June 2025
In this episode, Modearn™ advisors Kevin Rex and Stacey McKinnon share their tips on all things inheritance to ensure you are prepared financially, relationally, and emotionally, when giving or receiving. You should watch this conversation if you're interested in...
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Hi there, and welcome to another episode of Couch Side Conversations. I'm Kevin Rex, and I'm joined by my colleague and partner Stacey McKinnon. Today we're talking about giving or getting inheritance and giving our best advice. I'm excited to talk about this. It is a topic where I think, truly, we do some of our best work and make some of the biggest impact.
Our clients are regularly wondering when to give. Do I give while I'm alive? Do I wait till I pass away? Can my kids handle it? There is so many questions. What's the right structure to give? Talking about that is important. Then on the other side of the coin, receiving right when you get inheritance, so many people don't know what to do. I looked up a stat. It's really interesting, but one third of Americans, when they receive inheritance, spend all of it in the first two years. I mean, it's the Google advice. They pay off their home mortgage. They do things that maybe they shouldn't because they really just don't know. They have this windfall and they have never had that before.
And there's really no right answer. I mean, that's why the Google advice is so bad is because it depends on your values and how much you get. And do you have kids? Do you not have kids. Do you have charities you're interested in donating to? I mean, there's so many different dynamics at play that I feel like the only right way to do it is to talk it out.
Yeah, you have to have a plan.
Yeah, exactly.
So today we're going to talk it out. Yeah I look forward to that. I'm going to have you kick it off. I would love to hear a little bit about how you work with your clients when you're discussing giving away assets and inheritance and their giving strategies.
Well, let's start with the toughest of the conversations, which is the question that most clients ask, should I give to my kids while I'm alive?
And there's so much, I think, fear and uncertainty around this. And you and I were talking about maybe where that comes from, and we're talking about pop culture movies and TV shows like, the movie Billy Madison, or maybe like the Paris Hilton's of the world or The Hills, the like Laguna Beach reality show, all of these characters were what we would term as like, trust fund babies. And I feel like when these like, movies and TV shows came out every parent in America was like, no, don't, don't buy.
Like it was reality, right? So it was they didn't want it to be their reality.
Yeah, exactly. So there's this like fear of my kid is going to become a trust fund baby if I give them money during my lifetime .And the truth of the matter is, most of our clients did an amazing job raising their children who are now young adults. And for the most part, if you give to your kids, they're not going to become trust fund babies. In fact, there's some other big benefits to it, too, that we'll talk about in a little bit.
But I certainly think that acknowledging this fear is an important one. And really asking yourself the question of like, is my child, though maybe actually more responsible than I'm giving them credit for.
Sure. And I think when you go back to those movies and those reality TV shows, trust fund babies, most of them started out at birth getting everything they ever needed or wanted, having a personal trainer and nanny and all that stuff. Like at a certain point, your kids have demonstrated responsibility, work ethic, just integrity and compassion. Like, you've seen me know our children right to a certain level where it's they're not just going to convert or change overnight. And in fact, we I think we see the opposite were kids that do inherit large sums of money. They're a little paralyzed at times too, because they're they don't know too much. So it's we don't see them just go buy Ferraris and the things that maybe parents are fearing.
It's also hard at age 30, 35, to teach your children principles and lessons anymore. At that point, they're kind of formed. They're living their own lives. The decision to help them or give them money is, I think, a little more of a values based decision versus a fear they'll be spoiled or they want or earn their way.
I also talk to clients and they share with me that they worked really hard for it. So they want their children to work really hard for it. And I think that that's a fair statement. I mean, you played football in college, I've played sports and I think about any really good sports team. There's an element of suffering to get what you want that I don't think is a bad suffering.
I mean, don't make your kids suffer to the point where they're on the street or they don't have food. But there's an aspect of like grinding through it that when you make it, it's just like that much better. Right. And I find that sometimes if you completely stop the suffering, you actually miss out on giving your children that moment of confidence, that moment of success, that belief in themselves, that they can actually do it.
And so I do respect the concept of, I worked really hard. And so they should too. It's just how far are you going to take it? And are you going to take it to the place where those your children are not enjoying their lives and their miserable and they're depressed and unhappy? I mean, there's a way to to give them a little bit to help them through it too.
