Do I Have to Follow My Grandmother’s Wishes for My Inheritance?

Summary

Ramsey Everyday Millionaires Episode: "Do I Have to Follow My Grandmother’s Wishes for My Inheritance?" Release Date: June 9, 2025

In this insightful episode of Ramsey Everyday Millionaires, hosts from the Ramsey Network—including Ken Coleman—address a listener's dilemma regarding honoring a grandmother's wishes for an inheritance amidst ongoing financial goals. The conversation delves deep into prudent financial decision-making, balancing family legacy with personal fiscal responsibilities.

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Caller’s Financial Situation

Jay from Atlanta, Georgia, initiates the episode by sharing his family's financial standing. He and his wife have successfully eliminated all debt except for their mortgage. Recently, Jay's grandmother passed away, leaving them a modest inheritance of approximately $70,000 after taxes. Her explicit wish was for this inheritance to contribute to their children's education.

Jay: "My sixth grader has roughly $75,000 in his [college fund], my third grader has roughly $60,000 in hers."
[00:20]

Jay's children are currently in the 6th and 3rd grades, respectively, and their college funds have been steadily funded from the family's budget. Despite the substantial amounts already saved, Jay is contemplating whether to honor his grandmother's wishes or redirect the inheritance towards paying off their remaining mortgage—the last step in their baby steps towards financial freedom.

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Ken’s Initial Assessment

Ken Coleman responds by acknowledging the grandmother's intentions and raises a critical point: it's possible she wasn't aware of the family's existing college savings. This oversight prompts Jay to question whether their current savings are sufficient to meet future educational expenses.

Jay: "But the question is though, would we be better off... paying down our house. That's the last debt we have."
[00:56]

Ken advises assessing the adequacy of their current college funds by projecting future education costs and comparing them against the expected growth of their savings.

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Analyzing the Inheritance Option

The discussion shifts towards evaluating whether the $70,000 inheritance should be allocated to the children's education funds or used to expedite mortgage repayment. Ken suggests a methodical approach:

1. Projection of College Costs: Utilize educational cost charts to estimate future expenses based on the children's current fund sizes and projected growth.

2. Impact of the Inheritance: Introduce the $70,000 into the existing college funds to assess its effect on meeting or exceeding future educational needs.

Ken: "Let's put some real meat on this skeleton... So, that's how you would play that out."
[01:49]

Jay reveals that they're contributing $500 monthly towards both children's college funds, with plans to continue this contribution until each child graduates high school.

Jay: "We're splitting it $500 a month is what we're doing."
[02:55]

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Balancing Education Funds and Mortgage Payoff

A pivotal moment in the conversation arises when Ken introduces a strategic recommendation: utilize the inheritance to bolster the kids' education funds rather than redirecting it to the mortgage. This approach honors the grandmother's wishes while maintaining progress on their baby steps.

Caller (Ken): "I would take the $70,000 from grandma and I would use that... start moving down the baby steps from there."
[04:14]

The rationale is twofold:

• Maximized Investment Growth: By injecting the inheritance into the education funds immediately, Jay's children can benefit from compounded growth over time.
• Accelerated Mortgage Payoff: Redirecting the $500 monthly contributions towards the mortgage once the inheritance is allocated ensures the family continues on their path to financial freedom.

Ken: "By taking that $70,000... you're honoring Grandma."
[04:28]

Additionally, the benefits of early investment are highlighted, suggesting that the lump sum would yield greater returns compared to the incremental contributions.

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Communication and Expectations with Children

Ken emphasizes the importance of transparent communication with Jay's children regarding their education funds. Establishing clear expectations ensures that the children understand the financial support available and their role in seeking additional scholarships or making educational choices that align with their parents' support.

Ken: "We're having that conversation early and we're having it often... It's six and one half dozen another."
[05:06]

This proactive dialogue prepares the children to make informed decisions about their education paths and fosters financial responsibility.

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Final Recommendations and Conclusion

After thorough analysis, Ken and the Ramsey Network advocate for honoring Jay's grandmother by allocating the $70,000 inheritance to the children's college funds. This strategy not only respects the grandmother's wishes but also optimizes the family's financial trajectory by ensuring both educational and mortgage-related goals are met.

Caller (Ken): "I would honor grandma's request... Put it towards the mortgage. I feel gross about that."
[07:46]

Ken: "Yes, but you're honoring Grandma... You're gonna get the greater investment return on that."
[04:34]

The episode concludes with Jay expressing gratitude, reflecting on the clarity provided by Ken's guidance, and underscoring the importance of adhering to a well-structured budget while respecting familial legacies.

