Rethinking Inheritance

folivier said:
In our trust there is a provision that any heir who contests the will or trust will automatically be excluded from any inheritance. This was suggested and put in by our estate attorney. Hopefully this will prevent any problems.
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+1

Same here.
I give enough to each that it will "hurt" to be excluded automatically and hope to win more by contesting. Rather than simply trying to win more by fighting the terms.
 
My dad died first at 62 from liver failure, and mom was living with my sister in a trailer in North Carolina. Dad left me the burial bill and a unpaid bill from the liquor store. Dad was living with my other sister in Connecticut when he passed and she and her husband took his few belongings. I think they (my parents) were still married at the time, although not living together.

I moved mom and my sister from "Tobacco Road" in NC to California to live in my rental house until mom died of kidney failure. I paid for her burial. She had no assets, or debts, thank God. No inheritance there, will or no will (neither had one).

When I turn to ash, my daughter gets the whole pie and the cream. I have a will and everything is listed and she is the sole beneficiary. I also have recorded a Transfer on Death deed for my house to be passed to her. No probate required. She will also get my dog to add to her two cats (I haven't told her that yet!).
 
marko said:
IMO there's two types of inheritances. One is a small inheritance, maybe under $200k-$500k which is a nice boost but not life changing.

The other is one that is a life changing amount. Several millions of dollars. ...
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There is a third type of inheritance: responsibility.

Anyone doing estate planning or settlement work has encountered trustees who aren't trustworthy, directors who are directionless and presidents who aren't presidential. Inherited irresponsibility can be nasty for stakeholders - ask me how I know. ;)
 
folivier said:
In our trust there is a provision that any heir who contests the will or trust will automatically be excluded from any inheritance. This was suggested and put in by our estate attorney. Hopefully this will prevent any problems.
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I'd be very concerned if whoever draws up a will or trust didn't include that provision! SOP as far as I know, usually with the challenger receiving "one dollar" in order to satisfy some sort of legality.

I wonder what the success rate is...I'm betting it's pretty low. I only know of two such challenges, (one being my father's mother contesting my father's inheritance) and they both failed.
 
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Keep everything updated.

There is a massive legal fight over an aunt's estate on my wife's side of the family.

Childless couple, wife had many physical problems and so was already in an ALF.

Husband & everyone else thought she'd die first, so he never bothered updating his will.

And of course he died first, leaving everything to her, even though his family provided years of care to his wife.

So wife gets everything & then her out-of-state black sheep relatives start fighting over what she has, well before she actually dies.

They tried to obtain guardianship to take her out-of-state even though she cut off contact decades prior.

When aunt does finally die in her late 80s her will is so out-of-date that it still mentions her mother.

What is worse is that named beneficiaries are "nieces & nephews" so many of those out-of-state relatives come out of the woodwork claiming to be such, which results in more expense & delay as the executor has to sort out those claims, several of which turn out to be false.

So, wills should have named beneficiaries, not generic terms like the above.

I've joked with DW that what should have been a 5-figure inheritance is now down to 3-figures...if that.
 
aja8888 said:
My dad died first at 62 from liver failure, and mom was living with my sister in a trailer in North Carolina. Dad left me the burial bill and a unpaid bill from the liquor store. .....

.....
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If the deceased has nothing to inherit, then bills incurred before the death are NOT inherited, meaning you don't have to pay them.
And if a liquor store told me the departed who died from liver failure owed them money, I'd tell them they are lucky if I don't sue them for causing the death !!

It's similar how a doctor sent my Mom a bill after Dad died at age 64 under the doctor's care. I told Mom, he failed at his job and doesn't deserve payment !!! You can tell I was sensitive at the time ;)
 
We will inherit very little from either side, so no risk of squabbling in our generation.

I think its very easy to get screwed up by a large inheritance if there isn't a lot of planning and education to go with it. If someone had handed me $2M when I was 25, I almost certainly would have been thrown off my stride in terms of saving, LBYM, etc.
 
Sunset said:
If the deceased has nothing to inherit, then bills incurred before the death are NOT inherited, meaning you don't have to pay them.
And if a liquor store told me the departed who died from liver failure owed them money, I'd tell them they are lucky if I don't sue them for causing the death !!

It's similar how a doctor sent my Mom a bill after Dad died at age 64 under the doctor's care. I told Mom, he failed at his job and doesn't deserve payment !!! You can tell I was sensitive at the time ;)
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I don't recall the amount of the bill as it was probably small. The store owner runs a business and Dad made the purchase (on store credit - small town). I didn't think it was right to stiff him.

