I’m not sure if it’s a recent hot topic, or if it’s because my mind has been on it, but estate planning and inheritance seem to be popping up all over the personal finance landscape (see Canadian Capitalist guest post).

While our current wealth is modest, I imagine that the more time our investments have to grow, the greater our net worth will be.  Our retirement goal, like many others,  is to have an investment portfolio that produces enough income to meet our planned retirement expenses.

However, with our frugal mindset, it is difficult to imagine spending the capital base of our investments.  It is likely that we’ll end up living off  distributions (dividends/interest) keeping the capital in tact.  If we are fortunate enough to live into our 80’s or 90’s, we could possibly have a net worth of several million dollars upon passing.

So what are we supposed to do with all that cash?  What is our estate plan?

The way I see it, the obvious options are:

  • Give 100% of the money to our kids upon passing;
  • Give no money to the kids, but all to charity;
  • Give some money to the kids while we’re alive, rest to charity upon passing.

The problem with giving 100% of the money to the kids, especially if it’s a large amount,  is that it may take away some of their ambition and  drive to succeed on their own.  Similar to expectations for myself,  I want my kids to get their own education, own careers and have ambitious life goals.  Having millions of dollars simply gifted to them would likely take away some of that (depending on their life stage).

The second option is to leave 100% of the estate to charity. I can’t see this option being very popular with my kids, but it would give them the expectation that they need to fend for themselves and hopefully keep them hungry for more out of life.

The most appealing option is to give the kids some money while they are alive when they really need it, like for a down payment on their first house, higher education, seed capital for their business,  or maybe private school for the grand kids.  The gift would be with the expectation that upon passing, the remaining estate will go toward charity.  I’m partial to this solution as we would get to enjoy giving the gift while we are alive and it provides some financial help where it’s really needed (hopefully) without damage.

As everybody’s situation is unique, I’m interested in hearing what you plan to do with your estate.  Do you plan to spend it all while you are alive?  Or leave a large portion to your heirs?  Or maybe a hybrid of the two?

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Under your first option your kids wont get anything til they’re in their fifties! That’s hardly a prospect to make them lazy and entitled (a notion i think is way overplayed in money bloogs generally, mostly as an excuse for people to boast how independent they are). I hope i spend/give it away while we’re alive. Either that or leave it to the old golden retrievers home!

I will be leaving it to my kids. My parents worked hard to try and make a better life for me and give me as much as they could. BUT they instilled the values I have today to work hard to get where I am. I am doing the same to my kids to let them know money does not grow on trees and you have to work hard for what you want. I will not just “hand over” money when they ask but….I struggled through university trying to get a few bucks to have a beer with friends. I am very grateful for my experience at university, but I will try and make it better for my kids….and hopefully they do the same and so on….I think the entitlement some kids have today depends on how you raise them. If you give them everything they want growing up, they will expect it as adults.

What the old saying…..”give a man a fish he eats for a day, teach a man to fish he can eat for a lifetime”

Plus I hope to live a while, so they won’t get it until they are almost retired themselves.


It is interesting to hear how many Baby Boomers plan on leaving very little for their children when so many of their parents have left considerable sums to them. A major difference of focus from one generation to the next.

One thing to consider is how to make sure the kids get equivalent gifts if you pass away “ahead of schedule”. It could be a major problem between siblings if one got that down payment for a home and some seed capital for a business, whereas the other(s) get diddly-squat, and see their parents estate go to charity….

My parents helped us with a big chunk of money for a house in the form of a 25 year interest free loan. It helped us jump into the housing market without CMHC premiums or having to use the RRSP HBP. Furthermore, I think flat-out cash gifts, even large ones, are spent and forgotten within a few years, but my monthly payments serve as a reminder to the gift we have been given.

I plan to use this approach with my children, perhaps with a small amount of interest and at a relatively young age (ie, “loans” instead of allowance) to help teach them about money.

My goal is to leave earth the same way I came onto it, with a net balance of 0.

If anything more than that is left behind in terms of assets vs. liabilities, I have failed at one more thing in life…

I hope to leave the kids the least amount of money possible, like I hope my parents don’t leave too much to me. A large inheritance is synonymous with missed opportunities for travel, experiences and quality time with family and friends (such as early retirement, unpaid leave, etc.) I tell that to my retired parents all the time: go out and spend it, you have earned every penny. They’re on a cruise as we speak.

