By Elizabeth Davies
There once was a time when children counted on their parents leaving them a tidy inheritance to give them a helping hand a little later on in life. Parents made it a priority to save money to pass on to their kids, often making financial sacrifices throughout their own lives so that they had something to leave behind.
I’ll be the first to put my hand up and say that kids need to stop expecting this from their parents. They didn’t work hard their entire lives to live like paupers in their final years just so you can buy a vintage sports car when you’re 60. They’ve devoted the majority of their lives to raising you, they don’t owe you anything else, you’re not entitled to their bank balance simply because you’re a product of their genes.
Over the last few years I’ve heard of way too many cases where money brings out the absolute worst in people. Nothing brings out the selfish little demon in all of us like the reading of an ‘unfair’ will.
I’ve seen families completely torn apart when a parent dies, not due to grief but due to a sick sense of entitlement. People seem to think they ‘deserve’ more, they’ve ‘earned’ more by doing things like supporting their parents through illness or calling regularly, and you know, just generally doing the things that kids should do out of love not in a greasy attempt to get a bigger piece of pie.
On the same theme of traditional financial expectation, at one time it was safe to assume the father of the bride would pay for the wedding. Things have definitely changed and these days couples are mostly expected to foot the bill for their own nuptials. Needless to say my Dad is hugely relieved as being the father of five daughters he’d go broke trying to marry us all off.
I think most families are willing to pitch in with their kid’s weddings, helping them make the day special. I think this is a great way to manage the occasion. If couples have to budget and pay for their own weddings they’ll be motivated to keep things smaller and more simple rather than get caught up in the ridiculous fanfare of fairy tale weddings, never really thinking about cost because someone else is footing the bill.
For a while now I’ve been a firm advocate of standing on your own two feet. Our generation can’t afford to financially rely on the goodwill of others to get what we want out of life. Stop counting on an inheritance and start counting your pennies because your finances are on your shoulders, right where they should be.
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Elizabeth Davies is a graduate of the Auckland University of Technology post graduate journalism course. She writes a weekly article for interest.co.nz on money matters and financial struggles from a young person's perspective.
30 Comments
At what age do you stop helping your kids? 24?
Helping them pay off student loans can go on for decades.
Also it seems wasteful to allow your kids to waste money on exorbitant rent in a city when you could help them with a deposit on a property (& hopefully get repaid interest free).
If you are older with good income, nice home, ability to travel, etc, you do feel a bit guilty seeing your kids living pay check to pay check only just making the rent, driving an old beaten car etc. but then you also get annoyed when you see wastage, takeaway food, fines, & a lack of frugality such as brown bagging your lunch, walking/biking to work, refraining from going out regularly, seems to be no sense/ability to save today for tomorrow.
Adhering to that logic is the reason it galls me when Baby Boomers gripe about "this new generation" of "kids these days" that are lazy, stupid, fat, ego-centric, consumers with no morals. BABY BOOMERS LITERALLY MADE THEM. Then raised them, wrote the school curricula, taught them in schools, sold them (and bought them) fast food, and allowed their televisions to parent them. So, to unpack my steak analogy, the Baby Boomers provided the parts (e.g. genetic material) and the labor (raising them) for this generation and are complaining about the poor results. That's like a chef complaining about his steak that he selected and cooked and expecting people to blame the steak and not him.
Boomers, you should either shoulder the blame, roll-up your sleeves and improve these kids, or better yet- just shut up and bask silently in the self-affirming glow of your own ignorance, completely oblivious to the reality that you're the perfect instantiation of the maxim, "When you point a finger at someone, you have three fingers pointing back at you.".
I think you have no choice,
Although older generations will ultimately pass on much of their accumulated wealth, this may not help younger generations much. On current trends, inheritances are typically received later in life and primarily benefit those who are already wealthy. Gifts to younger generations are typically small, and also primarily benefit well-off households.
Governments should not delay, or a younger generation may be even worse off, as they miss out on benefits their parents enjoyed. The huge challenge for governments and the nation is to introduce policies that ensure we keep a vital part of the generational bargain: rising living standards for every generation.
While I strongly agree with your position the effect of the Family Protection Act 1955 is pretty much that you are entitled to some of your parents' bank bank balance simply because you’re a product of their genes. As Nicola Peart put in an article back in 1996: "it is no overstatement to say that children nowadays have a right to share in their parent’s estate, irrespective of age or financial position." As far as I know this is still the case today.
That's still the law, but Elizabeth is trying to say is that we should expect nothing because our baby boomer parents will have spent it all.
Baby boomers will spend everything themselves - and it'll be a lot of money, decades of capital gains on their properties sunk into overseas trips and healthcare due to longevity. The original "me" generation.
Very true, and I don't really have a problem with that. My point was though that the quote this post was tagged with ("You're not entitled to their bank balance simply because you're a product of their genes") is directly contradicted by the law as it stands. Whether that should be the case is a much more interesting discussion in my opinion.
the genetics DOESN'T get supported by the law.
