Instructions for family members

How to pass, fit in, eventually set an example, and ultimately lead the way.
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jennypenny
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Instructions for family members

Post by jennypenny »

I'm going to go out on a limb and assume that most forum members play the ERE/financial manager in their family ...

Do you have instructions written up for them 'in case'? Is the plan you've written up for them different from what you're doing now? (is it simpler or more to their taste?)

How have you communicated the plan? Do you discuss it with them? Once or regularly? Is it just written down but not discussed?

Have you done any other ERE-realted preps for them?

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C40
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Re: Instructions for family members

Post by C40 »

Do you mean plans for how they should handle their own finances? Or plans for if something happens to me?

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jennypenny
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Re: Instructions for family members

Post by jennypenny »

Sorry, I mean like if I'm managing my family's path to ERE and something happens to me.

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C40
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Re: Instructions for family members

Post by C40 »

ohhh, I see.

I don't do much in this area. I generally lead by example. I limit my proselytizing to only specific examples and try to do it in ways on and on things that they won't feel I'm criticizing them. I've given a very clear example and I believe my family all understand that they could do it. They don't ask me for much advice. Sometimes they ask about investing but that's about it. They don't really ask for input on lowering expenses or living well.

My family are making changes though. Every one of my immediate family are in the middle of big changes to try to live their lives more as they wish. None of them were doing this at all 6-10 years ago, and I believe seeing what I've done was a pretty big motivator for them.

Toska2
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Re: Instructions for family members

Post by Toska2 »

I couldn't give away free beer at a football game. I'm giving my wealth to charity. At least the money will be several steps from buying someone a new TV.

Dragline
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Re: Instructions for family members

Post by Dragline »

I told my youngest that he needs to go into finance to manage this crap since the older ones seem to have no interest. ;-) He has the best temperment for it anyway.

I have been meaning to write something out "in case of emergency", but I haven't done it. Maybe this will motivate me. It would be something simple involving index funds at this point.

George the original one
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Re: Instructions for family members

Post by George the original one »

Right now, apart from "here are the accounts and you already know what bills come in", I've not updated the old instructions for my wife. And everything is still pretty much verbal... bad, yeah.

Before retirement, the instructions were "here are the accounts, you know the bills, just make sure you file for the $50k life insurance that employer grants us".

Dragline
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Re: Instructions for family members

Post by Dragline »

Maybe I should just say "Don't spend it all in one place" and leave it at that. :lol:

IlliniDave
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Re: Instructions for family members

Post by IlliniDave »

For me it doesn't matter too much, no one depends on my financial savvy for their day-to-day or lifelong financial well-being. I have intended to write up sort of "a father's financial wisdom to his children" letter to be included with my estate settlement in case I don't get a chance to discuss their inheritance with them before I croak. But I can't rule from beyond the grave.

Scott 2
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Re: Instructions for family members

Post by Scott 2 »

This is where my wife and I managing money separately is a help. She's been running her own finances her full adult life, so she just needs to know how to get at mine.

I've got an aggregation tool for tracking net worth, an online password manager for all the accounts, annual tax records, and a local budget that lists accounts as well. She knows where it all is and is also beneficiary on everything.

The work life insurance is probably the most likely item to get lost, great point about that. I think it's 2.5x my annual salary.

I've been less careful with tracking her accounts, but am pretty sure I could get there with all of them.

Where we are weakest, is in the event we both die at once. We have a will and a designated executor. However, we have not handed out the list of accounts or amounts. I believe my wife put a centralized list together somewhere when she did all the estate planning, but I guess I didn't pay enough attention. With no kids, it's hard for me to care much about what happens to the money once we're dead.

7Wannabe5
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Re: Instructions for family members

Post by 7Wannabe5 »

My two adult children are both NT. My DS28 is taking courses towards CPA starting this fall. My DD26 is currently employed as financial-rescue person for small Interior Design firm that is in the red and being funded/floated by designer's wealthy attorney husband. She told me "I deserve a raise, but we can't afford to give me one yet."

That said, their individual styles of frugality and financial functioning are quite different than my own. Very much analogous to how the large stacks of books they are reading are evident, but also very different than my own. For instance, my daughter likes to shop, and my son never shops. My daughter will invest in an expensive haircut and nerd glasses with career ambitions in mind, and my son never cuts his hair. So, they would not appreciate any instructions from me.

