Last week my parents surprised my three siblings and I, giving us a lifetime inheritance of US $ 8 million in stocks, bonds, ETFs, etc. in a shared account (25% for each). As my brothers and I discussed that we were going to reinvest almost all of the profits, I told them that I wish I could withdraw 0.25% of my share each year ($ 5,000 from now) or even less, for travel expenses (traveling is my passion).
My younger brother told my parents and they told me they wanted this money to be used as savings for retirement. I love my parents deeply, I have immense respect for them, and I am truly grateful for what they have done, and I would feel terribly bad to have a disagreement or even to argue with them about it.
The Argentist:I earn $ 140,000 a year. I’m desperately trying to help my half-siblings: 2 are refugees in Turkey, 3 are in Syria. But how?
But I am also a 36 year old male who does not intend to have children, and having the opportunity to inherit this money early in my life, I wish I could use this very small amount to continue. one of my passions in life. I would be really grateful if you could share some tips on what to do in a situation like this. Thank you in advance.
Spirit of adventure
We’re in the middle of a pandemic, so you probably don’t have to worry about traveling the world for at least a year. If not, more.
Make savings your # 1 priority and your spending # 2. Jay Kopfer, Senior Managing Director of Antioch Partners LLC in Houston, Texas, says, “In our lifetime our goal is for all of us to fill a bucket of money to have and use in our golden years to make them golden. Presumably, you were spending a portion of your income, hopefully at least $ 5,000 a year, on pension contributions to fill that bucket of money to use in retirement.
“Your parents’ generous donation allowed you to stop / reduce your pension contributions, increase your monthly cash flow, allowing you to shift your budgeted monthly retirement savings contribution to your travel budget,” he adds. he. “It doesn’t matter if you take the $ 5,000 from your parents’ inheritance or take it out of your increased monthly / annual cash flow; To maintain a good relationship, I suggest that you pay for your trips with the increase in your cash flow. “
You can, of course, always take time off, if the work schedule allows it. But I also agree with your parents. You should fund it yourself. It will help you create a healthy work-life balance, which millions of people are pondering during the coronavirus pandemic, and teach you how to prioritize your income and expenses. It will also encourage you to find ways to raise that $ 5,000 on your own and excel at whatever you do best.
Until they relinquish control of that money, it’s theirs, and it’s up to them to decide when and how you spend it. If you had gone to see them first and told them about your travel plans, what would have happened next? We will never know, alas. It is quite possible that they felt like they had done something monumental and the first comment they received was “Yes, but…” It may have raised red flags for them.
If it was your decision alone? Travel while you are young and healthy. Get knocked out. Susan Carlisle, CPA at CPA CDW in Los Angeles, travel can dramatically improve our lives, and $ 5,000 a year wouldn’t exactly dilute your nest egg. “He’s not asking to take his share of $ 2 million, after all: only $ 5,000 a year.” As a CPA, personal finance specialist, senior with four grown children and six grandchildren, I say to this lucky young man, “Safe and Happy Travel.”
The Argentist:“We’re betting on the wrong horse”: I co-signed my nephew’s $ 55,000 student loan: he has no diploma or job. What should we do?
David Batchelder, Senior Investment Manager at Sentinel Benefits & Financial Group in the Greater Boston Area, worried about the ambiguity surrounding this inheritance / gift and / or if you are using the wrong term to describe it. If your parents have given up ownership or control of these investments, it is obviously a gift. “It appears that the parents have essentially (intentionally or unintentionally) ceded control of the funds to the brothers,” he said.
“If I was in this position as a parent, I would love to see my children enjoy this gift while I am alive and be able to feel their joy creating memories. We are talking about $ 5,000 out of $ 2 million or 0.25% of the inheritance per year. Crumbs compared to the whole cake. Considering it purely from a financial planning perspective, this plan does not seem ideal for parents or children as it potentially opens them up to inheritance, gift and tax issues.
Overall, however, I don’t think the expectation of a significant legacy is necessarily a good thing. Such a windfall could prevent you from experiencing failure, which psychologists say is useful, even essential, in our social and professional development. Young people with more courage are more likely to show higher levels of self-control, resilience, passion, mental well-being and life satisfaction, according to a 2018 Frontiers in Psychology review of three studies.
In this review, three themes emerged among people with more courage: 1. “Passion and Perseverance, included the themes of having short and long term goals, resilience, dedication and endurance. ” 2. “Self-control, including time management, self-awareness, prioritization of tasks and knowledge of strengths and weaknesses. “3.” positive states of mind. This included a positive attitude towards learning, the importance of constructive feedback and criticism, and the fact that success is not materialistic.
This is probably why your parents may want you to finance your own urge to travel. Sacrificing something you really want can build character and make it even sweeter when it does. It can also change your outlook: how can I make a living and bring something meaningful to society? How much do I really need to be happy and healthy here right now? We all have many wishes, dreams, and goals. But just as, if not more, important is what we have to give to others.
In the meantime, everyone should be asking themselves: How do I make sure I have a comfortable retirement and have enough cash on hand for a job loss and / or a medical emergency?
The Argentist:My brother is in his 50s and almost lost his house twice. Do I have to give him half of my inheritance to pay off his mortgage?
You can email The Moneyist with any financial and ethical questions related to the coronavirus at [email protected]. You want to know more ?Follow Quentin Fottrell on Twitterand read more of its columns here.
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