How to Help Your Children Financially Now Without Giving Them Any Money

Talk to them about what you hope to leave them after you die—for their retirements. You will ease their financial burdens.

I met with a very wealthy man who was referred to me by an estate planning attorney. He said he had decided not to leave his children any of his estate and instead was leaving everything to charity to help less fortunate people.

Since he came to me as an estate planning referral, I naturally asked, "So, why are you here?"

He replied that his attorney suggested he talk to me before he finalizes his wishes in his will.

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My next question was: "Why are you doing that?"

He replied that he started with nothing and felt really fulfilled with all that he accomplished. He didn't want to deprive his children of that feeling of accomplishment. The thought of them just living off of their inheritances really bothered him.

My response: "No one said you have to leave it to them right away."

He looked at me kind of quizzically, so I continued, "What if you didn't leave them anything until they reached age 65? What would they have to do until then?"

He said they would have to work and earn a living.

"Right. So by the time they're 65, and they've worked their whole lives and probably put their children through college, do you think they would be pretty socially responsible citizens by then?"

He agreed that they probably would be.

"So, you have the opportunity to take care of something that is very difficult for them," I explained. "Hopefully, they're already working with a financial planner, who has explained to them how much money they will have to accumulate in order to retire. Let's say they live to the ripe, old age of 100. They're figuring out that their 401(k) plan probably won't be enough, while wondering how in the world they're going to raise their family in a nice lifestyle, educate their children and save enough after taxes to be able to retire.

You could solve that problem for them by taking care of their retirements. By doing so, you'll be improving their lifestyle today without actually giving them any money they can spend today. By not having to save as much as they thought for retirement, they will have a few extra dollars to take a nice vacation with your grandchildren each year or live in a little nicer home. If nothing else, just watch the stress drain out of their shoulders when you solve that big problem for them."

Here's my point: You don't have to be a multimillionaire to want to help your children today. Most people don't tell their children what they will inherit when they die. As a result, your children can't use your legacy to them in their financial plans, which means they can't enjoy their inheritance until after you die.

Why not tell them today so they can make plans for retirement? Sure, they won't know the exact amount. That will depend on how much you need and your investment return (a topic that deserves an article of its own).

But, by having family meetings, they can be kept up to date and adjust their plans accordingly. People are living longer today, and it's very difficult to save enough for retirement. In effect, by informing your children of their inheritances today, the same money that's supporting your lifestyle could also be improving theirs at the same time.

Getting back to my client, I told him that if he leaves all his money to charity when he dies, his children will tell others, "That son of a gun cared more about 250 million strangers than he did about me."

Alternatively, you could tell them today that they'll never have to worry about retirement, and they can say, "Thank you so much, Dad, for taking care of that for me. I love you so much."

"Which conversation do you like better?" I asked him.

He said, "You're right. I'm definitely going to do that."

And he did!

What's the conversation that you want to have with your children? Why not let them enjoy your legacy to them today?

Bruce Udell has more than 40 years of experience in the financial industry. He designs solutions for wealth accumulation and enjoyment for high net worth individuals.


This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Bruce S. Udell, ChFC, CLU, MCEP
President, Udell Associates

Bruce S. Udell has more than 40 years' experience in the financial industry. He designs solutions for wealth accumulation and enjoyment for high net worth individuals. Bruce is sought-after for his easy-to-understand approach and his special talent in creative estate planning. He is the inventor of The Wealth Enjoyment System®, an innovative approach to estate planning.