Do I Have To Honor My Grandmother's Wishes With An Inheritance She Left?

Summary

Podcast Summary: The Ramsey Show Highlights Episode: Do I Have To Honor My Grandmother's Wishes With An Inheritance She Left? Release Date: June 13, 2025

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Introduction

In this episode of The Ramsey Show Highlights, the Ramsey Network hosts Dave Ramsey and Ken Coleman tackle a poignant financial dilemma presented by a caller. The discussion revolves around honoring a grandmother’s wish regarding an inheritance and determining the best use of those funds to benefit the caller’s family while adhering to their financial goals.

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Caller’s Financial Situation

The caller begins by outlining his current financial standing:

• Debt-Free Status: He and his wife have eliminated all debts except their mortgage.
• Children’s Education Funds: They have been proactively funding their children’s college education:
  • Son (6th Grade): Approximately $75,000 saved.
  • Daughter (3rd Grade): Approximately $60,000 saved.
• Inheritance: Recently received a post-tax inheritance of roughly $70,000 from his late grandmother, with her explicit wish that it be used for their children's education.

Caller’s Statement:

"So my wife and I are debt free other than our home. And recently my grandmother passed and left us a small inheritance about after taxes, roughly $70,000. Her wishes were that she wanted to leave her legacy with it going towards our children's education."
[00:07]

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The Dilemma: Inheritance Allocation

The caller is torn between honoring his grandmother’s wishes to allocate the inheritance toward his children’s education funds and using the money to pay down the remaining mortgage on their home.

Caller’s Concern:

"The question is though, would we be better off... paying down her house? That's the last debt we have."
[00:44]

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Expert Guidance: Ken Coleman’s Insights

Ken Coleman commends the caller on his financial prudence and begins to dissect the situation:

• Recognizing Oversight: Coleman suggests that the grandmother might not have been aware of the substantial amounts already allocated to the college funds.

  Ken Coleman:

  "She clearly didn't know that you had college covered when she said this in the will."
  [00:56]

• Evaluating Sufficiency: He emphasizes the importance of determining whether the current education funds and the inheritance together will sufficiently cover future education expenses.

  Ken Coleman:

  "Have you played it out to see what it will be when they reach 18?"
  [01:16]

Coleman advises using educational cost projection charts to assess if the combined funds will meet the future expenses, recommending a systematic evaluation to ensure financial goals are met.

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Expert Guidance: Dave Ramsey’s Recommendations

Dave Ramsey complements Coleman's approach with practical financial strategies:

• Inheritance Utilization: Ramsey suggests that the $70,000 inheritance should be allocated directly into the children's education funds rather than using it to pay down the mortgage.

  Dave Ramsey:

  "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..."
  [04:14]

• Investment Growth: By placing the inheritance into the education funds, Ramsey highlights the potential for greater investment returns over time.

  Dave Ramsey:

  "And you're gonna get the greater investment return on that. You see what I'm saying?"
  [05:10]

• Balancing Debt Repayment: He recommends continuing to use the current budget allocations ($500/month) towards paying down the mortgage, ensuring that both honoring the grandmother’s wishes and advancing their financial stability are achieved.

  Dave Ramsey:

  "And I would start using the money you've been putting in out of your budget and I would just start moving down the baby steps from there."
  [04:46]

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Strategies for Balancing Education Funding and Mortgage Payment

The discussion delves into the mechanics of balancing ongoing contributions to the education funds while addressing the remaining mortgage:

• Current Contributions: The caller is contributing $500 monthly, split between the two children’s education funds.

  Caller:

  "We're splitting it $500 a month is what we're doing."
  [03:23]

• Duration of Contributions: With the son in 6th grade, there are six more years of contributions, and nine years for the daughter.

  Dave Ramsey:

  "So how many more years for your oldest child would we be contributing? How old again?"
  [03:30]

Ramsey and Coleman calculate the projected totals based on current contributions and inheritance, assessing that the funds are likely to cover the anticipated educational expenses.

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Importance of Communication with Children

Ken Coleman emphasizes the critical role of open communication with children regarding financial expectations and educational funding:

Ken Coleman:

"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..."
[06:08]

Coleman advises parents to involve their children in financial discussions early on, ensuring that they understand the support available and the importance of seeking scholarships and other financial aid options.

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Final Recommendations and Conclusion

Both experts converge on the decision to honor the grandmother’s wishes by allocating the inheritance to the education funds:

• Allocating Inheritance: Place the $70,000 inheritance into the children’s education accounts immediately to maximize investment growth.

  Dave Ramsey:

  "Put the 70 in now."
  [05:06]

• Continue Mortgage Repayment: Maintain the current budget for monthly contributions towards the mortgage, ensuring the family progresses through the financial "baby steps."