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Key Takeaways:

1. Assessing Financial Priorities: Balancing familial obligations with personal financial goals requires careful analysis and strategic planning.

2. Investment Growth: Allocating lump sums to investment accounts can harness the power of compound interest, often resulting in greater financial benefits over time.

3. Transparent Communication: Engaging in open discussions with family members about financial expectations fosters understanding and responsible decision-making.

4. Honoring Legacies: Respecting the wishes of loved ones can coexist with achieving personal financial milestones when approached thoughtfully.

This episode serves as a valuable resource for individuals navigating similar dilemmas, illustrating the Ramsey Network's commitment to empowering listeners to build and maintain extraordinary wealth through disciplined and informed financial practices.

Transcript

[Jay]

Foreign.

[Dave Ramsey]

This episode is brought to you by SmartVestor. Connect with an investing pro near you at RamseySolutions.com SmartVestor so let's take it.

[Ken]

Straight to the phone lines, Ken, where we have Jay in Atlanta, Georgia. What's up, Jay?

[Jay]

So my wife and I are debt free other than our home. And recently my grandmother passed and left us a small inheritance. It was about, after taxes, roughly $70,000. Her wish, her wishes were that she wanted to leave her legacy with it going towards our children's education. I have a sixth grader and a third grader. We've been funding their college funds since the beginning. My sixth grader has roughly $75,000 in his. My third grader, she has roughly 60,000 in hers.

[Caller]

Wow.

[Ken]

Good job.

[Jay]

And the question is though, would we be better off? I mean, I want to honor my grandmother's wishes, but would we be better off paying down our house? That's the last debt we have. That's kind of where we're at in the baby steps trying to get the house paid off.

[Ken]

Yeah. So did your grandmother, she clearly didn't know that you had college covered when she said this in the will, is the guess right?

[Jay]

Well, I don't know if I have college covered. I guess that's my, the secondary question, like, when is it enough? You know, like, when do you have enough in their college funds? We're continuing to contribute to their college fund every month as part of our budget.

[Ken]

Have you played it out to see what it will be when they reach 18?

[Jay]

Yeah, yeah. I can't remember exactly what it was, but just, I mean, on the rough numbers right now, right. If it doubles every seven years, it's 150 and you know, probably 150 for each of them, maybe potentially more, I think. But we'll continue to contribute. But I, so if that's enough, then if we're already in the good. And again, I know education costs could change. I get all the other.

[Ken]

Well, there's charts out there. There's charts out there where you can play it out and see. So let's, let's put some real meat on this skeleton. So let's pretend you said you're in Georgia. So let's pretend that they go to a state school, which is what we would recommend here, going to an in state school, assuming you still live in the state. And so now it's like, okay, they're in sixth and third grade. Right. It's hard to know who they're going to be coming up. But let's just kind of conservatively say, even if they chose like the most popular state school in Georgia, what would that. What does it cost today? And let's use a chart to find out what it would cost in the next six years, you know, to find out what this. Or the next 10 years to find out what this is going to be. Right. And so that's how you would play that out. And then you go back and look at the account and find out would there be enough. So that's the game that I would play when I get off this phone.

[Caller]

I have a fun curveball.

[Ken]

What's that?

[Caller]

Can I jump? Is it okay?

[Ken]

What if they don't go to college at all?

[Caller]

No. Oh. What is the amount total that you're putting away each month for both kids?

[Jay]

It's. We're splitting it 500amonth is what we're doing. 500amonth split between the two of them in our budget.

[Caller]

So. So we got. So how many more years for your oldest child would we be contributing? How old again?

[Jay]

He's. He's in sixth grade, so six more years for him and then it'd be nine more years for mine for my daughter.

[Caller]

Okay, so we're talking. What I would do is you're doing $6,000 a year is what you're putting away for both kids, correct?

[Jay]

Yes.

[Caller]

So you've got how many years left? Six more years for your son.

[Jay]

Correct.

[Caller]

That's okay. And then the third grader, what? Nine years?

[Ken]

Ten years?

[Jay]

Nine. But I'm splitting that between the 500 is split between the two of them.

[Caller]

I know. Okay. But here's my point. If it were me, now I'm just throwing a curve ball out here. I do not mind either one of you pushing back on this. I would take the 70,000 because it's really darn close to what you're going to contribute over the difference is not that much as to what they're going to contribute at this current rate, if I'm not mistaken. So I would take the 70,000 from grandma and I would use that. I would go ahead and put that in each one of the kids funds and then I would start using the money you've been putting in out of your budget and I would just start. Start moving down the baby steps from there. That's what I would do. Because I think it's going to come.