Doesn't have to be an all or nothing. So, yeah. And we can talk about some of the structures and ways to implement giving where you're not just saying, here's a lump sum of money, and then we can talk about it here in a minute. But I agree with you. It's it's finding that balance where maybe it's supporting their rent or maybe it's helping pick up some cost of the what their children are going through, which just takes a little bit of pressure off where it's not going to say, oh, I can quit my job and, you know, move out of the country or any of that stuff.
So it's finding that balance. It's right for each individual and their family.
There's a lot of our clients that say, hey, you know, my child needs to not work for a few years while the kids are young to raise the kids. And so can I gift to them and help them financially so that they can work part time, or they can take a little bit of time off?
Because our value system is I want my kids to be present with the grandchildren as they're raising them. And I think that's beautiful. I think that's a really good idea. And I don't know, in that situation, if you need to stick to with your guns of the like, I did it. So you so should you. I think that there's a way where, if you have the affordability to make it a little easier and your kids.
I think that's really good. The other, the last fear, I would just mention that a lot of people have when giving during life is just that they're going to run out of money. And unfortunately, this is the hardest one because we and both worked on a lot of financial plans where the results did show that. And so while their love language might be giving to their kids, financially speaking, that's really hard to do.
And so maybe we brainstorm other ways that they can give and fulfill that bucket and make sure their children feel really loved, but also preserve the financial side because unfortunately, what they don't really realize is if they spend all their money, then their kids have to pay for them, and that might be actually worse for their adult children.
So those are some things that I think are maybe some of the considerations when it comes to giving during your life. But there's a lot of positives too.
Yeah. No, absolutely. I think sticking to a plan and knowing where you're at is crucial. And you know, those are two things that are negatives. But I think you can tolerate them or handle them by planning or having conversations with your kids.
So this might sound like I'm biased, but I definitely lean towards giving while you're alive. And we'll talk about that in a way that, you know, those hurdles, we overcome them. And now how do we truly experience life? How do we get the most joy out of life? How do we help our kids? And in a world where, you know, there's the mental health, where there's, you know, therapy and things that they cost that maybe weren't there when, you know, the older generation was growing up.
Or, you know, I was joking about this. My son plays baseball. He's a mediocre batter. And, you know, one of our friends is like, hey, I have a batting coach for you. He's the best. He'll change your son's game all around. So I called the coach. $200 an hour. Yeah. And I was like, okay, so my son's just going to be a mediocre batter forever.
But, like, it's one of those things where life is expensive. We live in a place where we want to provide for our kids and our family. So like to be able to do some of those things. And as a parent, to be able to maybe provide that. If my parents could provide that for my son, if that was something they valued or, you know, to pay for some of the medical help or concerns or things that we're going through, it just makes our lives a lot easier.
Statistically speaking, our parents were 30% wealthier at the same age. So think about that for a moment. Like we're 30% poorer for lack of a better word, which just means that the world is more expensive. I did a financial plan for a couple with kids the other day, and we were looking through their budget and just trying to find anywhere to reduce their budget because they wanted one parent to stay home.
And I was looking through it, and I could not figure out how to make it less than $150,000 a year of just expenses, mortgage, needs. Like there was some clothing, some auto, some insurances in there, but I could not make it less than $150,000. And I just thought to myself, wow, in Southern California, you can't really live off of less than $150,000 after tax.
That's $200,000 pre-tax. And so when we talk to our clients about gifting to their kids during their lifetime, I think this reality of how expensive it is to be in your 30s and 40s, especially in Southern California, if you can alleviate that burden now versus giving it to them later, I mean, it could make all the difference in their life.
I like to talk a lot about just the money we make. The reason we work is to get some experience or some joy, some help and provide some kind of service to somebody. Right. Having a big number in your bank account doesn't bring joy necessarily. Maybe it brings a little peace of mind, but I like to think about what experiences are we giving up, what opportunities to, whether it be travel or again relieve the pressure for your children?
Like if you know the way I want to live my life is I want to see the good that I'm doing. I'd rather see the charity provide services to people in need versus pass away, and then my legacy never really be seen or known to me. Yeah. So I think for those that are kind of considering when to give, would it bring you joy to see the difference that your money's making, to see the experiences that you and your family get to have together?
If you have enough, if you know and you feel confident that you're taken care of for your life, including long term care and your basic living expenses, and you have extra. I mean, I think a lot of adult children would say, hey, I'd rather do experiences and memories with you here and now. I'd rather make deposits into the memory bank versus the bank account.
