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Dear Moneyist,
My parents, who are now deceased, had a living trust with provision for creation of a new trust that would allow my brother and I to share the income from that trust during out lifetimes.
When we both die, the principal from that trust is to be distributed in equal parts to the three grandchildren (I had two children, my brother had one).
Over the years, the principal in that trust has grown to over $6 million. As my brother and I are still in reasonably good health, I anticipate another 10 to 15 years before either of my children will see any of that money.
I have kept all of this information secret from my children (now ages 30 and 33). My children had a lot of difficulty growing up and their father (we are divorced) enabled a lot of behavior by giving them money well into their adulthood. Their father died about 1.5 years ago, so that money is no longer flowing.
How and when should I tell my children about their ultimate inheritance? My son is working and could absorb the idea that his share of $2 million isn’t as much money as it sounds like. He would likely use income derived from it as a supplement, rather than a replacement for working income.
But my daughter has not arrived at hat point in her life yet, and I’m worried that my daughter would blow through her inheritance with little to show for it and a much worse life afterwards.
What should I do?
Cautious Mother
Dear Cautious,
Who gives advice columnists advice?
The answer to that question is directly related to my answer to your dilemma. I could give you my suggestion right now, but that is not often enough and this column would be over before it began. So please indulge me. Even when I use my own “call a friend” lifeline from “Who Wants to be a Millionaire?”, I am left with a decision to make. Financial, legal and familial choices are fueled by emotion, ego and experience. I’d like to say that I could always trust myself, but that would be a lie.
Still, who wants advice from an advice columnist who claims to be perfect? Who wants to listen to a braggadocio who tells everyone what to do, and stands on the highest mountain or sits in the studio of the highest-rated cable channel to do that? Who would trust someone who always claims to be right and never puts a foot wrong? As Johnny Lydon sang, “I could be wrong, I could be right.” We weigh up the pros and cons with the information we have, and then we make a decision.
So who do I listen to? My inner Jiminy Cricket. Yes, that’s the Walt Disney DIS, -4.29% version of the character in Carlo Collodi’s 1881 story, “The Adventures of Pinocchio.” The fellow with the blue top hat and the red umbrella, who always seems to have a wise word. We have a similar sartorial taste in bib and tucker, but I also like his wise, upbeat manner. He doesn’t see conflict, he sees resolution; he doesn’t see fear, he sees opportunity; he doesn’t see badness, he sees pain.
A few years ago, I spoke to a friend who spent years in U.S. military special ops in war zones overseas. They are super-smart, extremely adaptable, highly-trained people. This person has a high emotional and logical intelligence. I wanted to know the secret to figuring out complex mysteries and moral dilemmas, and how he knew who to trust. After all, he was scoping out dangerous territories in foreign lands with unexpected dangers lurking around every corner. His answer: “I trust my gut.”
That is what I advise you to do now. Only you know what personal challenges or demons your children have had to face. Correction: only they know. But you have a better idea than I do. If your children are on an upward trajectory, and they have learned to stand on their own two feet and they are focused on putting good into the world, being productive members of society, while supporting themselves and/or their families, marvel at their achievements from a respectful distance.
If your stock portfolio is on the up and has been for some time, you wouldn’t start tweaking it now. If it hit a bump, like the markets have done this week, you may decide that given that you’re in this for the long-haul, making rash decisions about selling or buying would not be wise without consulting your broker first. If your $200,000 Patek Philippe watch made from sapphires and alligator leather was working a charm, you wouldn’t start shaking it, and wishing it would run faster.
The wisdom you seek is in your question. You can structure their trusts in a way that give some freedom, some allocation for education, housing, and their children wrapped up in legal advice, mature reflection and consideration from your adviser, your own love, pride in their progress and a realistic perspective on what $2 million apiece can achieve. As for telling them about it now? Sometimes, the best course of action is the most difficult one: to say and do nothing at all.
Do you have questions about inheritance, tipping, weddings, family feuds, friends or any tricky issues relating to manners and money? Send them to MarketWatch’s Moneyist and please include the state where you live (no full names will be used).
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The Moneyist: ‘What did he do with all the money?’ My dying husband cashed his $700K life insurance and emptied his bank accounts
Hello there, MarketWatchers. Check out the Moneyist private Facebook FB, -4.50% group where we look for answers to life’s thorniest money issues. Readers write in to me with all sorts of dilemmas: inheritance, wills, divorce, tipping, gifting. I often talk to lawyers, accountants, financial advisers and other experts, in addition to offering my own thoughts. I receive more letters than I could ever answer, so I’ll be bringing all of that guidance — including some you might not see in these columns — to this group. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.
