of the gift while you’re still alive. Third, you get to potentially influence what is done with the gifted money. If you try to influence the behavior through the inheritance, you’ll have to establish a trust, which isn’t always economical or through conditions precedent or subsequent in a will.

If you’re expecting an inheritance, it’s time for you to change your attitude about life. If you’re a parent of a child expecting an inheritance, it’s time to have a discussion about what’s going to happen with your estate. Inheritance is a gift of love, not a rite of passage.

By Jason Hull, CFP®

Jason Hull, CFP®, was the co-founder of Broadtree Partners, a firm that acquires $1-5MM EBITDA companies. He also was the co-founder of open source search consultancy OpenSource Connections, a premier Solr and ElasticSearch firm. He and his wife FIREd (financial independence retire early) at 46 and 45, respectively. He has a BS from the United States Military Academy at West Point and a MBA from the University of Virginia Darden Graduate School of Business.

You can read more about him in the About Page.

25 replies on “If You’re Waiting for an Inheritance, You Are a Sick, Entitled, Teat Sucker”

I don’t think waiting for an inheritance makes me a tit sucker…. but it definitely formed some of the decisions I made about not continuing in a job that gave me anxiety. We certainly worked out tushes off to get to where we are. We know we may be waiting for another 15-20 years to get what is sitting in trust until my mom passes. Unfortunately, two other sibs are always interested in wondering how much longer mom will last. I think that attitude was created LONG before that discussion ever began.

My husband and I decided that we would share our money with our kids now- as needed. Of course- that takes the chance that there will not be enough for us when we are elderly. It is a gamble. We don’t plan on ever telling our kids how much we have—but they do know where it all is. If they get an inheritance it will be a surprise- to all of us.

I don’t exactly agree with your assessment. Sometimes parents are leaving their children companies that the future generations need to manage/operate. How is this any different from an inheritance? Essentially, they are inheriting a livelihood with the company.

It’s the difference between acting and acting upon. If you’re expecting to run the company as a right of your existence on the planet, then you’re a teat sucker. If you’re expecting to run the company to help Mom, Dad, the family, and the X number of employees who depend on that company for their livelihood, then that’s a different situation. However, even in that situation, you’d better be working your butt off to make the company even better rather than just expecting it to be your sinecure to a certain lifestyle, a la Paris Hilton.

So according to you, if your family started a successful business, you would expect your parents to hire someone else to manage the company and not expect you to continue operations?
It’s quite likely that if anyone’s parents started a small business, their expectation would be for their kids to work and gain experience in the business. Hiring an outsider just sounds bad for their business. Also, Paris Hilton is a terrible example because she was never responsible for managing the company.

Absolutely. In the business I ran and sold I had no expectation of anything except what was right by the shareholders and the stakeholders. I had a couple of dozen people who relied on us to put food on the table, hundreds of customers, and hundreds of thousands of users. I wasn’t in the business of creating a nepotistic empire.

Furthermore, why would I want to box my kids into one job and one career? To me, it’s like telling your kids that they’re going to be a lawyer/doctor/truck driver/whatever from day one. If they wanted to run the business, they’d have to start at the bottom and work their way up and earn it through merit.

Anyone whom you hire who is not a founder is called an outsider. I hired dozens of them and they seemed to work out pretty well in delivering value for my company. So, yes, I’m going to, in almost every case, hire an outsider because the outsider is the best equipped to deliver value and do the job.

Finally, if I was a child of a small business owner, there’s no way I would have any sort of expectation that my parents would just tie up a business (or anything else) in a bow and give it to me. That would make me a sick, entitled teat sucker.

I have older siblings waiting for me to die. I had a major operation and was given a 50/50 chance of making it. When I t9old my older sister about it. She sent me 13 e-mails on nothing but living will and living trust. And tried to get me to put on my bank accounts. She wasn’t worried about me. She was worried about getting her grubby hands on my assets as easy as posable. She didn’t want to come here until I was dead so she would plenty of paid leave from her job to pack everything she wanted and take care the other bussiness. Everytime I talked to her on the phone, the first thing she brought up was my living will. I never did put her on 8it. I was too scared to. She even had her friend that lives here spying on me.

Diana–

Ugh. That is so sad. I am so sorry for you. I hope that you recover fully from the operation and are back to your good old self as soon as possible. I’m terribly sorry that money had to come between you and family. Hopefully at some point, your sister will come to learn of the wrong of her thinking and have a proper heart and attitude towards helping her younger sister. If not, then confide in friends whom you trust, or, if applicable, members of your church. I hope this all turns out as well as possible for you.

Unfortunately, I probably will inherit. My mom fights bag lady syndrome. It’s slowly getting better, I think.