Anyone can make a claim to the estate property, and it's up to any person to put forward a claim. Your worst enemy could easily put forward a claim stating "significant personal and emotional contact" and get part of the estate gifted to them for that reason.
which is one reason it is best not to die intestacy.
Another is the court pocesses to sort out intestacy are convoluted , chancey and time consuming.
Also the government can also step in and has default claim on all goods...and heck most dead people have already paid enough share in taxes. It's not like they're going to much more of a burden on societys' resources....
No that's nonsense. If you die without a will your estate is dealt with under the Administration Act and goes to your surviving partner/spouse, children or parents/grandparents depending on your family situation. If you die with no family whatsoever then it'll go to the Crown.
If you leave a will before you die the only ways your will can be challenged are under the WIlls Act (if it doesn't comply with the formalities or you lacked testamentary capacity when you made it); the Family Protection Act (which only allows family members (including dependent step-children)) to make claims; the Law Reform (Testamentary Promises) Act (if you've promised to leave someone something in your will in return for services rendered) or the Property Relationships Act (which allows survivng spouses/partners to claim their share under that Act rather than what's in the will). Of course creditors of the deceased are entitled to have their debts paid out before any distributions are made under the will as well.
A non-relative trying to make a claim based on 'significant personal and emotional contact' has no standing at all.
Hi Conrad, i agree with almost everything you've said - and legally you are accurate.
However a person making a claim under the Testamentary Promises Act can cause a world of pain if they are supported by an annoying lawyer. Basically they blackmail the executors (which really means the beneficiaries) in an attempt to 'hold up the estate dissolution' until they can get their settlement offer accepted. [obviously in Court they would have to prove the testator made "the promise", services were rendered, and only reasonable compensation can be sought - but these spinless individuals never intend on going to Court... they're just trying it on]
Of course one can fight it but the estate suffers expense at the hands of the executors and the lawyers - and even though applying for an order of costs may be possible after you win, it may not be worthwhile as the protion of expense retrieved is barely worth the hassle.
I would suggest to anyone writing a Will, make sure you clearly state you have made no testamentary promises to anyone at that time.
Zoltuger...if the BB's choose to spend all their money.......then someone, some business, some entity is going to be on the taking side of that trade so there are plenty of opportunities for younger generations to transfer some/most of that money across the generational divide!!! And in a few years time Zoltuger there will be a new "me" generation and your kids and grandkids will be pointing the finger at you!!!
The younger generations have the opportunity of a lifetime to provide services etc that the BB's will need.
We are in this now, at 70ish my parents are still very much in need of their equity and what limited amount they have, may not pass to myself and my siblings anytime soon. My own equity is secure but allocated and retirement saving will not be compromised as I expect when it arrives precious little support from the state will be provided.
My children, just now laying financial foundations, have the relaxed, disposable attitude that youth has to money prior to the real biting baseload that comes with the accumulation of longer term commitments. Children of their own to feed, clothe, house and educate, transport, phone, insurance, healthcare and fees for things you just have to pay as part of your mere existence.
While we can and will contribute, it will be to things which are for their betterment such as assistance with books, equipment and uniforms required for study or work. It will not be for a car or gas to run it, or to pay a bill they expected but blew the dough on drinks. These things they need to learn by being denied.
Assitance into modest property is an aim, it would be a unit in a mid range suburb, easily rented out and refinanced to them, releasing our equity input as soon as was practical. Just to get their foot in the door. It need not be where they live, the important thing is to keep the borrowing cost low and cashflow neutral or positive.
As far as I'm concerned my money is "my money" and i will do with it as i want. If i choose to leave it to my children then that's exactly what i will do.
People like myself make scarifices throughout their lives so that they can get into a solid financial position. (NB. I still often work till 1am)
I dont know about the other readers but i love my children and i will do anything i can to help their future. I want their life to be easier than mine.
I completely agree that your money is your money and if you wish to/intend to leave it to you children that is entirely your choice and there's absolutely nothing wrong with that. I'm sure ever parent would love to be able to afford a good retirment for themselves and also be able to leave their children money.
What I'm suggesting is that children shouldn't expect this inheritance or support or feel entiteled to it - they aren't. As you said yourself it is your money, not theirs. If you are generous enough to help them financially then congratulatinos on your ability to do so and you're in a position many parents would love to be in.
Thank you for your response Elizabeth - and you raise some valid points.
Perhaps children aren't entitled to an inheritance 'ethically', however legally (as another respondent has already pointed out) The Family Protection Act is a strong piece of legislation and children are entitled to make a claim under section 3 of the Act.
Logically speaking, if parents are wise enough to make it through life without losing their savings, then it would be equally logical to assume these same parents are 'likely' to instil life skills into their offspring. Otherwise, a fool and his gold are soon parted. There is little point leaving assets to children who are inadequately educated as they will be decimated in no time.
