Should You Leave an Inheritance for Your Children?

by Shawanda Greene

Stingy blonde hoarding cash

Proverbs 13:22 says, “A good man leaves an inheritance to his children’s children.”

Luckily for me, I’m not a man. Yeeehaw! *duck walk*

My descendants can thank the sexist Bible for assuming  us chicks would never have the wherewithal to obtain wealth.

But seriously, the decision to gift a sizable estate gathered through blood, sweat, and years without a single cup of Starbucks coffee is nothing to trivialize.

At one point, I was 100% sure my monies would eventually pass to my young’uns seamlessly and without hesitation.

Yeah, there was a time I knew exactly where I stood on this issue. Now, I dunno.

When it comes to leaving a little something behind, I’ve narrowed it down to three basic choices.

Leave your kids an inheritance to squander without your guidance.

Okay, so you’re dead, right?

You’ve scrimped, couponed, sold some hair, sued some people, erected a backyard chicken coop, and so on – all in an effort to retire and die rich.

By foregoing the luxuries you hoped to enjoy in your latter years, you amass quite a fortune that’ll go to your heirs upon your death.

Unfortunately, with you being dead and all, you have no control over how the money is spent. Your kids can multiply their seed money by executing a series of prudent investment decisions. Or, they could piss it away on booze, weed, and loose women.

Try as they might, your children won’t respect your money like you would. It’s impossible. They didn’t earn it.

Give your kids their inheritance while you’re still alive.

Currently, you can transfer an annual amount of up to $13,000 (if you’re single), $26,000 (if you’re married) to an individual without subjecting yourself to a gift tax. Doing this over many years will allow your kids to enjoy a decent chunk of their inheritance before you die.

I like this option for a couple reasons:

a) You can influence your kids to make the best decisions. If you disagree with how they use their generous gift, cut ’em off. Hell, it is your money after all.

b) Promising to donate any excess funds to charity upon your death, motivates your children to help you stay happy, healthy and alive for as long as possible.

Squander the kids’ inheritance.

All of it.

Aim to spend your last dollar on your last day.

Like I said, it’s your money. You made it. What’d your kids do? Be born? Pfft!

You’ll probably wrestle internally with this option the most, but isn’t it the most freeing? It’s hard enough to cover your own expenses.

Kids, grand kids be damned. I’m looking out for numero uno.

Just make sure you carefully monitor your assets so they last you. I’d hate for you to get tossed in a Medicaid nursing home by the children you’ve scorned.

Presumably, everyone who reads this blog will save so much money they have to ask themselves the question, “Should I leave an inheritance to my children’s children?” (That’s not an unreasonable assumption, is it?)

Start thinking about it now. It’s not a question of whether you can, but whether you should.

What do you think?

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{ 7 comments… read them below or add one }

kim October 11, 2011 at 12:09 PM

I've read that middle/upper class count education as a large portion of the inheritance, thus setting their children up for life while holding the purse strings.


Shawanda October 11, 2011 at 12:27 PM

I like that. College is so expensive these days, kids need to understand what they're sacrificing in the future to get what they want now. I think this technique would incentivize children to at least perform a quick ROI calculation before mindlessly choosing to attend a costly private school.


Guest October 11, 2011 at 5:59 PM

What if the education doesn't amount to much? Sure would be a shame to give your child's inheritance to Harvard.


Shawanda October 11, 2011 at 8:47 PM

There are worse places than Harvard to waste your child's inheritance. The same could be said of a failed business venture or a – I don't even wanna say it – wedding. Eeeck!


FabulouslyBroke.com November 6, 2011 at 9:58 AM

I like option 2. :) Giving them money once they're fiscally responsible.


Shawanda November 8, 2011 at 6:02 AM

It's the most reasonable. Although, I'm betting more and more parents are choosing option 3 these days.


@JoeTaxpayerBlog January 17, 2012 at 7:08 PM

The timing is key, right?
Say we plan ahead, have the right nest egg to spend 4% till we're 95, but the market goes wild, and we get old and less active. The nest egg you worried about is suddenly a small fortune.
The flip side is planning too little and spending every last dime a few years too soon. Tough to hit the target dead on. I agree, as we get older, if we actually have too much, I'll fund the grandkid's college, and daughter's own retirement.


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