However, I do intend to prepare and pass on instructions for use and maintenance of my perma-culture project once it is completed, but I think my daughter's boyfriend is more interested than either of my kids.

IlliniDave
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Re: Instructions for family members

Post by IlliniDave »

Dragline wrote:
Thu Jul 20, 2017 5:07 pm
Maybe I should just say "Don't spend it all in one place" and leave it at that. :lol:
To hedge an untimely demise I considered setting up trusts with my estate that would pay my daughters something like 2%/yr until they hit 50, then 3% until 65 when they would get the entire balance, with the throw-in that in addition to the age-based percentage the trust would pay out dollar-for-dollar anything they contribute to a retirement account, which would have the net effect of transferring my retirement accounts to theirs (neither is willing to plan for their future yet--they both have a double dose of their mother's strict "saved money is wasted money" gene). I guess my main concern is that they'll hit old age with no real plan in place and have hardscrabble golden years. They are still steeped in the youthful belief of today that only privilege will get them ahead without centralized intervention to make things fair. Ironically they recognize I got where I am through working hard and making good decisions, despite my obvious whiteness and maleness. They just don't think it's worth the effort to imitate me because the other people who fit my demographic are systematically oppressing them.

Increasingly, though, behavior modification seems hopeless and the adage you cite seems like the easiest way out for me. :)
Last edited by IlliniDave on Fri Jul 21, 2017 6:55 am, edited 1 time in total.

7Wannabe5
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Re: Instructions for family members

Post by 7Wannabe5 »

@IlliniDave:

I used to babysit the son of a teenage hippie Mom, and he grew up to be an investment banker like his grandfather, so you might want to consider skip to 3rd generation in your bequests. OTOH, I knew a gentleman who married and had kids before WW2 and lived to be 95 and meet some of his great-great-great-grandchildren (due to couple teen mothers in the chain), and it was one of his young adult great-grandchildren who caused him financial grief in his last decade. Not over 'til it's over.

IlliniDave
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Re: Instructions for family members

Post by IlliniDave »

7Wannabe5 wrote:
Fri Jul 21, 2017 6:53 am
@IlliniDave:

I used to babysit the son of a teenage hippie Mom, and he grew up to be an investment banker like his grandfather, so you might want to consider skip to 3rd generation in your bequests. OTOH, I knew a gentleman who married and had kids before WW2 and lived to be 95 and meet some of his great-great-great-grandchildren (due to couple teen mothers in the chain), and it was one of his young adult great-grandchildren who caused him financial grief in his last decade. Not over 'til it's over.
In general I agree, that's all stuff that will sort itself out in time. I was thinking more of the case of my untimely demise where "my" money is floating around but I'm not and my primary heirs have not yet reached age 30. If I reach 80 they'll be north of 55 and hopefully in a better state of maturity when it comes to coping with money, but in the spirit of what you said, no guarantees.

I have a $hithead nephew that is mercilessly taking advantage of my dad's inability to say, "No!", and as my mom's health and ability to check my dad's impulses fades, it gets worse, to the point my aunt and I have been discussing arrangements to pay for Mom's funeral/burial despite my dad's > $70K/yr pension income. They live frugally and low key, but the kid (who's pushing 30) bleeds them dry. It's a source of shame for Mom that they don't even have the means for their own funerals, something I hate to see her carrying while she's fighting the cancer. Yet another reason I need to get my butt home.

Dragline
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Re: Instructions for family members

Post by Dragline »

Sorry about your parents' situation and your mom's illness, ID.

Dragline
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Re: Instructions for family members

Post by Dragline »

IlliniDave wrote:
Fri Jul 21, 2017 6:41 am


To hedge an untimely demise I considered setting up trusts with my estate that would pay my daughters something like 2%/yr until they hit 50, then 3% until 65 when they would get the entire balance, with the throw-in that in addition to the age-based percentage the trust would pay out dollar-for-dollar anything they contribute to a retirement account, which would have the net effect of transferring my retirement accounts to theirs (neither is willing to plan for their future yet--they both have a double dose of their mother's strict "saved money is wasted money" gene).
Well, I have as a guideline in my head "Give them enough to do something, but not enough to do nothing," but what exactly that means in concrete terms is more difficult to suss out.

