Great stuff, as expected from Justin Powell! This should be required reading for every parent. Pastors should give this article to people during marriage counseling.
I’ve seen a few comments of late from accounts encouraging parents to open up 529 accounts, UGMA’s, and other accounts for their children. This is on top of the new Trump accounts being rolled out. These assets can be used as a way to encourage hard work, discipline, and ownership.
It can also be a prevention process for something more painful. One thing people underestimate is the probate process and the nightmarish stories that come from it. A clean process can be painful. Accidents, health, divorces, fraud, disaster can cause a nightmare for your heirs. Will contests are not uncommon. I have multiple friends who had a parent remarry and pass away only to have a nasty probate estate process with the second spouse. A couple of folks had parents who got into poor or complicated business deals which caused many headaches and grief for surviving family members. A consistent gifting process for your children could alleviate a future headache.
Domestic court stories are talked about a lot. Probate court stories can be as crazy and damaging.
No contest clauses, well drafted trusts, and better overall planning can reduce rancor. Some of that costs money but some of it is just using the correct boilerplate.
Totally agree with this. In the young adult years, you're starved for capital. You need capital for higher education, to buy a home, to have children, to start a business. Not every parent can afford to help their kids that much but yes, the Boomers have really prospered and many could, but don't grasp that if they wait too long, that window for having grandchildren will close, the business opportunity will pass, and their kids may have to move far away, just to make ends meet.
For example, my immigrant in-laws ended up giving us, over a number of years, the house we're living in. The home that we raised nine children in. And then they helped get them through college. They didn't pay all of it, but it was a substantial help. Now, our adult kids are all doing great, AND my in-laws, at 92 and 88, are also doing well. Grandkids keep you young!! And we live in the same zip code, instead of three states over.
It's a win-win, for those who can do it and who think it through carefully. Be a source of capital for your kids that have a proven track record, of diligence and conscientiousness. If they want to get married and have a family, help them to do it. Invest in the future, starting with your own family, NOT your alma mater!
I think this article has a strong whiff of AI writing, but I do think overall I would agree with it.
As counterpoints, I think that the vast majority of parents simply don't believe that they're going to be able to sustain their way through their retirement if they give away their money early. When people only lived five or ten years after retirement, it wasn't such a crazy suggestion, but now that it's quite common for people to live 20 or even 30 years post-retirement, giving away a substantial chunk of that, or doing something like equity release/reverse mortgage, early on is extremely high risk.
Though, even then, that's probably fine if a conversation has been had with the children that they will be on the hook for caring for their parents. For example, if your parents gave you 10% of their assets when you were 30, that you might be giving them money in your 40s or 50s. But that is quite different from most Western thinking today.
And on giving lots of money to young people, I think it can be extremely high risk. I know several stories of of people who received large inheritances at a young age and effectively blew the whole thing.
"Wealth gained hastily will dwindle, but whoever gathers little by little will increase it." - Proverbs 13:11
That all sounds very critical given I said that I actually agree with the post. I put my cards on the table, last year, my dad actually gave me the majority of my inheritance (I'm in my late twenties). He had never made any mention that he was going to do this until one year before it happened. I think from his perspective he was waiting to see if me and my sister would be mature enough to deal with the money.
I actually think if he had told me a decade or so before what his plan was, it probably wouldn't have done me any good. It probably would have made me less ambitious for myself, but coming when it did has had a significant impact.
I would say if parents are considering giving money to their children early, rather than telling them several years in advance, it's probably worth trying to instil the character traits that they want in their children, then seeing if they actually develop those traits, then being able to give them the support that you always wanted to.
I agree that the sharing of dynastic wealth needs to involve not simply the elderly passing on money to the next generation at a crucial time, but it also comes with it a reciprocal duty to take in and care for the elderly in their twilight years. Both must be discussed, but a miserly mindset of "I've got mine" and "no one helped me" is holding many families back.
I also agree that fear about the future has many older folks in its grips. Elder care continues to get more expensive, but so does the cost of living in a house by yourself and enjoying the ever-increasing basket of consumer goods pushed by our society. I'm pessimistic about asking older folks to change though, especially after they have been sold a certain vision for their entire lives.
This piece assumes the parents are rich and have money galore. Most people aren't and don't, and their kids will necessarily have to wait until the parents are gone to receive whatever is left over of their assets, and to sell the house their parents were living in.
Agreed. This article isn’t for everyone. There are millions of wealthy people in this country who should spend more time thinking about how they’re going to steward their resources.
Sure, but that's fairly concentrated in the upper strata of the economy. Most people are lucky to have a 401k and a paid off house (and many do not even have that much). And they may wish to continue living in the latter. Moreover if an elderly person needs a nursing home and it's funded by Medicaid, the state will do a look back and see if any assets have been given away-- and they will claw anything and everything back given away within the last ten years. One cannot even a sell a house to one's kids or grandkids-- the state will be suspicious that the price was low-balled. I knew a young couple some years back who wanted to buy a grandparent's house, where they were living, when he was institutionalized and the state said a firm No to them and they had to move out.
Great article and podcast on a timely topic. This is why I subscribe.