So spend that money on, like, let's make memories together. I don't need it when I'm 60 years old. I think it'd be better if we could enjoy life and wealth today. And so that's something that, with proper planning, I think is a real consideration. And it can bring such value and such joy to people's lives too.
I've been pushing my mom and her fun saying now she goes, hey kids, we're going skiing. And she thinks it's so funny. But she takes she picks up my kids and it's spending her kids' inheritance. So she's spending, you know, potentially my money. And my mom is someone who she's, you know, a hoarder when it comes to money. She's ultra conservative, worried about the future. But when she takes my daughter to get her nails done and spends an ungodly amount to do whatever, $100 on getting your nails done, but the joy that they have and my daughter's telling stories and like I, my mom will spend that money all day long. And so it's become this thing where I used to have to kind of encourage her, push her.
And now she's at a point where she finds so much joy in it, where she's taking my son to lunch. She's going and getting nails done, like those things matter so much.
Yeah.
Otherwise that money would just grow in the account. I would get it hopefully in a long time from now. My kids are grown up, but they've missed out on all these experiences with their grandparents. So, I am glad.
It really is.
Yeah. And that's that's why you work hard to earn money.
Yeah, I totally agree.
Well, there's also a door number three, right. There's the like give your kids money now. Give it to them later. And we'll talk about structure for inheritance later. But then door number three is kind of referencing the book Die With Zero, which you and Chris did a podcast episode on this recently.
Tell me a little bit more about just like the Die With Zero concept, which I think is just means like you spend it.
Yeah, it really—spend it. And it doesn't mean you have to spend it on yourself. It's some of the things we talked about. It could be spending it on charity, spending it on your children, your friends, experiences. But the concept of the book is really like there's three things that ultimately matter. You have your time, you have your health, and you have money. And in life, it's really imbalanced. Because you're young, you typically have a lot of time, you have a lot of health, so you can typically do a lot of things, but you don't have a lot of money to afford it.
Then as you get older, now you have more wealth, but your time is scarce. And unfortunately, almost every day our health gets worse and worse. And so there's this time frame—and it's typically between like your mid-30s to mid-40s—where you're at your peak time, peak health, and hopefully you can be at your peak financial situation.
And it's doing those experiences that bring you the most joy. And I just had this recently where I went skiing for the first time without my kids, and I was like, I'm going to get 30,000 feet in. And I told this story on the podcast too, but it was like I was so tired. Like I was so tired. Like I remember 20 years ago, you couldn't stop me. I was getting it too. Now it's—we ended up being down at two. But like, the reason being I had all this time, I had all the ability to do it. But my health, my age, I'm just—I'm not a spring chicken anymore.
And so like my dad or my mom, like you could give them free trips to fly to Europe and like, they would think twice about going because it's a lot of work for them to get on a plane and do all these things. And they're still, you know, relatively young, but it just gets harder. So the whole concept of the book is spend it while you can, when you can, and whether it be on yourself or your children.
And so you go back to the hardest time raising kids or growing your career is late 20s, early 30s into your 40s. Most people don't get their inheritance until they're in their 50s. So they've already gone through that struggle. They've already passed those peak enjoyment years. So the book really challenges you to say, look, if your kids are going to get it anyways, you can—they might get less dollars today than they would in the future, but they're going to get more value out of those dollars.
Which I think is an important conversation around value, the value of time, the value of experiences.
I feel like we have to address these things because I think we would spend our money differently if we were following our values sometimes. So an example might look like you create a bucket list for yourself, where it's a whole entire list of all the things you want to do, and you just start spending towards that, and you ask your family to be involved in that, and you make those memories and they align with your values.
Or maybe you do pay for a child to stay home, if that makes more sense for them and their young children at the time. Or maybe you pay for education, like there's a lot of ways that you can let your values lead and then your money can follow it. I would also say that as you think about the Die With Zero concept—valuing your time.
Yeah, I feel like you can paint a room yourself, or you can hire someone to paint it, and if you hire someone to paint it, you can go spend that time doing the things that you love. And I think we work our whole lives to just gather, gather, gather, gather. We're like squirrels. And then all of a sudden, like, we have this amount of money and we think to ourselves, oh, it's the right thing to do to continue squirreling it away.
Like it's almost like a mindset shift to no longer be like keeping the acorns with you. But now you're like giving the acorns away, and you actually have to train yourself how to do that. I feel like you have to make a conscious effort to say, it's not a bad thing that I'm not doing it myself. It's not a bad thing that I'm spending the money. It's actually like me putting my money where my values are. And I think that that's an important transition.
