A 71-year-old retired teacher has managed to save enough money to finish paying the mortgage on his house and put a good amount in his bank account. in the middle MarketWatchexplains to economic journalist Quentin Fottrel that after more than 30 years of working life, contributing to Social Securityhas life insurance and two annuities. But, in addition, he has two children and would like to be able to donate the inheritance to them during his lifetime.
In his statements to the aforementioned media, he explains that he feels lucky because in the United States it is difficult to get a stable job in a school, and that he has done it. “I have worked hard to be able to save,” he says, although he is worried about how to distribute that money so that there are no fights or arguments between his children. So, ask if you could opt for the so-called ‘inheritance in life‘ which consists of a person transmitting his assets to the future heir with a donation, after acceptance by the donee of some conditions.
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“When I collected my father’s inheritance, I became a financial advisor so I knew how to invest it instead of spending it. Now, I would like my children to receive my savings before I die but they are in different circumstances and I have mixed feelings.”
Because he wants them to value and know all the sacrifices this retiree has gone through. “I delayed collecting my pension (he retired later than his due) so I could receive a higher benefit and I did it with them in mind.”
His eldest son is rich and his daughter wastes money.
His eldest son studied engineering and married a lawyer from a family with a lot of money. “They have so much money that they don’t know what to do with it,” says the pensioner. The second has just gotten married, he is calm and gets along well with his father. The problem comes with his daughter.
She is an adoptive mother of two children, one of them has ASD (Autism Spectrum Disorder) and although she is “a good worker” she has made “unwise” financial decisions such as, for example, very expensive vacations. “He has managed to save very little for his children.”
Therefore, this 71-year-old man asks the expert if it is a good idea to create a trust for grandchildren, so that they can pay for their studies or special needs. Although he is afraid that this will generate resentment between the brothers. “It could cause a conflict when they say I don’t treat them equally.”
A common dilemma for retirees with savings
The case presented is very common among middle class retirees in the United States. They must debate how and when to transfer their savings without fueling tensions. Financial expert Fottrel advises maintaining equality between donations by guaranteeing a specific destination. That is, the money goes to predetermined purposes (treatment of the child with autism or payment for school, for example) instead of collecting cash amounts.
In the United States, it is allowed to donate up to $18,000 per child per year (15,506 euros) or $36,000 (31,011 euros) when done as a couple without having to declare it. The advisors recommend that it be done with caution, that it be distributed equally and that one avoids judging the way of life of the children, except when they are serious cases such as addictions or irresponsibility.
“It is very easy to fall into the trap of the emotional tax, the father begins to think who deserves it more and ends up measuring love with money.”
Before donating the assets, experts advised this retiree to have a emergency fund with which to cover future expenses. “It’s okay to be generous, but don’t be left without anything.”