Great stuff, as expected from Justin Powell! This should be required reading for every parent. Pastors should give this article to people during marriage counseling.
I’ve seen a few comments of late from accounts encouraging parents to open up 529 accounts, UGMA’s, and other accounts for their children. This is on top of the new Trump accounts being rolled out. These assets can be used as a way to encourage hard work, discipline, and ownership.
It can also be a prevention process for something more painful. One thing people underestimate is the probate process and the nightmarish stories that come from it. A clean process can be painful. Accidents, health, divorces, fraud, disaster can cause a nightmare for your heirs. Will contests are not uncommon. I have multiple friends who had a parent remarry and pass away only to have a nasty probate estate process with the second spouse. A couple of folks had parents who got into poor or complicated business deals which caused many headaches and grief for surviving family members. A consistent gifting process for your children could alleviate a future headache.
Domestic court stories are talked about a lot. Probate court stories can be as crazy and damaging.
No contest clauses, well drafted trusts, and better overall planning can reduce rancor. Some of that costs money but some of it is just using the correct boilerplate.
Totally agree with this. In the young adult years, you're starved for capital. You need capital for higher education, to buy a home, to have children, to start a business. Not every parent can afford to help their kids that much but yes, the Boomers have really prospered and many could, but don't grasp that if they wait too long, that window for having grandchildren will close, the business opportunity will pass, and their kids may have to move far away, just to make ends meet.
For example, my immigrant in-laws ended up giving us, over a number of years, the house we're living in. The home that we raised nine children in. And then they helped get them through college. They didn't pay all of it, but it was a substantial help. Now, our adult kids are all doing great, AND my in-laws, at 92 and 88, are also doing well. Grandkids keep you young!! And we live in the same zip code, instead of three states over.
It's a win-win, for those who can do it and who think it through carefully. Be a source of capital for your kids that have a proven track record, of diligence and conscientiousness. If they want to get married and have a family, help them to do it. Invest in the future, starting with your own family, NOT your alma mater!
I think this article has a strong whiff of AI writing, but I do think overall I would agree with it.
As counterpoints, I think that the vast majority of parents simply don't believe that they're going to be able to sustain their way through their retirement if they give away their money early. When people only lived five or ten years after retirement, it wasn't such a crazy suggestion, but now that it's quite common for people to live 20 or even 30 years post-retirement, giving away a substantial chunk of that, or doing something like equity release/reverse mortgage, early on is extremely high risk.
Though, even then, that's probably fine if a conversation has been had with the children that they will be on the hook for caring for their parents. For example, if your parents gave you 10% of their assets when you were 30, that you might be giving them money in your 40s or 50s. But that is quite different from most Western thinking today.
And on giving lots of money to young people, I think it can be extremely high risk. I know several stories of of people who received large inheritances at a young age and effectively blew the whole thing.
"Wealth gained hastily will dwindle, but whoever gathers little by little will increase it." - Proverbs 13:11
That all sounds very critical given I said that I actually agree with the post. I put my cards on the table, last year, my dad actually gave me the majority of my inheritance (I'm in my late twenties). He had never made any mention that he was going to do this until one year before it happened. I think from his perspective he was waiting to see if me and my sister would be mature enough to deal with the money.
I actually think if he had told me a decade or so before what his plan was, it probably wouldn't have done me any good. It probably would have made me less ambitious for myself, but coming when it did has had a significant impact.
I would say if parents are considering giving money to their children early, rather than telling them several years in advance, it's probably worth trying to instil the character traits that they want in their children, then seeing if they actually develop those traits, then being able to give them the support that you always wanted to.
I agree that the sharing of dynastic wealth needs to involve not simply the elderly passing on money to the next generation at a crucial time, but it also comes with it a reciprocal duty to take in and care for the elderly in their twilight years. Both must be discussed, but a miserly mindset of "I've got mine" and "no one helped me" is holding many families back.
I also agree that fear about the future has many older folks in its grips. Elder care continues to get more expensive, but so does the cost of living in a house by yourself and enjoying the ever-increasing basket of consumer goods pushed by our society. I'm pessimistic about asking older folks to change though, especially after they have been sold a certain vision for their entire lives.
This piece assumes the parents are rich and have money galore. Most people aren't and don't, and their kids will necessarily have to wait until the parents are gone to receive whatever is left over of their assets, and to sell the house their parents were living in.
Agreed. This article isn’t for everyone. There are millions of wealthy people in this country who should spend more time thinking about how they’re going to steward their resources.
There are trillions of dollars in wealth projected to be passed on to Millennials via inheritance.
Sure, but that's fairly concentrated in the upper strata of the economy. Most people are lucky to have a 401k and a paid off house (and many do not even have that much). And they may wish to continue living in the latter. Moreover if an elderly person needs a nursing home and it's funded by Medicaid, the state will do a look back and see if any assets have been given away-- and they will claw anything and everything back given away within the last ten years. One cannot even a sell a house to one's kids or grandkids-- the state will be suspicious that the price was low-balled. I knew a young couple some years back who wanted to buy a grandparent's house, where they were living, when he was institutionalized and the state said a firm No to them and they had to move out.