How many times do we just tell our clients we're going to send you the money?
Yeah.
If it builds up in your account, send it back. But they—the hurdle of them saying, hey Stacey, can you send me X amount of dollars...
Yeah.
They don't want to do it. It's like they ask permission—can I, can I have $10,000 out of my account? And you're like, this is what you worked so hard and saved for your whole life. But it is that mindset shift, which is really interesting. Some of the other benefits though, too, even structurally thinking—so from an estate planning standpoint, depending on the level of net worth, there is a huge benefit to starting to give and gift while you're younger.
Getting all of the future growth outside of the estate and going back to one of the first concerns that you have—is giving money to my children now, what if they just spend it? You can use things like irrevocable trusts, where the money is being gifted outside of your estate for their benefit, but they don't necessarily get it right away.
There can be parameters. Maybe they're just getting income. Maybe they have someone else who has control over when they take distributions. So there are ways to benefit the kids, keep protections in place, maybe benefit your future estate from reducing taxes in the long run. But there's—you know, I think just considering and thinking through those different options makes a lot of sense.
Yeah, I think that's really wise and smart. And like you said, there's protections in place. Like generally most trusts say you can use the money for health, education, maintenance, and support. And that in and of itself kind of protects you from like the overspending trust fund baby concept.
Okay, so we talked about giving during life. Now tell me a little bit about smart ways to actually give an inheritance. So you're setting it up for when you do pass. What are some wise strategies that you would call out?
So I think, you know, one thing that you have to kind of think—there is there's different assets to give. So there's—we typically think of someone just getting all of your wealth. But wealth can be bank accounts. It could be real estate. It could be assets that you own. And each one of those things comes with different complexities and different things that you have to consider. Obviously, bank accounts, trust accounts, they have beneficiaries and they're more just transferred. But one thing even with those is what assets are inside. You know, we love alternative assets, but for certain families those can create complications. And so thinking about what are the illiquidity terms? Is it right for my children to have those assets? You're also inheriting the advisor that comes with those assets potentially, K-1s—so there's different things that go with assets within those accounts.
You know, one thing we talk about with my parents—they, you know, my mom and I said hoarding—but they have like their jewelry and their china and they have their great grandma's like, you know, dining room table. And they're like, oh, you guys are all going to fight over this. And my sisters and I look at each other like, none of us want this stuff.
I hate to say that—and they're going to watch this before—but like, none of us really want a china cabinet anymore.
And I know there's sentimental value to them. And so being able to start setting up a plan where—letting your kids kind of figure out who wants what—it makes things a little bit easier. I have three sisters. My mom has one wedding ring. I don't know if all three of them want that. How do you make some of these decisions as a family before, you know, now you're mourning the loss of your parents, and then you're trying to figure out how to settle assets?
How many times do we see even the closest families—they start fighting over money, over decisions, and they all have the best interests.
You know, the next piece is real estate, which creates so many headaches around—someone wants to keep it, someone wants to sell it. Is it even a good asset to keep?
Who’s going to manage it?
Who’s going to manage it, right? Where’s the money going to come from to take care of it? And so like all of those different things—the more that you can lay out in a plan ahead of time, the better. And I know we have clients and people that are like, look, I’m going to be passed away. They can deal with it.
They’re getting assets, they can figure it out. You know, I understand that to a degree, but the more planning you can do, just the smoother and easier it will be on families.
Yeah. It’s too hard to leave people in the middle of mourning to then be like in a place where they have to argue with each other. And have to debate, what did mom or dad leave me, and why did they leave me that versus that? I think if you can even write side letters that say, hey, these are my intentions, this is what I wanted to do—it just helps your family stay in a better place. I even think, speaking of just setting it up for your kids, setting them up with separate property trusts that they inherit money... And I think that’s something that gets missed a lot in plans. People just say, oh, here, you know, Johnny and Sally get their pieces. But if you set it up in your estate plan where they get separate property trusts, it saves them from really awkward conversations with their spouses. Because otherwise they get the money and then their spouses turn to them and they’re like, so you going to deposit that in the joint account?
And if they have to be the ones to say, no, I think I’m going to keep it a separate property. And then the spouse is like, are you going to divorce me?
Like it never—
You sound like the jerk.