In my case, the kids will have to build their own fortune. Anyhow, by the time I am 80, they will be in their 50s. If they haven’t built up a good life for themselves by then, they will have failed. Longevity is also a new reality. We just celebrated my grandmother’s 101st birthday. Good thing her 75-year old son isn’t waiting for an inheritance…

You should be grooming your children from a young age to handle the responsibility of inheriting all of your wealth when you die. When you die, they can enjoy the fruits of their parents’ labor and continue to grow the wealth and your household. Part of the reason the middle class is a dying breed is because no one stays there, a few smart people help their children/grandchildren enter the upper class.. Many spend their lives approaching upperclass only to give it all away, allowing their kids to repeat the cycle.

Also, it seems that people thing charities are these angelic organizations that do no wrong and deserve huge amounts of philanthropy. You should atleast be looking at charity navigator to find the best home for your donation dollars.

Just a few of my cents.

Like generations before me, I plan on leaving zero cash and a paid for house to liquidate for my kids. That’s what my parents have planned on, and their parents as well.

Leaving the bulk of a large estate to charity is a final slap to the face of your children In my opinion.

Why line somebody else’s pockets? Many charities pass very little to the acutal cause, and spend the bulk of donations on administration and advertising.

Not only that, but consider the phrase “behind every great man, there is a great woman.”

My wife (who’s father will probably die a millionaire) doesn’t remeber her Dad being around when she was young. She does remember him working late, working Saturday’s and missing big events. He got up early, came home late and didn’t have a lot of time for his kids.

There deserves to be some sort of payout for missing out on having her Dad around while he was out making money.

I couldn’t see myself not leaving it to my family. The whole “making your own fortune” thing is hogwash. What’s so great about working? There’s plenty of ways to build character, contribute to society, and have a full meaningful life without working! I’m sure that most wealthy people still teach their kids about responsible spending. Wouldn’t it be nice to have your own comfortable life, die, and have your heirs live an even more comfortable, luxurious life? If done correctly your great grandchildren would be born into immense wealth and not have to worry about working at all.

I, too, don’t envision our children being lazy while waiting around for both of us to die. That is because I think they will be at least in their 40’s if not 60’s when that happens.

My parents (and my wife’s parents) won’t be leaving anything substantial to us. We help them more now than ever before. Yet neither of us feel deprived.

I like the idea of being able to live a great life yet still be able to help our future generations get a head start on great lives of their own. It isn’t as though I see passing the money on to our kids, it’s passing it on to THEIR families (when they have them).

We made our success and while I hope our kids do likewise, I’m certainly not of the mind we would deprive them of what is left when we die. In fact, I can definitely anticipate that if we have the opportunity to see our life fading, we do what we can to transfer wealth to them before we die.

We are fortunate in that our plan is to have a rich retirement yet still have a substantial nest egg for the kids when the time has come. What could derail these plans would be significant medical expenses (e.g. assisted care living). However, both my wife and I have discussed euthanasia should our quality of life fall below certain standards (e.g. the ending scene in “The Notebook”).

Great post and lots to think about. Warren Buffett himself has said that he will not be leaving his fortune for his children, and his children are 100% okay with that. I think he did give them some money when they were younger for education.

I think that leaving SOME money for children can be beneficial to them. Many baby boomers probably bought their first home when it was $75,000 to $100,000. Now, for the same home, it is $1 million (at least in Vancouver). I know that baby boomers worked really hard to get where they are and they have enjoyed phenomenal appreciation for real estate, and I think it is very important to enjoy retirement and do the things you want to do. But I think that it can be very difficult for their children to save up enough money for a down payment for a home these days. That being said, there is a fine line between giving some money to help out, and spoon feeding your children so that they don’t have any aspirations in life.

I see this myself with friends I grew up with. Some of them are so wealthy they do nothing all day. They don’t have the passion or the drive to succeed.

Hey FT,

What is missing here is insurance…not term because you might outlive it. Over a long lifetime term costs more. The insurance company is off the risk, but has your money.

You may want to review the story I wrote for you on annuities as one example.

What if you could spend your money, enjoy it and still leave a large estate behind with no worries?