Dad was responsible for his own death by his actions. Alcohol sales were not illegal in his state and Dad was of age.
 
As I see it, an inheritance is either intended to compensate the heir for something, such as caring for the now-deceased parents, or else it should be expected to be nothing more than a windfall, to be squandered if desired. If a windfall sounds somehow vulgar, leave it to charity. If an inheritance is not of the compensation flavor, then I don't see a real difference between an heir "upgrading their lifestyle" now and investing it prudently now and likely upgrading their lifestyle later.
 
RunningBum said:
The biggest negative I see is if someone has a drug or gambling problem and not only blows the money but also their health. If you fear that, or even just reckless spending, maybe you set up a trust and hire a trustee to administer it.
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That’s exactly what DW and I chose to do. Our two daughters get their share upon death. But we established a trust for our adult son due to his alcohol dependence, with an independent trust management company as trustee. Since that time, I’m ecstatic to say that he seems to genuinely be sober as far as we can tell. For two years now. We have yet to re-work the will to remove the trust though. Maybe we should. But our son still has many challenges and managing significant money is so far from his capabilities (or even a top concern given other things) that maybe keeping the trust in place for now makes sense.
 
Lorenzo said:
As I see it, an inheritance is either intended to compensate the heir for something, such as caring for the now-deceased parents, or else it should be expected to be nothing more than a windfall, to be squandered if desired. If a windfall sounds somehow vulgar, leave it to charity. If an inheritance is not of the compensation flavor, then I don't see a real difference between an heir "upgrading their lifestyle" now and investing it prudently now and likely upgrading their lifestyle later.
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The only thing I inherited from my parents were good looks and a bad attitude. I have not squandered my inheritance.
 
folivier said:
In our trust there is a provision that any heir who contests the will or trust will automatically be excluded from any inheritance. This was suggested and put in by our estate attorney. Hopefully this will prevent any problems.
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How is this interpreted and applied? Pass / fail? A single question invokes the clause? Is there a risk its subjective? Could it then be debated or litigated?
 
Exit 2024 said:
Only headache that I have is to how educate her to keep inheritance separate that it will not count as marital assets. She does not want to hear about that as she thinks of me being too negative and already planning for her divorce while she is not even married. But I have a reason to worry - her last BF was a lawyer and when she mentioned that to him briefly (she does not even know out NW and do not think that she will ever inherit much), he started to act like he is offended and that if they get married - everything should be marital property from day 1 plus all that they both will receive later. And that would be ok if he had something too - but not, he only had tons of debt and nothing to show for it. Grateful that he is out of her life now. We can not control everything, just hope that when time will come she will remember what I am trying to tell her now.
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I am in a similar position. 2 daughters and neither is married yet. They seem receptive to keeping premarital and inherited assets separate but IDK if they will follow through. No attorney boyfriends :) I have suggested keeping quiet about the plan. I may look into getting advice about irrevocable trusts.
 
Route246 said:
Not thinking so much about our assets and pass down to heirs but what about anecdotal tales of inheritances observed and perhaps experienced with friends, colleagues, classmates and family members (heirs). In the aggregate I can think of many instances where it was neutral to negative and few instances where it was productive and entirely positive. I think of the following cases off the top of my head:
  • Positive - dentist handed off practice to his son who ran a successful practice to this day
  • Positive - relatives who inherited and sunk it into a down payment resulting in domiciling and gaining equity
  • Positive - those who spent it on higher education and emerged with little or no student loan debt as a result
  • Positive - saved the majority of assets, invested in equities and fixed income securities
  • Neutral - paid off debts, did not squander on lifestyle upgrades, saved a significant portion
  • Neutral - BTD on some but not all, saved the rest, respected legacy savings
  • Negative - immediately quit job (not retired), squandered money, treated windfall as a lottery winning
  • Negative - upgraded lifestyle, treated windfall as a paycheck bonus
I know of many instances where heirs were simply waiting for someone to die in order to secure their entitled paycheck. I know of many instances where heirs fought with each other to get their "fair share" and where lawyers took a significant cut, in a few instances the lawyers got everything. I know for a fact where heirs have been demotivated from going out and working hard, taking chances and being driven to be successful. The looming inheritance has demotivated them where they become trust fund babies and really squander any talent potential they may possess.