Like, I love you, but
it’s not good. So it’s better, I think, to potentially set it up where your kids inherit separate property trusts and then they can say, this is the way that mom and dad did it.
And these separate property trusts—you can access, like spouses can access it. Meaning like if you decide you want to share it with your family and use that money for your own lifestyle—
Yeah, most of them you certainly can. Unless they’re very restrictive. But for the most part, I think people set it up where there’s flexibility in there.
I think the part about that that I really like is it just makes it so that you take the weird, awkward conversations away for your kids. So that’s one recommendation. And one other recommendation—you mentioned real estate. If you’re going to give your kids like a cottage or a beach house or a mountain house or something like that, please also set aside money to pay for said property. Because that causes so much conflict where like—
Maintenance and stuff
Yeah. You might think to yourself, oh, they’ll just split the assets and then they’ll both contribute back. But once those assets go into Johnny and Sally’s account, to bring them back into a shared pot to fix the roof of the cabin is not an easy conversation. And so it’s better to like, have a bucket of money with a property that says, hey, this is the money for you to renovate and fix it and pay the monthly bills and things like that.
And that’s great. One other concept too that I was thinking through is—equal is not always fair, right? Or, you know, there’s not always equal, I guess, in that. So thinking through—and you and I were discussing this and I love this concept too—where at the end of someone’s life, when they’re looking at the balance sheet, it’s a lot harder to be like, all right, you get 60%, you get 30%,
You were successful so you get less money. They weren’t successful so they get more money.
So most people say, I could never give different children different amounts. And so what we were talking about too is like—but one way to do it, where it isn’t as obvious, is helping those throughout their lifetime maybe that need more support. So you have one child that’s a doctor making good money, you have another child that decided to be a teacher, and one of their, you know, spouses stays home and it’s just a little bit tougher. You can help give support during your lifetime—again, another proponent of giving now—and then it could be equal at the end of life. And if someone went back and did the accounting, maybe it wasn’t, you know, equal. But it’s still fair because you helped where the needs were.
You have to take care of people.
Exactly. And I think it’s a little bit easier to do it while you’re alive versus just at the end where everybody’s kind of looking at all the numbers at the same time.
I would have no problem with my parents giving more to my brother during his life if he needed it. Like, I think that that would be completely fair. And I know if I really needed it, they would help me too. I don’t need that to equalize. Like, that to me—that’s like unnecessary math. But at the end it would feel awkward.
So yeah, I feel like that’s a good strategy. Like what you’re saying, like fair isn’t always equal. I think people need to remember that. It’s okay if you’re helping one more than the other. It’s fine. Yeah, it’ll be fine.
It’s your wealth, your money, and ultimately you’re trying to do what you can—typically the best for everyone in your family.
So yeah.
All right, so we talked a lot about how to give. Now let’s talk about how to get—because you mentioned the statistic earlier where people spend it in the first two years. So you get an inheritance. What are your thoughts? What do you do?
Yeah. People think it’s a lot easier to get, but there’s also a lot of challenges that come with that. My first suggestion or what comes to mind is like, just pause, right? You think about—like you hear lottery winners all the time going broke. And you come into this newfound money or this new wealth that you didn’t have before, and you start making decisions. Friends start showing up, families start showing up. I think there’s so many things that start happening right away.
Keeping in mind, like, you just lost a parent or both parents or, you know, you have some mourning to do. Is that the right time to go buy a rental property or pay off your mortgage? And, you know—definitely don’t Google what should I do with my parents’ inheritance. But having some form of a strategy. But when it comes to the strategy, I think looking at high-interest debt. So if you’re somebody that has credit card debt, you have any other type of personal loans that are, you know, call it 8, 9, 10 or up to 30% these days—getting rid of that debt.
It doesn’t feel good because you don’t have anything right away, but it definitely creates more free cash flow and takes stress off your plate. I am also a huge proponent of like, taking a trip or doing something special. Like you’re going through a lot—maybe go to a special place that your parents would have loved or, you know, take your family on a vacation that you hadn’t been able to do before.
So just spending time being present with your family and kind of mourning and taking time to heal in that situation. So—paying off debt, taking a trip. And then from there, it’s really like figuring out what’s most important to you, but seeking advice, building out a plan. So knowing how to invest, looking at different assets. I brought up kind of buying a rental property.