[Jay]

Out a month extra to the house.

[Caller]

Yeah. Yeah. Because I think. I think that then you're honoring grandma's request and you're creating. It's still Cat, it's still cash flow. It's still the same. I mean, it's six and one half dozen another. But you're honoring Grandma.

[Ken]

Yeah, by taking that 60,000.

[Caller]

But go ahead and put it in now. So go and put the 70 in now.

[Ken]

Yeah.

[Jay]

And.

[Caller]

And you're gonna get the greater investment return on that. You see what I'm saying? Yeah, it's a chunk from day one. Let's say you put the 70 in now, then you guys start taking that 500amonth, and you start using it towards paying off the house. That's what I would do. And that way I'm honoring Grandmother. I'm getting the benefit of that investment by getting that 70 in now and early as opposed to 6,000. 6,006. That's what I would do.

[Ken]

I'm not opposed to that.

[Jay]

It makes sense. My question then is you're afraid you're going to leave yourself short. Is it enough still? I guess. I guess goes back to the calculator.

[Caller]

It does. But I would also say I'm. I'm. I'm channeling Dave right now. If Dave Ramsey, when he'd go, what you have is going to be enough.

[Ken]

Yeah. Cause you set the budget, my friend, and what you have is the budget.

[Caller]

And the kids go, this is what we have. And so if each of them have 150, I feel pretty confident they're going to be able to get educated. Yes.

[Jay]

Thank you very much.

[Ken]

Yeah, that's a good question.

[Caller]

They don't have an unlimited number. They don't go, well, Dad, I want to go to Harvard, and it's 80 grand a year. You can go. Tough cookies.

[Ken]

Or you tell them to figure out where. Where is it coming from? Which.

[Jay]

Well, the hope is if they went to grad school, then there'd be enough, you know, to carry on to a, you know, in a graduate degree afterwards or something. If you. Well, you could continue to fund it more.

[Caller]

Okay. Then again, you can choose to keep doing the 6,000.

[Ken]

Yeah, you can. And then you're doing both. You're doing what Grandma said, and you're adding extra to it. But it does lead into another question, Jay and Ken, that I think is worth talking about, which is when it comes to school, college, grad school, higher ed, whatever, you know, going to get training. I think the biggest piece of this responsibility is not financial. I think the biggest piece is that communicative part of it, where we're saying, here's the expectation, here's what mom and dad are going to do, but here's what child what you do. And we're having that conversation early and we're having it often. So they're not going to wake up one day at 16 or 17 scrambling trying to figure out or learning hey, I have a college fund. Right. It's, we're talking about this probably from the time you hit freshman year of hey, college is coming in four years. Your mother and I are saving. We don't know what school you're going to end up with but just know if there's a deficit, you're going to be on the line for it.

[Caller]

That's right.

[Ken]

And even if there's not, you're applying for scholarships.

[Caller]

Yeah.

[Ken]

I expect, you know, depending there's going to be some work aspects on your end and so really clearly setting that guideline. Yeah, I think is the most important part.

[Caller]

I think so. And so just a quick review here. I would I put the 35 in each kid's account today. 35 here, 35 there.

[Ken]

Yes.

[Caller]

And I talk with the smart, your smartvestor pro, the person you're using and go let's play this out. Let's do our best calculator, guess or amortize this whatever you want to call it. And now we can look back and go okay, based on this new 35 and 35 in each kid's account, what's that going to end up being? And I believe it's going to take one of the kids to 120 and I think the other one 90 something or somewhere in that range.

[Ken]

So I mean it's $72,000 for the 10 year spread for the 6 year old and the 9 year old if they keep putting in what they've been putting in.

[Caller]

Yeah. So you got options. But I would honor grandma's request. I wouldn't take her money and put it towards the mortgage. I feel gross about that.

[Ken]

I agree. Especially it would be one thing if you already fully had education covered but with your what you've said you want to pay, you don't have it covered. So I would put it towards. I agree with Ken.

[Caller]

Let's get that mass sum in there right now. Let that start building.

[Ken]

I know that's right and yeah, you're right, Ken. Yes.

[Caller]

Wow. Somebody write it down. Ken is right. I need to call my wife and daughter immediately. Tell them hang on, I'll be wrong later.

[Dave Ramsey]

Thanks for tuning in to Ramsey. Everyday millionaires need help with your investments? Connect with a smartvestor [e-mail] smartvestor or click the link in the show notes Ramsey Solutions is a paid non client promoter of participating pros. Learn [e-mail] SmartVestor.