I’m trying to urge her to splurge on herself. (She is… slowly.) I told her I don’t really want an inheritance — or that her grandkids (if I produce any) should be the ones who inherit. In other words, live a very, very long life and try to enjoy your money, not just furiously save. But even if she follows my advice, there’s still the matter of life insurance, which is pretty generous.

So I guess one way or another, I’ll be profiting off her death, which makes me very queasy. As it stands now, she’s sending me money yearly to help pad my IRA. That way, she says, I won’t have to lose out on compound interest.

Still I don’t rely on inheriting or her life insurance. I want to be stable from my own efforts. I hate the idea of profiting off anyone’s death, let alone my own mother’s.

Abigail–

Thanks for dropping by!

You have the right attitude about it. You’re not depending on it, and you don’t want it, but it is, after all, your mother’s money, and she can do what she wants. If she wants to give it to you or the Mini-pennypickeruppers, then that’s her choice. Your mom is in the majority of Boomer women who don’t feel comfortable about their finances. Some of them will never get past the frugal tipping point no matter what you do.

If I were in your shoes, I’d keep talking to her about how set you are and won’t need her support and then ask her what her fears are. They probably revolve around running out of money before she runs out of heartbeats, which provides a good opportunity to review what she has and to talk about safe withdrawal rates and, where appropriate, income protection strategies.

Beyond that, it’s her choice. I empathize with your struggle, though. I have a similar story with my grandmother (which I tell in the 52 week Financial Game Plan), and it’s frustrating to see someone who’s “arrived” and should be able to reap the benefits of hard work and intelligent living not be able to flip that switch and enjoy some of it.

A different perspective Dianne. Could your sister be following what most financial counselors would tell her and you- living wills and living trusts so the state does not end up with Your final decisions? These are both documents to help YOU. They give her power only when you are unable to do for yourself. They tell the person what to do for you. If you want for her to care for you, she needs the information to do it.
If she is going to be responsible for caring for your finances when you are very ill- then she may need that information. If putting on accounts feels weird- then how about putting her on an account to pay your mortgage and such for six months if you cannot do it for yourself.
Could the “spies” be checking on you to make sure things are going fine? You mentioned that she does not live near you- is she able to quit her job to watch over you? Is that the expectation?
Jason, isn’t that what most counselors ask first—“are your papers in order”?

Jason, by tomorrow you might rule Google’s results for “teat sucker”!

“Inheritance” seems to be a concept right out of a 19th-century Dickens novel. In today’s world, most beneficiaries are old enough for the bequeathed assets to be irrelevant.

We’ve told our daughter that she’s getting her inheritance now in the form of a few years’ gifting for TSP and Roth IRA contributions. She’ll still have to save more on her own, but at least she won’t have to wait another 50 years to see if she inherits. I hope we know our adult kid well enough to trust that it won’t go to lifestyle upgrades, but this tactic will certainly answer the question.

Nords–you had my hopes so high and then dashed them upon the rocks! I’m not in the first page of Google for the term “teat sucker!” Boo!

We have a family member who likes to beat the more easily cowed members of the family with the threat of being left out of the inheritance, and some of us have made comments similar to yours (though not as eloquently incorporating a Dickens reference) that it’s not going to make a material difference in the recipients’ lives, but they kowtow anyway.

You brought up a point which I failed to mention in the article in that when you gift, not only do you get the joy (and control) of seeing it happen while you’re alive, but you also get to do so in a time in the recipient’s life when it can have the greatest influence. Give me $50,000 when I’m 60, and it will, while appreciated, not register much on my overall net worth. Give me $50,000 when I’m 25, and now I have 40 years (give or take 20) to grow that into enough to retire on.

I have another article in the hopper about how you can fool Monkey Brain into getting out of the scarcity mindset by giving, which will relate to what you’re doing. It’ll come soonish*.

*Soonish: somewhere in the next (as of my latest tally) 163 articles.

If it’s any consolation, you’re crushing it for “entitled teat sucker”!

I do worry about control and affluenza issues. $50K in today’s dollars would’ve made a mighty big difference to me in my 20s, but it might also have taught me a painful lesson about due diligence for investing in stocks or real estate. Not so sure I would’ve wanted my Dad “helping”, either.

I hear you on “soonish”. No scarcity mindset there, either…

It appears I’m in good company with that phrase! 😐

You’ve brought up an interesting point about the unintended consequences of a gift like that.