I’m passionate about this too. Like, everyone thinks that when you’re rich, you should own a lot of real estate, or you become rich by owning a lot of real estate. It’s not easy to be a landlord. And I know I’ve harped on this in the past. People think you buy a property and you just get mailbox money.
It’s not that simple. Especially in California, being a landlord’s challenging. It’s expensive. So when people look to go out of state and buy, that’s not always the easiest thing. And just take a break—maybe wait a year before you make any...
Yeah, the Airbnb market is not as attractive as it was in 2020.
It’s a different world.
Yeah. You know, I did some math recently with a few clients on real estate that they inherited. And one of the challenges is that a lot of our families have built their legacy around real estate. The last 100 years have been really amazing. And real estate—grandparents and parents bought these properties in the 1970s for $48,000 that are now worth $2 million. And you look at those numbers and you say, oh, real estate’s the best place to invest. That was then. I think this is now. So if we look at the real estate market today—I mean, multifamily, commercial properties, even some single family in different parts of the country—they’re down 10, 20%. And so real estate going forward might not look like real estate in the past.
So let’s just pretend for a moment that real estate flatlines and it makes 0%. It doesn’t go up at all for the next ten years. And all you have is your income. Well, when you actually look at your income minus your expenses—like property tax, homeowners association, insurance (which in California is so expensive
If you can get it
Gardening, like basics of maintenance, having money just in case you do have that leak, or you do have that plumbing issue...
When I look at some of these real estate returns, they’re like 2 to 3%.
Yeah.
And so actually working with somebody to say, hey, this is a property I just inherited, here’s the situation—is it actually worth it to keep it? Or oftentimes you get what’s called a step-up in basis. And you can sell the real estate tax-free.
And it might be better to just do that and invest in another way. You also mentioned the mortgage and paying off the debt and how that’s not a wise decision. One thing that happens often is people use all of their liquid cash to pay off a mortgage, and now all their money’s in their home, and then they don’t have money to go do things in life.
And so I think one of the things that people have to think through is: how much real estate should I have for wealth creation and maybe some for income, but do I have also a third bucket—enough on the other side where my real estate doesn’t limit me from enjoying my life?
Yeah. I think that step-up in basis is huge, right? There aren’t a lot of opportunities where you can make a ton of money and not ever pay taxes on it.
Yeah.
So that is an opportunity for someone to evaluate what does that property look like from the investment side. But then going back to what we talked about earlier—like how many parties own this property, right? Would it just be easier to kind of be rid—everyone get their cash, go their separate ways, invest it with their family in the ways that are going to be most important for them?
Yeah.
Sometimes it just simplifies your life.
Yeah. Co-owning a property with your siblings is like—who’s going to do the maintenance? Who’s going to clean the house? Are we going to have a house cleaner? Is there an alarm system? And you’re just like—start going down that, and then it becomes another thing to do in life versus—I think the intent is something to enjoy.
And so back to like, I think if parents can set it up with intention and with that bucket of money and make sure it’s clean, that’s better.
Okay, so final question for you—and this is a tricky one.
Awesome.
Do you consider inheritance you’re going to be receiving when you do your own financial plan? Like, for young people, should they think about how much they’re going to receive in inheritance for their retirement?
That is tricky, and it’s a good question. The way I approach it—I think most of us have more, and we’ll approach it as: you don’t consider it in the base plan. And when I talk about base plan, it’s covering your everyday expenses, your housing, your food, you know, just the things you need to live. Because you should plan on considering the ability to do that on your own.
Yeah.
Now it’s hard because we see some kids that we work with, young adults that we work with, and, you know, they have inheritance coming and they’re really struggling. And they’re trying to figure it out. And they’re like, can I take this trip? And you’re kind of like, I really want them to take that trip. But the plan doesn’t show that they can.
So it’s—as if when it comes to some of those extras, like even if they know money’s coming in, don’t count on it. Be able to do it independently. And then if and when it does come in, it’s just the benefit on top of it, you know. And this goes back even to like—the more parents can kind of open up and share when they’re comfortable, like, with their children, so that they can make choices and not miss out on opportunities.
Or maybe they could have gotten into their dream home that might have been a little bit more of a stretch, but they didn’t know what was really coming down the line. So yeah, the easy answer is I think: don’t count it. Put it in more of like an advanced scenario where you’re like, the “what if?” Okay, so this is me on my own. This is what if I get a million or three million or ten million. But that way, if something ever happened—if your parents went through a health event and their money was less than they thought, or they decided to give it to somebody else, you know, something changed—you’re not stuck, left high and dry. So I don’t think you can count on it until it’s really written into a plan.
