Wednesday, May 02, 2007

Silver Spoon

So this is the money topic really on my mind of late: inheritance.

My parents are going to their house in Umbria for about four months (my father is beginning to really enjoy his retirement), and as a precaution (they're anxious about spending all that time on another continent) have sent me and my sister a catalogue of what they call "the important papers"—all of the account statements and deeds and bonds and whatnot—as well as a list of valuable items in the apartment. It doesn't even have any numbers in it, and nevertheless, it's the most I've ever known about my parents' financial situation.

I've spent much of my life without any real knowledge about my parents' finances. I didn't really realize that my family had a lot of money compared to many families until I entered a public (test-in) school in 7th grade, and even then, it took awhile to get the necessary shot of perspective, partially because both of my parents are pretty anxious about money management (in separate and complementary ways). By the time I realized they were going to pay all of my college costs out of pocket, I had a pretty good handle on that, like, "okay, got some money." Nevertheless, I've had no idea if "some money" is like, "travel the world in retirement" or like "leave a sizeable estate," and from this catalogue of assets, I'm beginning to think it's the latter (though I couldn't say for sure).

I'm self-conscious talking about this, the growing sense that there's probably a substantial amount of money coming to me. It's just a weird idea. Not that I'm not grateful or glad, it's just...weird, kind of, possibly because thinking about it involves contending with the issue of my parents' mortality, which is actually pretty hard to think about in a real way (especially because my parents are older than most people with children my age). It's also weird because I've never really considered the possibility, and because there's this whole weirdness that surrounds inherited money, like I'll automatically turn into a dissolute trust-fund baby, all Sarah Michelle Gellar in Cruel Intentions, or like the kids at my sister's private school who'd never taken the subway because they'd always been driven to school in chauffeured cars.

And then there's the little devil that sits on my shoulder going, well, you don't need to save for a down payment if you're just going to inherit enough money to buy a house outright. That little bugger needs squashing, because yes, you could think that way, but it would mean working around a very uncertain timetable, and I like having more control over my life than that.

See, I'm spoiled, relatively speaking. I've been given all manner of luxuries, really, and sometimes I catch myself thinking that those luxuries are universally expected, and I have to give myself a quick slap on the wrist. But I'm not that spoiled. I have a work ethic, a serious one, and a driving sense of ambition, and a demanding conscience. Those are all things my parents have encouraged in me. I manage money sensibly. What reason is there to feel ashamed that at some point in my life, I may receive a substantial sum of money I didn't earn? There's no reason to think I'll blow it on a stable of glorious Marc Jacobs bags, because I'm just not that kind of girl. There's every reason to think that I'll use it intelligently for the benefit of my family and community, because I am that kind of girl.

And isn't this the goal of careful money management, of working hard and saving hard? Isn't the whole point to provide your descendants with more choices, more freedom, more opportunities? That's certainly how my parents have always thought of their money-management goals, and it looks like they may have achieved those goals.

So whence the weirdness?


mOOm said...

Do you know for sure that your parents would plan to give you the money and not give it to charity? :) If they plan on giving you money once they've passed away then it's likely that you'll be heading for retirement at that stage yourself. So in that case the way to think about it, is likely there is a retirement back up plan apart from Social Security and what you can save yourself. This is the way I think about the money that I will probably inherit. My mother is 75 and I am 42. I get roughly half when she dies. Hopefully, I'll be a lot older by the time I inherit. I grew up very much at the lower end of the middle class. My parents were very frugal, not spending, saving and investing. And then my father inherited money. He was 80 years old when he finally realised most of it (after legal battles, art auctions etc.). Only after he died in 2002 did I find out how wealthy our family was. My Mom now has about $2.5million + she receives pensions. I help manage the investments.

Seems that most PF bloggers parents are poorer than they are. Not sure why that is, but that's the impression I I get from reading the blogs. So we are unusual in the PF Blog world. In my non-virtual life I am more used to people complaining that they are poorer than their parents were at their age. I'm better off than my parents were at my age.

Strange Bird said...

