Give Our Kids An Early Inheritance?

Summary

Podcast Summary: "Give Our Kids An Early Inheritance?"

Podcast Information:

• Title: The Ramsey Show Highlights
• Host/Author: Ramsey Network
• Episode: Give Our Kids An Early Inheritance?
• Release Date: February 9, 2025

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Introduction

In this episode of The Ramsey Show Highlights, hosted by the Ramsey Network, Valerie and Bill from St. Louis reach out for financial advice regarding Valerie's recent inheritance. Valerie has inherited a substantial sum from her late father and is contemplating how best to distribute a portion of this wealth to her four children. The discussion delves into the nuances of gifting money to children at different financial stages and the potential impacts of such decisions.

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Valerie’s Inheritance and Dilemma

Valerie explains her situation:

"[00:18] Valerie: I inherited a large amount of money from my dad... it's like 2.5 in that."

She clarifies her total inheritance:

"[01:04] Valerie: No, separate. Yes, ma'am."
"[01:05] Dave Ramsey: Okay, so 3.5. Okay."

Valerie seeks advice on distributing a portion of her inheritance—considering an equal gift of $10,000 to each of her four children. Her concerns revolve around the varied financial situations of her children:

• Oldest Child: Married with three kids, owns a house, financially stable.
• Second Son: Married, two children with another on the way, owns a house, could use a financial boost.
• Older Daughter: Owns a house with her boyfriend, a recent nursing school graduate, financially prudent.
• Youngest Daughter: Currently in college, living at home, financially inexperienced.

Valerie expresses her hesitancy:

"[02:36] Valerie: ...I don't want to enable one... potentially give them money and put it on the..."

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Family Perspectives on Inheritance

Rachel Cruze probes deeper into Valerie's plan:

"[02:36] Rachel Cruze: All right, so how much are you planning to give each child? The same amount or different amounts?"

Valerie responds:

"[02:45] Valerie: Maybe just 10,000. Just something just to kind of help them, ease them their financial life."

Bill, Valerie's spouse, offers a contrasting viewpoint:

"[03:01] Bill: I personally think they wait until something happens and we pass on to the other side and they get the whole shebang that's in our car."

Bill advocates for leaving the inheritance until after their passing, believing it allows the money to grow and benefit the children in the long term.

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Host’s Input and Book Reference

Dave Ramsey introduces the concept from the book Die with Zero:

"[03:15] Dave Ramsey: ...it's called Die with Zero... it's his philosophy, basically, is give your kids their inheritance now."

He discusses the philosophy of providing financial support during key life stages (ages 24-34) versus leaving inheritance until after death. Dave suggests that early financial assistance can offer children a head start in significant life expenses like buying a home or starting a family.

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Balancing Equality and Individual Needs

Rachel Cruze emphasizes equal distribution:

"[06:03] Rachel Cruze: Yes. I'm going to tell you as a father of three, Rachel's a mother of three, my vote is yes, each one of them gets the same amount. You create a whole. I don't like giving them all different amounts based on their realities."

Dave Ramsey concurs, highlighting the importance of equality to prevent favoritism or resentment:

"[06:29] Dave Ramsey: Oh, it's equal, yeah. I think you agree with me."

Valerie agrees, reinforcing her intention:

"[06:31] Valerie: Yeah, for sure."

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Concerns and Final Thoughts

Bill remains cautious:

"[05:22] Bill: ...we will have multi millions in there for them whenever we die."

He prefers maximizing the inheritance to ensure long-term financial security for his children.

Dave Ramsey acknowledges the concerns but supports Valerie's plan as a small portion of the total inheritance:

"[07:04] Dave Ramsey: ...10 each and it's such a small percentage compared to what you guys will leave them anyways."

Rachel concurs, validating the thoughtful approach:

"[07:04] Rachel Cruze: I am too."

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Conclusion

The episode concludes with a balanced discussion on the merits of early inheritance versus waiting until after one's passing. Valerie and Bill are encouraged to consider their children's varying needs while maintaining equality in distribution to foster fairness and prevent financial dependency. The conversation underscores the importance of strategic financial planning and open communication within families when handling significant inheritances.