So I think that’s really wise. And something that you mentioned I just want to highlight, which is being a little bit more transparent with your kids about what they’re going to get. I’ve had many, many situations where an adult child is struggling to make 401(k) contributions. Like they don’t have enough. Remember I mentioned earlier $150,000 after-tax baseline to survive?
Maybe they don’t have to struggle to make those 401(k) contributions if there’s a degree of certainty about the inheritance that they’ll receive. And so having some transparency actually maybe might take away some of the struggle from your adult children. And I think that’s an important thing to consider as well.
Yeah. Frees up 10–15% maybe of the income, or hey, you don’t need to put as much money in the 529. We can help support you. And cause all of those little decisions—it’s going back to the first fear. It’s not going to say, hey, I can quit my job and buy a Ferrari and move out of the country and be fine. But it does just kind of relieve a little bit of that pressure. It makes it more tolerable for your kids, which I think most people want—their kids to enjoy their lives as much as they can.
I totally agree with you.
Yeah. Let’s just decrease the pressure a little bit.
Absolutely.
Well, thank you so much. We’re going to move into what I think most people find to be their most favorite segment of this—This or That. You ready to ask a couple questions?
Oh, I love this part.
So first question, okay. This or That: Would you rather inherit property with your siblings or get a check for $800,000?
A check for $800,000. I do want to say that I just don’t—there’s so many decisions to make about the property, including hiring somebody and paying them a commission and doing the whole shebang. And I just think that there’s freedom in—my circumstances are different than my parents’ circumstances. And so if I could just get a check and make my own decisions, that would be a blessing to me.
You don’t want another job on top of that?
Yeah. No more job.
Okay. So question for you—let’s say that you have adult children and you have to make the decision of giving during your lifetime or giving them an inheritance later. What do you do?
I know the answer.
Yeah. This is—I want to give to my children as much as I possibly can in a responsible way, in a way that does not give them the ability to freeload. But I’m hoping I live a long enough life where I can see them mature and responsible young adults and middle-aged adults.
So yeah, I want to support that as early and as often as I can.
Yeah.
All right, back at you—would you rather encourage your clients to spend money on experiences or give cash for needs?
That’s such a hard one. The experiences are so lovely because you can travel with your family and you can make those memories, and you have those photos and Instagram reels and all of those things, and that’s really meaningful. But I think there are certain few needs that maybe should trump the experiences—like food, mental health, maybe education for grandchildren. If you can pay for some of those basic needs and decrease that pressure valve a little bit, that probably should trump experiences. But I love the experiences.
Yeah, and in a real world, it’s not this or that.
Maybe you can do a little bit of both.
That’s true.
Yeah, maybe a lower vacation with some needs. But yeah, I agree with that. That’s a great answer.
Okay. Would you rather inherit a property with your family members that you co-manage, or would you rather just have your own property?
My own property.
Yeah.
Yeah, it goes back to everything we talked about. Anytime you put family together that has to deal with money, financial decisions, properties—all the maintenance—like, it’s not only your family members, it’s their spouses and everything else that goes into it. So I love my sisters. They are my best friends. I would do anything for them. They’d do anything for me.
I kind of dread the day that we have to make financial decisions together.
And like, it just complicates it. Instead of having fun over Thanksgiving, you’re like, hey, what are we going to do with that tenant that just moved out?
So I think it probably preserves our relationships to not do that.
Okay, last This or That. Would you rather have your family split your inheritance equally between the four kids, or would you rather have them split it based on who needs it most?
Darn it. I think—I mean, I want to say that I want it to go to who needs it most.
Yeah
That’s easy to say now.
Yeah
If my sister’s getting more than me, I think myself or my other siblings would have an issue with it.
Yeah
And that goes back to giving while you’re alive. If they help her now, or help, you know, one of my sisters now—
Zero issues.
But when I think when I go back and I’m running the numbers...
It’s not that fun.
I want them to give it to who needs it most. But I know that that would cause us an issue.
Yeah.
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Disclosures:Information presented herein is for discussion and illustrative purposes only and is not intended to constitute financial advice. The views and opinions expressed by the speakers are as of the date of the recording and are subject to change. It should not be assumed that Morton will make recommendations in the future that are consistent with the views expressed herein.