  Dave Ramsey:

  "You are honoring grandma's request and you're creating... pay off the house."
  [04:48]

• Confidence in Sufficiency: Ramsey expresses confidence that the combined contributions and inheritance will be adequate for the children’s education needs.

  Dave Ramsey:

  "If it's enough, then you're already in the good... I feel pretty confident they're going to be able to get educated."
  [05:38]

The episode concludes with both hosts reaffirming the importance of honoring familial wishes while maintaining financial goals, providing a balanced approach to inheritance allocation and debt management.

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Notable Quotes

• Ken Coleman on Communication:

  "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..."
  [06:08]

• Dave Ramsey on Investment Growth:

  "And you're gonna get the greater investment return on that. You see what I'm saying?"
  [05:10]

• Dave Ramsey’s Final Advice:

  "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..."
  [04:14]

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Conclusion

This episode provides valuable insights into managing inheritances in the context of existing financial plans. By prioritizing educational funding and maintaining a structured approach to debt repayment, the caller can honor his grandmother’s wishes while ensuring financial stability for his family’s future. The experts’ emphasis on communication and proactive financial planning underscores the importance of comprehensive strategies in personal finance management.

Transcript

[Dave Ramsey]

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[Caller]

So my wife and I are debt free other than our home. And recently my grandmother passed and left us a small inheritance about after taxes, roughly $70,000. Her, her wish, her wishes were that she wanted to leave her legacy with it going towards our children's education. I have a sixth grade 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.

[Ken Coleman]

Wow, good job.

[Caller]

And the question is though, would we be better off? I mean, I want to honor my grandmother's wishes, but will we be better off paying down her 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 Coleman]

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

[Caller]

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 Coleman]

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

[Caller]

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, if we're already in the good. And again, I know education costs could change. I get all the other.

[Ken Coleman]

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 the 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 of Georgia. 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 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.

[Dave Ramsey]

I have a fun curveball.

[Ken Coleman]

What's that?

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[Ken Coleman]

What's that?

[Dave Ramsey]

Can I jump? Is it okay?

[Ken Coleman]

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

[Dave Ramsey]

No.

[Ken Coleman]

Oh.

[Dave Ramsey]

What is the amount total that you're putting away each month for both kids?

[Caller]

It's. We're splitting it $500 a month is what we're doing. $500 a month split between the two of them is.

[Dave Ramsey]

Okay.

[Caller]

Our budget.

[Dave Ramsey]

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

[Caller]

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

[Dave Ramsey]

Okay, so we're talking. What I would do is I. I'm trying to back into this, and I'm not a mathematician, but Basically you're doing $6,000 a year is what you're putting away for both kids. Correct?

[Caller]

Yes.

[Dave Ramsey]

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

[Caller]

Correct.

[Dave Ramsey]

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

[Ken Coleman]

Ten years.

[Caller]

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

[Dave Ramsey]

I know. Okay. But here's my point. If it were me, I'm just throwing a curveball out here.

[Ken Coleman]

Hit it.

[Dave Ramsey]

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.

[Caller]

Out a month extra to the house.

[Dave Ramsey]

Yeah, yeah. Because I think that then you're honoring grandma's request and you're creating. It's still ca, it's still cash flow. It's still the same. I mean it's 6 1/2 dozen another. But you're honoring grandma.

[Ken Coleman]

Yeah.

[Dave Ramsey]

By taking that 60,000. But go ahead and put it in now. So go and put the 70 in now.

[Ken Coleman]

Yeah.

[Dave Ramsey]

And you're gonna get the greater investment return on that. You see what I'm saying?

[Ken Coleman]

Yeah.

[Dave Ramsey]

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 sense. That's what I would do.

[Ken Coleman]

I'm not opposed to that sense.

[Caller]

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 question.

[Dave Ramsey]

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

[Ken Coleman]

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

[Dave Ramsey]

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.

[Caller]

Thank you very much.

[Ken Coleman]

Yeah, that's a good question.

[Dave Ramsey]

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 or you.

[Ken Coleman]

Tell them to figure out where, where is it coming from? Which.

[Caller]

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

[Dave Ramsey]

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

[Ken Coleman]

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.

[Dave Ramsey]

That's right.

[Ken Coleman]

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

[Dave Ramsey]

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 Coleman]

Yes.

[Dave Ramsey]

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 Coleman]

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.

[Dave Ramsey]

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 Coleman]

I agree. Especially it would be one thing if you already fully had education covered. Yeah 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.

[Dave Ramsey]

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

[Ken Coleman]

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

[Dave Ramsey]

Wow. Somebody write it down. Ken is right. I'm going to call my wife and daughter immediately and tell them. Hang on. I'll be wrong later. Create your free every dollar budget today. The simplest way to budget for your life.