It is such a tragedy when I see and know someone's parents work so hard to provide a financial legacy for their children only to see their dysfunctional children fighting over the prize after Mom or Dad dies. A classmate from college is in that situation now, father died 5 years ago intestate and the children have been fighting ever since. The estate was over 5M when he died and lawyers have sucked off more than half so far and they are not going to quit until they get the whole thing. These kids all hate each other so much now that it can never end amicably. They already sold one house and the entire proceeds went to pay legal bills which is unbelievable. The family court judge is a lawyer so it is obvious who she is going to favor in this matter.

I knew both parents and they are both turning over in their graves now, screaming at their children. The father would "jokingly" threaten to give the entire estate to the local humane society because he know they did not get along. Why he died intestate is beyond belief, I guess he was holding out to see what to do and by that time it was too late.

I'm beginning to think we should give the vast majority of our assets to something we hold dear and leave comfortable but token amounts to our heirs.
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Kinds of implies you don't hold your heirs "dear".

More seriously, to you and many of the others who intend to leave the bulk to charity, why not start aggressively giving it away during your lifetime when you can monitor and influence the charities? In the end they are just people, with overhead, who may or may not use it productively.
 
WhenIsItTime said:
Kinds of implies you don't hold your heirs "dear".

More seriously, to you and many of the others who intend to leave the bulk to charity, why not start aggressively giving it away during your lifetime when you can monitor and influence the charities? In the end they are just people, with overhead, who may or may not use it productively.
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Because I never know when my best laid plans might go astray and I might end up needing that money after all. Their need will still be there after I'm gone. They can have the money then.
 
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MuirWannabe said:
That’s exactly what DW and I chose to do. Our two daughters get their share upon death. But we established a trust for our adult son due to his alcohol dependence, with an independent trust management company as trustee. Since that time, I’m ecstatic to say that he seems to genuinely be sober as far as we can tell. For two years now. We have yet to re-work the will to remove the trust though. Maybe we should. But our son still has many challenges and managing significant money is so far from his capabilities (or even a top concern given other things) that maybe keeping the trust in place for now makes sense.
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Can you share the name of the independent trust management company?
 
We have always had a will in place. Well, since our first child was born. When the kids hit mid thirties, we gave them each a copy and continue to do so as it’s updated. We also have an action plan with specific instructions in the event we are both killed or seriously injured (car accident, plane crash..). Includes what bills need to be paid, when and how. Who cares for pet(s), secures guns, takes car of car and truck, who else needs to be notified and how, Advance Directive, medical power of attorney.

Goal is to minimize kids arguing about who decides what. If anyone has heartburn with the terms of our will, or any other plans we can sort it out now amongst ourselves without $$attorneys. If it all goes south, it will be in spite of our best efforts, not a lack of effort. 🤞
 
My parents left basically just a few thousand. But they had retired from clock punching in their 40s and the nestegg sustained them. Good for them but it was really close.

My hope is my son is able to manage to hang into the windfall and use it wisely, passing some on to his kids. He is prudent so I am optimistic.
 
Our kids will receive relatively little actual inheritance with most of our remaining stash going to our charities. BUT, we are "giving with a warm hand" in the mean time. We've helped with weddings and house down payments and Roth IRA funding, loan repayment, etc. Heh, heh, wish I could tell you how it will all turn out. :cool:
 
DH and I have one son. The inheritance will be a life changing amount, as mine was. He has a learning disability, is bright, but has some difficulty communicating, and gave up trying to make a career out of teaching. He works nearly full time, but there are benefits to part time in his position (more flexibility in time off), and he has a ROTH 401K. full time would give him health insurance benefits, but the ACA in our state offers dental insurance, and his cost is minimal. We are gifting $17000/year in the form of stock/ETF transfers, and will probably increase that when SS kicks in. He is frugal, hasn't dated since college and wants to stay single and is not interested in having children. Maybe someone wonderful will come along, but who knows.

I had such a high stress occupation and burnout. I'd rather see him happy in a lower stress situation than what I went through.

DH inherited a five-digit amount when his mother died in 1995. We also got some nice furniture. We were the only ones who wanted it, so it worked for us. From my parents, my sister and I got a life changing inheritance-barely 7-figure inheritance, mostly in an after tax account, treasuries, and a couple of IRAs. Dad had been in assisted living for 18 months before he died, and I had sold his house, which gave him plenty of cash to pay for assisted living.

The inheritance added to my retirement savings and we paid for DS's college. I could have retired right then, but worked another 10 years including multiple OMYs, until I discovered the ER forum and the ACA seemed safe.
 
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