Perhaps I should feel relieved that my parents won't have much to leave to me? ;)

In any event, this stuck out to me: "And then there's the little devil that sits on my shoulder going, well, you don't need to save for a down payment if you're just going to inherit enough money to buy a house outright." Do you want to wait until you're 60 to own a home? What you're doing makes perfect sense, and the little devil is a silly character. You'll be a better person for having made your own way before an inheritance, but if you're really stuck on it... the inheritance can help you with your second home. ;)

Lacey said...

I hate talking about that type of thing with parents. It is sad.

Budgeting for Our Wedding

English Major said...

See, moom, here's the thing that slightly alters the situation: I am 23. My dad (who's not a give-it-all-to-charity kind of guy, though he has already endowed a scholarship at his alma mater and will, I assume, give a substantial portion of his estate to good causes) is 72. An extremely healthy 72, but 72 nonetheless, which, I think, is why he is bringing this topic up more and more frequently with me and my sister (who's 19). I also hope that I'll be much, much older when I inherit (and, like your father, I stand to inherit some entangled assets, like art), but the likelihood that I'll be, say, over 50 is slim.

It's weird, though—I've never encountered so many sets of financially irresponsible parents as I have in the pf blogosphere. With only a single exception of which I am aware, my friends' parents, who range in class from lower-middle-class to straight-up rich, are all pretty financially stable—certainly financially stable enough not to represent a financial outlay to their children. It's sort of a new phenomenon to me (though certainly, that may change as I get older).

strange bird, I don't really plan on not making my own financial way—I just wanted to acknowledge that I'm not a saint, and I do think that the knowledge that one will likely inherit can be dangerous in this respect.

Pappy Blue Ribs said...

My wife and I both got "the money talk" in the same week. HER parents have a secret file cabinet with all the important phone numbers, account numbers, etc. MY parents said to get a Yard Sale sign, sell what we can, take what we want, and throw the rest away. Ha!

The idea that you can inherit money is a very dangerous thing. Just read Bleak House (or at least rent the PBS version)! Fight the urge to focus on handouts.

mOOm said...

Actually my Dad was 71 when I was 23, my mother is 15 years younger than him. The average person won't inherit a lot from their parents. But the parents are unlikely to need much financial help. But likely a lot of other practical help. Maybe many PF Bloggers THINK their parents will need financial help. Or maybe having poor or financially irresponsible parents and then becoming comfortably middle class makes people want to blog about their thoughts?

Sensibly, the prospect of inheriting a moderate amount of money (say $1million in today's money) when you are already middle aged means to me that I can take a little more risk than many people can in trying to achieve financial independence myself at a younger age. I expect actually that my net worth will be greater than what I inherit when I do.

I've had a few discussions online and I think my attitude is different about this than many posters because a large chunk of the wealth came from the previous generations not money my parents saved. This makes us in some way "upper class" I guess in the American sense. Each generation gets a share of the wealth, benefits from it, adds some themselves and passes it on. OTOH the phrase "upper class" is amusing when I think of growing up in a London suburb with immigrant parents, (modern) orthodox Jews too :)

English Major said...

moom, I think we have a fair bit in common—my dad is 72 and my mom is 57, and they represent both "family money" (my mom, whose parents are Mayflower-American types) and "immigrant work ethic money" (my dad, who grew up in the Russian Jewish tenements in Brooklyn).

(From what I understand, though, from this email, my father's estate will pass partially to my mother, but also partially directly to me and my sister.)

I think "I can afford to take a little more risk" is a good way to think about it. I certainly don't plan on slacking financially, but I do feel like it takes the pressure off me a little bit—I feel a little more professional freedom because of this prospect.

Mary said...

I'm an avid PF blog reader (not blogger) and I have always been struck by the differences in attitude towards inheritances among the community. moom and english major, you seem to me to be among the bloggers most likely to talk openly about inheritances, to not deny the effects they will have on your lives.

I inherited (from an old money grandmother and an immigrant grandfather who took what not-enormous amount they got from my grandmother's large family and made it grow through frugal living and savvy investing) and will inherit more from my parents, someday. These have given me the freedom to go to graduate school and to pursue a career that makes me happy. But that career is wrapped up in notions of (for want of a better word) noblesse oblige, that the research and work that I do will make the world a better place in ways particularly related to opportunity for all. It's not high paying, and I think the freedom to choose a non-high paying career, and the feeling of obligation to give others something closer to the chances I've had, come from past and (possible) future inheritances.

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