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I don’t know what’s taken us so long to get a will. Actually, it’s probably because I was single for so long. I figured my (very small) assets would go to my sister or parents. So I didn’t really worry too much about what happened. I figured that it would sort itself out.
When I got married, I knew that my (slightly bigger) assets would go to my wife. I had seen how that was a fairly smooth process when a friend of mine’s father passed away. While his dad did have a will, nobody could find the original copy, which was needed. So they had to file some extra paperwork with the court since there was no original will. But, my friend insisted that it wasn’t that painful. His mom ended up getting 100% of his father’s assets. My friend basically told me that my wife and I really didn’t need a will.
Planning with a Kid in the Picture
Now that I have a one-year-old son, I’m not sure that the argument holds as true. I have been thinking about all the estate planning that is needed, ie trusts, guardianship, etc., that probably needs addressing so that our son is set for the future.
LegalZoom was something I considered, but it makes me a little nervous. I have also perused a couple of local lawyers. They seem a little expensive for what I anticipated a few fairly simple documents would cost.
We don’t plan to be overly elaborate. I hope to set aside the money until he is 18 to pay for college, and then hopefully he has enough common sense to not blow it. I don’t want to withhold it from him until he is 60 because if I was around, and he had a great business venture or major medical bills, my desire would be to help him out.
So you may be thinking why is this on the forefront of your mind?
Well it has to do with a couple of things. The first is that a lot of financial bloggers have been talking about estate planning recently, and I know I won’t be living forever.
On top of that, I have helped facilitate the Dave Ramsey Financial Peace class for years now. He has a module all about estate planning, and I always hear and say that I’m going to get around to creating a will but never do. I guess that’s why I added it as one of my 2017 goals to accomplish.
Another reason is that I want to make sure that there isn’t a mess for him to clean up after we die. I have read about too many wills that get contested or children and outside parties fighting over control of estates. Just look at Prince’s estate. There is/was some serious fighting going around. While my wife and I are nowhere to close to that type of money, we’d love to avoid any drawn out problems.
Interestingly enough, did you know that 56% of Americans are currently expecting to provide their children with an inheritance? I have to admit that this seems a bit lower than I expected. But then again, based on some of the debt numbers that people have, it makes a ton of sense.
For those that are receiving an inheritance, a survey conducted by HSBC found that the average American is in line to receive an inheritance of around $177,000. This is a nice chunk to help when you get to retirement.
According to research done by Jay Zagorsky, he found that 1/3 of people who received an inheritance had negative savings within two years of the event. I can’t imagine spending $177,000 in two years, but also in line with my lottery article, people find ways to blow throw money in a hurry.
This fact is further confirmed as the Williams Group wealth consultancy found that 70% of wealthy families lose their wealth by the second generation, and a stunning 90% by the third. As the old Italian proverb goes, from the stable to the stars and back again.
A Tricky Situation
Of course, my hope is that our children will not be part of those detrimental statistics above. One of our relatives has recently shared that they like to include our son in their will. When he initially told us, we felt very honored and grateful that he would include him. This relative had indicated that his hope would be that my son would use this money towards further education.
However, recently this relative alluded that even if we have more children, that there would be no guarantee that the others would get any money. I have to admit, this makes me a little nervous. I grew up much differently. My parents always stressed fairness and tried to keep everything equal between my sister and me. So essentially whatever money that my parents spent on me, they tried to spend on my sister as well, and vice versa.
I am slightly worried though that if my son received a sizeable amount of money from this relative while a future child did not receive anything, that this might cause a rift or jealousy between the siblings.
My parents have had some first-hand experience with these types of issues, and I believe that it caused some resentment within the family. It’s sad, but there are some distant relatives that we don’t know very well due to some of the fallout from inheritance. Money can bring out such ugly sides of people.
Let me preface this with saying that people can give away their money however they see fit. All I know from experience is that it has caused a lot of heartache over the years when people don’t understand why they received less than someone else.
My Parents’ Plan
To avoid drama, my parents have agreed to keep everything equal between my sister and me. I am incredibly thankful that my parents, first off, to anticipate any sort of inheritance. Secondly, I am grateful that there shouldn’t be any potential squabbles with my sister down the road.
My wife has also seen unequal distribution of assets. She tried to explain to me that my equal-mindedness was not as common as I had hoped. In her experiences, people who have passed have left different amounts for different people. Even in Biblical times, when a father passed away, the firstborn son inherited a double portion of the family property. What seems “unfair” to us now was common practice back then, strictly because of birth order. The concept of equal inheritances for children is not a tradition.
So readers, do you expect to receive an inheritance? Do you think I’m overly concerned about it not being fair that children receive different inheritance amounts? Share your thoughts below.