Letting It All Go
Time has no mercy.
But sometimes age brings some unexpected wisdom. Even if it is later than it should have been. For a few years now I have been trying to get my wife and her sister to talk to their parents about providing power of attorney rights for them, but they "haven't been ready" to have the discussion. However today, their mother called and said that they want to have a discussion about it.
Seismic move.
The two children don't really know how much their parents have stashed away, but even though they were working class most of their lives, they are also from a generation that saved, and didn't take on exorbitant debt levels. They have largely lived modestly their entire lives, splurging occasionally on a car, or perhaps a holiday back in the days when they were comfortable to travel. However, they have also not been the most savvy of investors from what I understand, so they haven't been investing heavily into generative investment options either.
This shift must be scary for the parents though, as they have spent their whole lives controlling and being careful with their money, only to get to the point that they have to give up control. This is not only a loss of freedom, but also a loss of something that they have spent the last sixty years of their lives being concerned with. Now that they are reaching close to eighty though, it has to be done.
Getting old sucks.
But they are also old school, where if something happens to the father, the mother won't be able to pay bills or probably even go to the shop. And if something happens to the mother, the father won't be able to prepare a meal, other than a barbecue. I suspect that once one goes, the other won't be far behind.
They have been together since their early teens.
For my wife and her sister however, there are now a lot of things that they are going to have to organize and consider, because whatever they might get from their parents, is going to be subject to some pretty significant taxing and there are many extra costs. The inheritance tax in Finland is high and complicated, and it also seems to depend on what form the value comes in as there are different rates depending on whether it is cash, a residence, an investment property or investments like stocks. This means that they have to also consider what to do before their parents pass away.
Neither of them are the investor type.
And, they don't really have a good picture of the landscape of their parent's value as it is, which means they are going to have to sit down with them and work out what is where and why. This is planned for tomorrow apparently, and I suspect that once the discussion starts, the father is going to start getting that feeling of loss and become quite defensive.
Have fun girls.
Getting old sucks at the best of times, but it sucks even more when having to watch all those decades of hard work of a lifetime, get chopped up and turned into assets and resources. Of course, that is what they are, but for the person who earned them through the blood, sweat and tears of labor and sacrifice, there is also the emotional attachment to the idea of it, not just the opportunity of it. It is because of this that people who earn the money, tend to be more protective of it and more sensible in their spending of it, than those who get the money cheaply or for free.
While I didn't get an inheritance of any kind, I think that if my wife does get something, she would be pretty sensible with it and perhaps "too sensible" even. I suspect that if it was cash, she would want to put it onto the house mortgage rather than invest it, which will of course be her decision at that time. However, I suspect that this is still some years away and if things go well, our mortgage won't be that great by that point anyway, so perhaps she would be more open to investing some of it instead.
Whatever the kids decide to do with it, it is up to them, but for the sake of my future self, I hope they at least do something useful with it rather than waste it. Inheritance might feel like it is free, but it is not when you consider what parents had to go through in order to build that amount, whatever that amount might be. I hope that when the time comes for Smallsteps to have to go through this, I would have already sorted out all the details so that all she will have to do, is benefit from the investments themselves and perhaps be able to offer her kids some additional opportunities.
At least, I hope there is more for her than my parents left me.
Taraz
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I can only imagine how tough this must be for their parents. Handing over that kind of control and financial independence has to be really scary, especially after a lifetime of being so careful with their money.
But it's so great that they're being proactive about it and getting your wife and her sister involved. Even though it's a big change, at least they'll have the support of their children to help them through it.
I am pretty sure your wife will do well with her inheritance because you will be there every step of the way to guide her.
Yeah - I think that they are a pretty decent family all in all, so there shouldn't be too many issues.
I would spend it all on candy ;)
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A day will come when our parents will be old and may not be able to handle so many things like they used to.
Inheritance is just like free and a lot of people tend not to use it well since they didn’t really work for it. I just hope and pray that your wife and sister use it well and save well from it
It is funny how people think that other's hard work is free, isn't it?
It’s funny but that’s life😅
In Third World countries they are based on criteria such as “what doesn't cost us, let's make it a party”. It is torture to see families that were once united battling over who gets the biggest or best slice of the cake, which then evaporates. Others, sole heirs, let the property whose parents built with sweat and tears deteriorate.
Perhaps, with first-world thinking, the conception of an inheritance is handled properly.
As I write, I was reminded of a nice film related to this topic, “The Last Gift” (2007).
Lawyers don't mind this.
I am not so sure. I think it comes down to family itself. I have seen some terrible outcomes here.
Getting some inheritance from your parents is good so that you can at least have something to rely or fall back on
I pray your wife and sis use the inheritance well
I got nothing from my parents, but I think it would have helped to have got something :D
I think it's better to equip your children with the tools they need to build financial Independence so all their minds won't be on what to inherit and when they do inherit they definitely would make good use of it. If someone has his children squabbling over what to inherit from him or they misuse it then the person didn't do his job as a parent well. I hope all goes well for you wife and her sister. I think their parents just has to go through with it. Thanks for writing.
My father in law finally got around to updating his will and created a power of attorney for my wife. It is a relief in some respects, but sad in others because we know he is approaching the end of his years. Like your wife's parents, we are not sure how much in assets he has, but have a good idea. There will be no waste as he never wasted anything, and she would not want that to happen either. Hell, the man still sews up his socks when he has more than enough money just to buy a new pair. Then again, that is how he has saved up so much I guess.
It's a tricky situation, if you push the parents on these sensitive issues, they may think the kids are after their money and get all defensive.
Now your in laws are ready for the discussion, maybe it's also a good opportunity to encourage them to spend more of their hard earn cash on themselves instead of handing them over to the tax man.
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These topics are always a bit uncomfortable to talk about, but as the oldest of four siblings, I've had this talk with both of my parents. We are lucky that they both have been successful in their lives and have significant retirement plans and investments. They are certainly more well off than my brother and I ever will be. The jury is still out for our two sisters.
What I thought was quite interesting in having these discussions is that both of them already have pre-paid for their funeral arrangements. They have their land plots picked out, headstone, casket, service, all the "last details." How considerate of them to take the financial and logistical strain out of a sad day.
I can only imagine how tough it was on them with their parents that they would go out of their way to prepay for an end-of-life plan. Give it up to late-stage capitalism though. It's thought of everything!
Getting old definitely sucks and time doesn't give two craps about it!
I wonder how close they are as a family, and if they trust each other a lot. Money is a big deal, and it can even tear families apart. But if they are really close, then they can just start transferring assets now to avoid any inheritance tax in the future. Cash is easiest. My granma's money was placed in a high dividend investment, and the proceeds are just given to her every time it pays out. When she needed the money for hospitalization, that was used. For assets like land, it might be good to research how much they will probably have to pay in inheritance tax, as opposed to just 'buying' or transferring the ownership now.
It's nice to have some inheritance but I think it's a luxury and I have seen how people spend theirs like an idiot. I agree that it's best if things go well and you treat that money wisely. The tax does suck though.