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Notable Quotes

• Valerie:

  "[00:40] ...like a million plus... 2.5 in. Locked up in that."

• Bill:

  "[03:01] ...wait until something happens and we pass on to the other side..."

• Dave Ramsey:

  "[03:15] ...give your kids their inheritance now... it could lead them in more of an unhealthy path..."

• Rachel Cruze:

  "[06:03] ...each one of them gets the same amount. I don't like giving them all different amounts based on their realities."

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Additional Resources

• Book Mentioned: Die with Zero – A discussion point for inheritance strategies and financial planning for optimal life experiences.

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This summary encapsulates the key points, discussions, and insights from the episode, providing a comprehensive overview for listeners and those who haven't tuned in.

Transcript

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[Dave Ramsey]

Ramsey okay, up next, we have. Which is one of my favorite calls to take, is actually two people on the line. I'm assuming there are a couple.

[Rachel Cruze]

You're kidding me.

[Dave Ramsey]

And this is Valerie and Bill.

[Rachel Cruze]

I couldn't be more excited that we have a couple on with us.

[Dave Ramsey]

Yeah, they're calling from St. Louis. Hey, you guys. Welcome to the show.

[Valerie]

Hi, good afternoon. Thank you for having us.

[Dave Ramsey]

Absolutely. And you're both here, right?

[Valerie]

Yes, ma'am.

[Bill]

Yes, ma'am.

[Dave Ramsey]

So fun. Okay, so great. All right. How can we help? What's going on?

[Valerie]

Yes, ma'am. So I inherited. Inherited a large amount of money from my dad.

[Rachel Cruze]

How much?

[Valerie]

Like million plus.

[Rachel Cruze]

Wow.

[Valerie]

And it's in the sale of his house is where it initially comes from. There's actually an addition to that inheritance that's in IRAs and things of that nature. It's like 2.5 in. Locked up in that.

[Dave Ramsey]

But wait, 2.5. Wait, hold on real quick. Valeria. 2.5 in the investments and the million from the house. Or is that. Is 2.5 altogether?

[Valerie]

No, separate. Yes, ma'am.

[Dave Ramsey]

Okay, so 3.5. Okay.

[Valerie]

Yes, ma'am. So my question is, I would like to give some of a little bit of this money. Not. Not a lot, just a little bit to our four children right now. My dad didn't leave him anything. I was the only child, and so he pretty much just left everything to me. But I would like to give them some. And the. The dilemma I'm having is that I have four kids in four different financial situations. My oldest one is married with three kids, a wife that works, has a house. He's financially okay. My second son is married, has a wife, two children with one on the way. Could use a financial bump, if you will. Owns a house. My daughter, who is also older, she owns a house that is living with her boyfriend, who. They own the house together. I know. That's a real Dave Ramsey. No, no. But anyway. And so she's financially. Well, she's graduated nursing school, and she's got a good head on her shoulders financially. She's the saver. And then I have a daughter who is currently in college and still lives at home, who needs to get hit heavily in the head with the Daver and the financial piece. Seriously. So you can see I'm kind of all over the map with. If I give them some money, how. How do I gift it to him? I don't Want one. I don't want to enable one. I don't want another one to just blow it. I don't want to, you know, potentially give them money and put it on the.

[Rachel Cruze]

All right, so let me. Let me jump in for a second. So how much are you planning to give each child? The same amount or different amounts?

[Valerie]

Same dollar amount across the board. It's not. I mean, it's not huge. I'm just thinking like, where's Bill?

[Dave Ramsey]

What are you thinking?

[Valerie]

Maybe just 10,000. Just like 10,000. Just something just to kind of help them, ease them their financial life.

[Rachel Cruze]

All right, so. So where's Bill at on this deal? Bill?

[Bill]

Yes, sir.

[Rachel Cruze]

Where are you at?

[Bill]

I. I personally think they wait until something happens and we pass on to the other side and they get the whole shebang that's in our car.

[Dave Ramsey]

Okay. This is a fun. Okay. This is a. Yes, this is an interesting discussion.

[Rachel Cruze]

Okay.

[Dave Ramsey]

Because I read a book which you guys should read just for this discussion, because I don't agree with the entire book, but it's been parts.

[Rachel Cruze]

I love that you're coming with a book record.