When you factor taxes, probate fees, and accounting costs the insurance gives you two great options. You get to enjoy your money today.
Your estate pays less taxes. Money is given to the estate in days not months or years. You avoid lawyers and accountants…which means saving money and lots of it!

If you want I can draft up a scenarios like buy term and invest the difference and why for someone in a high tax bracket this does not work out because of our taxes, why there is better control of your money, more protection and works for all economic conditions.



Hi FT,

If you get the right type of insurance the death benefit increases every year.
By year 20, this far outstrips inflation every year. If one lives for a long time and gets the coverage early, this in many ways the cheapest as well.

If one thinks their estate is going to grow and has good cash flow, this is the way to go.

Again, I have an example of the type of insurance in the https://milliondollarjourney.com/how-annuities-work.htm (near the end)

I think what you are thinking about is level coverage.



I’m not worried about this at present. Every penny we have right now will go to the kids obviously since they are young. Once they are grown up our plan is to fund our kids’ PSE. Anything they get beyond that will be a bonus, not to be counted upon!

I think everyone here needs to consider first what will happen to your kids NOW if something happens. Worry about the future in the future. I speak as someone who is currently in a 3 year battle over the terms of my fathers will. This is preceisly what happens when a will is drawn up that does not consider the people you are leaving money to.

Bottom line, what is written in your will is worth only what you spent to execute it. As soon as you are gone so is your ability to control the future of the people effected by the terms of your will. In fact, if you make the wrong decisions, your hard earned money can easily end up in the coffers of an unknown lawyer.

My advice, consider what needs to happen now if you were to pass, and worry about what gift you will or will not give as you are closer to the age you expect to pass.

Ultimately, the choice belongs with the parents, and what they want done with the money. Leaving something behind means you have passed on and it really makes no difference to you at that point what you’ve done with it. I think that whatever you want to do, you do now while you’re alive.

Give annually to a charity you agree with. Start spending more on yourself. Help your kids out with a mortgage payment or a down payment or with a new car. Take your kids on a trip or pay for them to go on a trip.

I think what a lot of people forget is that a large part of why they worked so hard and accumulated so much wealth is to provide a better life for their family. My parents have recently begun talking about estate planning, a topic I really don’t want to hear at this age (23). My father wants everything to go to me and my potential children, while my mother is more in favour of charity. They have earned everything they have through hard work, and I am on the road to do the same. They have given me every opportunity in life, so it’s up to me to make the most of it. Although they are constantly helping my brother and I out, and have been my entire life, if they want to spend everything or give it all away, I won’t hold that against them. It would be much more appreciated with them around to spend it with anyway, and I expect by the time they pass away, I will be financially independent anyway.

Someone mentioned Buffett earlier, and I love his quote on the subject: “I want to give my kids just enough so that they would feel that they could do anything, but not so much that they would feel like doing nothing”.

I think this speaks volumes about the whole debate. Leaving millions and millions to your children who have not earned it will ruin them IMHO, but setting them up so they can do anything they want and not have to worry about bills, mortgages, car payments etc., will set them up for a life of happiness in whatever they do.

A very interesting post.

Recently my wife and I have been putting life insurance policies in place, along with a will.

Our goal is to leave our kids a large chunk of the wealth we have accumulated but our will sets out some very specific time frames with respect to when our kid(s) will be able to avail of the money.

Our biggest priority is to be around when our kids get older so they learn the value of a dollar, responsibility, and working to earn their place in the world.

We don’t live a lavish lifestyle and want our kids to be brought up with solid values and a drive to learn and do well. I think that a huge chunk of change in the hands of a young kid or adult at the wrong time can have disastrous consequences.


“fund your kids PSE”? What is the PSE? Are you planning on setting up a trust?

I wonder how many people would have a different perspective if you were 80 years old and thinking of leaving money to your close to retirement children… and their middle aged grandchildren… and their teenage great grand children. That could be quite a brood to distribute wealth to.

It’s a tough decision, one I have not yet made. I do not yet have children, but when I do, I know that I will likely leave most of my money for them and my spouse. The perfect scenario would perhaps be me personally distributing the money before my death. I never thought about setting up stipulations but that could be an excellent idea to ease my mind as well about how it could affect their lives. Still though I would not have a problem if it was a large sum of money, I would like to believe that my children would do the same for me.