Pros: Accelerate retirement, money when most needed, maximum leverage while parents still have some modicum over the behavior of kids
Cons: Perception of meddling by parents after leaving nest, temptation to go high on hog leverage to buy 53 properties with little money down, loss regret if money blown

One way to get around some of it would be with a trust which could be used to set conditions. There might be Crumney provisions to deal with if gifting into the trust, but a smart trust attorney deal with those pretty deftly. Or give a little to allow for the learning curve while tagging the rest with stipulations such as “this will go into your IRA and if you don’t invest it in index funds, you get no more.” A little meddling while the kid learns the reasons (through the “hedge fund” approach) why that’s the right way to go.

Hmm. The wheels are still spinning on this. WWDAD (what would Dan Ariely do)?

I don’t count on anything, let alone as a retirement plan. I hope there will be a will, because even if it is unfair, it will set things straight and help avoid fights between siblings. My boyfriend fought ugly for 7 years with his siblings and there was 7 digits for everyone… while they were not impatiently waiting for their parents to die, most thought they could live the high life they lived as kids, except that when you cut a pie into six kids, it is not as big as when your parents were enjoying the whole thing!

I hate to be a Debbie Downer, but if there are fights between the siblings, a will probably won’t solve them. It’d be easier for the parents to have a family discussion to get everything out in the open and set expectations long before the reading of the will. It would enable some discussions about who wants what and for trading to happen rather than later resentment (“Pauline got the lint ball collection! I knew she was Mom’s favorite!”). Still, a will is better than nothing and having the kids fighting over things like vultures at a kill.

Sorry to hear about your boyfriend’s issues with his family. It’s really sad when money (or, more precisely, the expectation of receiving money from someone else) destroys what should otherwise be a close and tight relationship and erases good memories of a life with someone and replaces them with disappointment.

You’re absolutely right that a will won’t solve anything, especially when parents make a will saying they want everything split equally between their two children and then put one child’s name on accounts as POD to them without realizing they just nullified their wills. This happened to me when both my parents died recently.

I knew nothing about how much money my parents had; I never asked because I thought it was in bad taste and didn’t really care. Unfortunately my sister had no such reservations and was always interfering in their affairs and giving them “advice” about how to handle things. Apparently her estate planning advice was to keep everything out of probate no matter what, so they decided the easiest way to do that was to leave everything POD to my her (expecting her to share). Long story short – not only did she walk away with close to a million dollars, she tried her best to convince me that my parents actually wanted this because they never really loved me. (Did I mention my sister has serious mental health issues?)

I’m trying my best not a be angry with my parents but it’s not easy. My sister bullied me constantly as a child; their poor estate planning gave her almost a million dollars to bully me with as an adult. The saddest part of this is I have a severely disabled son in his 30’s who lives with me. I know how much they cared about him but they never took the time to set up things properly. My sister is loving it – it’s the ultimate ‘gotcha’ for her.

Just a little cautionary tale for you all.

I don’t have kids yet, but my boyfriend and I already have frequent conversations about how to make sure our (hypothetical future) kids don’t become spoiled brats.

In theory, if everything goes well, we’ll have a bunch of fully-paid-for rental properties generating passive income by the time they’re either born or very young. That means they’ll have a sense of a “trust fund,” of sorts, that they can rely upon. Their sense of entitlement might rise through the roof. We need to figure out ways to prevent this from happening. (Of course, I realize I’m totally getting ahead of myself …)

The most likely outcome of your situation, if it goes forward as you envision, is that you’ll continue to grow the RE assets (and other assets) until you feel comfortable enough to stop working, since you’ll be financially independent. Let’s call that age RANDBETWEEN (30,45) = 37. That’s the number Excel spat out. At that point, your kid(s) will not even need toes to count their ages. There’ll be about 50 more years (give or take some, depending on the propensity you have to step out in front of a beer truck) of you living before this becomes an issue. You’ll have plenty of time to discover if they’re spoiled little ****s well before making the decision. Plus, that’s what all the joy in trust planning is all about. Hello, springing trusts!

By the way, do you like how I just created an anchor for your retirement age? You’ll be bashing Mr. Afford Anything about it all weekend! You’re welcome!

How did I miss this gem of a post when it came out? I found it today through Control Your Cash.
I have a couple sad, personal inheritance stories too. It’s one thing to talk about wills and trusts, but it’s another thing all together when the time comes to execute the your plan. Estate planning for people who don’t think they need it has become my personal hobby horse (obsession? compulsion?).
Great stuff, Jason

It sucks to have to face your own mortality or the mortality of someone you love. That’s why people don’t do it. However, probate is a dirty, nasty process, so even if you won’t have a taxable estate (either federal or state), it’s still worth it to do the proper planning to avoid probate and make sure that your wishes are documented and can’t be challenged or otherwise disregarded. It should be mandatory for people, upon turning age 21, to be eligible to buy alcohol or get a discount on their insurance or whatever, to have to witness a screwed up probate exercise. That’d get them on the estate train.

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