[Dave Ramsey]

It's called Die with Zero. Have you heard of this?

[Rachel Cruze]

I know this book and it's on my list.

[Dave Ramsey]

It is. It is interesting because part of this discussion is what you guys are talking about, and it's his philosophy, basically, is give your kids their inheritance now. What now? So that. Because the most time, according to the book, that people need money. So to your point, Valerie is really between 24 and 34, you're paying off student loan debt, you're getting your first home. Usually transitions with a marriage and kids, like the most happens usually within that time frame. And they could get a head start, quote, unquote, financially, if they had help with a down payment or if they. Whatever it is, and then they get to build above that and they get to start earlier versus them getting money. This is not kind of against you, Bill, a little bit, but versus the older kids now being in their 60s, when Bill and Valerie pass to the other side. Well, when you're 60s, you're pretty much all set up. You don't really need it or you shouldn't. And then what do you do with that? Right? So it's just kind of like, all.

[Rachel Cruze]

Right, so let's stay there.

[Dave Ramsey]

Go ahead and use it.

[Rachel Cruze]

So before we get them. So if that's the case. And. And you're not necessarily saying they do that here.

[Dave Ramsey]

No, it's just a. It's just a take.

[Rachel Cruze]

They don't. Valerie and Bill, to my knowledge. You two, y'all speak up here. You don't have already a set amount that you were going to give outside of this conversation of give them all ten grand out of this inheritance. But, Bill, if I'm hearing you right, you're going. We don't know what chunk it'll be, but whatever we have left when we die, that's what they get. There's not a certain amount of money that you would be in favor of giving them. Now, this. This idea that Rachel put out there, would the two of you go, all right, if we gave them a larger chunk now, would you be okay with that?

[Bill]

Well, my thing is, so we're going to be paying off our house and a few other things that we have. I just don't want to. I would rather that money continued to grow because now we will be financially set and then in hopes, if the market is the way it should be, we would have multi millions in there for them whenever we die.

[Rachel Cruze]

All right, but that's contingent on you guys stewarding it as you would, and it grows over time. So. I appreciate the book idea, but that's. I feel like that's only applicable to people who have a large chunk of money.

[Dave Ramsey]

And that is true. Yes. That's fair. So in this case, which is them, in a sense, they have 3.5 million.

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Yeah.

[Rachel Cruze]

So in this case, you two, you guys are. You're calling us to weigh in the middle of this deal.

[Dave Ramsey]

I want to know, Bill, from you. I mean, it's 40 grand, which, granted, it's nothing to sneeze at, but 40 grand out of 3.5 million, it's not a ton.

[Rachel Cruze]

That's where I'm at.

[Dave Ramsey]

So is it. What's bothering you about it, Bills? It is.

[Valerie]

It.

[Dave Ramsey]

It's less about the dollar amount and probably maybe the principle of it. Is it.

[Bill]

Is it truly equal to all four? Because there's four different situations.

[Rachel Cruze]

Yes. I'm going to tell you as a father of three, Rachel's a mother of three, my vote is yes, each one of them gets the same amount. You create a whole. I don't like giving them all different amounts based on their realities.

[Dave Ramsey]

And you could wait with like the one in college and say, we're going to hold it until you're 25. You know, I mean, there could be an age.

[Rachel Cruze]

But where are you at on the ten grand each? Forget the number amount. Is it an equal?

[Dave Ramsey]

Oh, it's equal, yeah. I think you agree with me.

[Valerie]

Yeah, for sure.

[Dave Ramsey]

I think it needs to be Yeah, I feel like it get real messy real quick. Yes. Even though certain kids obviously maybe need more right now. But I also want this. Whenever you give a gift of money you want it to be a blessing. Right. You want this not to continue to harm. So if you do see situation where this could be actually not good for them and leads them in more of an unhealthy path, that would be more of a pause for me just to think through. That's why the age limit may be something to think about. Like when you're 25. You get it. I don't know. Yeah, just throwing it out there. But no, I'm in favor. Sorry Bill.

[Rachel Cruze]

I am too.

[Dave Ramsey]

I'm on validation. Sorry Bill. 10 each and it's such a small percentage compared to what you guys will leave them anyways.

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