Let’s talk dollars and sense.
My desire to do this comes after reading an article titled “Why Not to Leave Too Much to Your Grown Kids.”
The author has also written a book called "Entitlemania.” I’ve not read the book, but I might. These are concepts I have not thought about before, one in particular, “warm money” and “cold money.”
The premise is this: “Somewhere in our DNA as parents, we believe it is an act of love, generosity or, for some, contrition to leave our children an inheritance.”
I have seen this. My widowed mother lived on her modest social security income for years with my siblings and me subsidizing her care toward the end. But throughout her life, my mom insisted on keeping her $1,000 term life insurance policy; we calculated she had paid for it 1,000 times over through the decades, but she always wanted to make those small monthly payments to be assured of “leaving money to grandchildren.”
The author of a new and provocative way of looking at financial legacy, Richard Watts, is a veteran financial counselor and legal advisor. He strongly believes “money from familial inheritance is divisive.” In his get-your-attention words, “Just in case you believe your kids are going to be appreciative of the money you leave, it takes about three days for your children to consider your inheritance all theirs.”
Here’s a story worth retelling. Three adult children convene a meeting with their aging parents and the parents’ financial planner. The oldest speaks on behalf of his siblings and begins by saying, “Mom and Dad, there’s something called warm money and cold money. Warm money is money you give with love while you are still alive and you are able to witness appreciation of that gift. Cold money is money we get after you are dead.”
The story would be better if the children had encouraged their parents to use their “warm money” for exotic travel, personal self-renewal or to benefit favored charitable causes. But it started me thinking. My husband and I do not have a lot of money to leave our children and grandchildren, but we have some. What if we left half of our estate (as warm money) to charities and nonprofits of our choosing and the other half to our children, asking them to select where it goes — allowing they might decide give it to themselves but they also might give to their own charitable choices.
Here’s another story. A dying mother convened her adult children and gave each of them a handful of colored stickers, asking them to go about her home and, taking turns, put a colored sticker on an item of furniture, a piece of jewelry or family heirloom they would like to have after she passed. One son waved away his turn to place a sticker each time it came around, and at the end, when his mother asked, “Son, don’t you want anything?” he “carefully peeled off one yellow sticker from his unused sheet of dots and gently placed it on his mother’s forehead."
I like that story. A lot.
— Sharon Johnson is a retired Oregon State University associate professor. Reach her at Sharon@agefriendlyinnovators.org.