There are now states that allow for the creation of essentially perpetual trusts (under common law a trust could only last a lifetime plus 21 years). Yes, the laws are being re-designed to ensure the rich can stay rich long after they are dead and their heirs never have to work (they can run for office instead and make sure only the little people pay taxes) -- but I digress.

I think I'd like to lock up the corpus somehow and only let dribs and drabs come out of it to my heirs with some significant portion also going to charity -- but these are only foggy notions at present. Then another part of me says just buy one big fat single premium annuity for the joint lives of me and DW and live like rock stars until we expire, leaving nothing left at all.

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jennypenny
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Re: Instructions for family members

Post by jennypenny »

Are any of you planning to share anything other than financial docs? Have you considered investing the money in something that may provide more security for them down the road -- either because you think it will be more valuable or because it's harder for them to piss away? I've considered leaving each of them 20 years worth of food and/or a solid car that would hopefully last them 20 years. That's 2/3 of the ERE 'big 3'. I'm also putting together a library for each of them with all the books from the ERE hit parade.

I'll admit that I've also considered using reverse psychology on my heirs and specifically telling them they should spend all the money on hookers and blow. Maybe they would respond by deciding to find something more productive to do with at least part of the money.

I guess my biggest concern is that my family would try to 'do the right thing' wrt the finances but would make mistakes because I hadn't taught them enough or explained enough about why the household and finances are set up the way that they are. To use the wheaton scale example, I'd be leaving them something set up (and comprehendible) at one wheaton level but they'd be viewing it from a much lower wheaton level. How do I convey enough information -- and what specific information -- to level them up enough to understand why everything is structured the way that it is?

IlliniDave
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Re: Instructions for family members

Post by IlliniDave »

Dragline wrote:
Fri Jul 21, 2017 8:51 am
Then another part of me says just buy one big fat single premium annuity for the joint lives of me and DW and live like rock stars until we expire, leaving nothing left at all.
Every time I have a thought like that I go visit http://www.usdebtclock.org/ :oops:

IlliniDave
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Re: Instructions for family members

Post by IlliniDave »

jennypenny, I've considered it, but that's about all. Right now my estate plan is basically 42.5% to each kid and 5% to each of my three siblings. That's basically it. Once I get through with work and get settled, and as the kids get older and further into their lives I will probably think about customizing it more. I've got a lot of family matters on my plate these days along with being on the cusp of a large life transition, so trying to out-clever my kids' spendthrifts genes in my estate plan doesn't make it to the important-urgent quadrant.

One thing I didn't mention before that I worry about is divorce. I will probably advise them to keep all assets from me in their name only if I don't wind up creating a trust -- in some states inheritances are excluded from "marital property as long as they are not commingled.

I like the idea of perpetual trusts Dragline mentioned now that I think about it. I wouldn't mind my descendants eventually being philanthropic aristocrats, though looking around my corner of the gene pool they are more likely to just be rich ba$tards.

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Re: Instructions for family members

Post by jacob »

I have little faith in [step-by-step] instructions if they aren't backed up by a matching understanding of the whys. Wheaton levels can not be dismissed. A howto on level 7 will not survive a bumbling level 4 execution for very long.

Therefore, there are no instructions to propagate "however I go about it".

DW is running her own stuff on her own like an ongoing concern and has been doing so for several years now. If I die, my wealth will transfer to her and she'll run it as if it was hers.

The "plans" I've designated for her are fairly robust (= will be available and workable 20 years from now too) and should survive most financial fashions. (No, I'm not going to reveal them here.)

I don't really have any plans in case we both get hit by a bus. I suppose it will revert to whatever the authorities deem the default situation (nearest genetic relations). I don't care because I'll be dead and I don't think humans deserve windfalls just because they were lucky enough to be related to someone who was financially responsible. I generally think that generational financial wealth is a bad idea because when it comes to finances, personal responsibility wrt handling large sums of money doesn't seem to have much of a genetic component nor transfer from parent to child as far as I can tell.

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