I'm simply suggesting these lucky offspring will probably do ok without mum or dads help, but why wouldn't a parent help if they could.
Elizabeth, recall that you are a public information spreader, with the brand backing of a good publisher to give your credibility weight.
When you say children shouldn't expect an inheritance (often from g.grands or grandparents) many people who feel cheated or poor or that others have had an advantage over them, will read your words differently. As will those in positions of advantage, who want to pretend their success is only on their merit and nothing else...and worst many of these people are looking at ways of removing wealth from others (because never having had to REALLY fight for a crust ) they feel others don't and shouldn't be allowed such handouts.
such people ignore your independent and liberal attitude as only use your words to justify your position... that inheritance should be taxed to the government for the long term good, and the more the better.
Also if you have several children and 1 or 2 of them help out more than the others ,even though they live in the same town,reward them while you are still alive because as my partener found out every body is entitled to a equal share despite the will saying something else.
Interesting article. I agree that a sense of entitlement can be an ugly thing - and everybody should take responsibility for their own financial security to the best of their ability.
What about a sense of family however? Why should the generation colloquially known as "Baby Boomers" get to decide that this is the generation where providing assistance to future family members ceases?
My parents in the UK are a classic example of this actually. Both were left property by their parents - my Grandparents - and will be left another 2 properties and cash when my final Grandparent passes. This property was passed down by their parents in turn, along with land - and prior to that, I have no idea where it all came from.
Due to this, they have been able to enjoy early retirement and a mortgage free existence for a number of years. However as the next generation we have clearly been told not to expect any form of inheritance due to the increased cost associated with aged care and living.
Personally, I'm financially fine - I don't need anything from anybody, and hey, it's their money. I'm also fortunate in that I have a great relationship with my parents, so there's no hard feelings there.
However the irony in this article above, encouraging the sentiment of a Boomer generation that has enjoyed plenty of advantages now telling their children not to expect anything because apparently we're all about "entitlement" is quite sad.
Some cultures seem better at this than others. We have some Greek friends in Melbourne who are extremely "family oriented" - they have a culture of supporting future generations and take pleasure in improving the wealth base of future generations, who in turn continue to work like stink (yes I know, and they're Greek... :)) thinking about how they are going to grow it further.
It's viewed more of a "handing on of the baton", as opposed to a funding of the vintage sports car fund referenced in the above article. Shame we can't all think like that, eh?
What I find rather sad is I was brought up in what I call a dynastic tradition.
I was never expected to "stand on my own two feet". No. All family members were expected to pitch into the farm. skills, income, contacts. The _Family_ is what mattered. It was difficult with my ex-wife who never understood such things and spend everything under the sun, (everything we earnt and could get her hands on).
What some folks don't seem to grasp, is that those core assets don't belong to "a" person, they are "the family's". the farm was a core asset, the nest egg, a cash cow (if you excuse the pun). Never supposed to make a lot, but it was that piece of equity which the whole family could work off.
All the sons were expected to learn basic economics and budgeting, and the familys' holdings will be operated us, for future generations to do the same.
Responsibility is the watch word, one is expected to do more than "stand on your own feet" - everyone is expected to contribute back to the center.
Any money the children, or even the parents access is only ever loans. When young that's unsecured or low security; when older higher levels of business plan and security are expected. There is never a case of buy the kid another car they smashed the last one - each business failure reduces what the family will risk to you. Everything is about the future responsibility.
I say tax the lot and invest in excellent education for all kids and let the best prosper. Currently wealth is accumulating with the numpties while the poor and capable are left behind. My aim is to help extract the windfall from the entitled, legitimately of course - cafes and travel agents. One risks more when it is not earned ala capital gain & reinvestment
Inheritance is a mid and upper class dirty secret. We need to teach about it in all schools, how some will benefit much from doing little. Let's see how it plays out. Infographics are always helpful, show a syringe of cash extraction
Since when has increasing taxes substantially benefited the masses?
You are talking about making the general population relient on the state for hand-outs. What a depressing notion.
Inheritance is no dirty secret. Some people work harder, save harder, and take more business risks throughout their lives. And as a consequence their fortunate offspring benefit from the work ethics of their parents.
We already tax the lot right now.......there is already excellent investment into education for all kids......if the best aren't prospering then maybe that system you are advocating doesn't work as you planned.......If one is capable then I would suggest that they should not be left behind....so if this is happening then surely that is proof that the system of taxing the lot doesn't work????
Would the real "dirty secret" please stand up!!!
Isnt history wonderful
My grandparent gave up everything and emergrated to this country... then enlisted in the NZ Army for the Great war..Got a bit of crap land for the effort started to raise a family.
Then got hit with the Great Depression as theur children where leaving home
So we now have 2 genations that dont give out handouts..
We now have my parent geneeration heading off to another war , working as a land girl...
War end , and not after they start their family.. breeding baby boomers.
The forturtunatly raise their children with no parental help...thru a couple decades of some of the most proporus and peace times in many generations.
Then we as baby bomers start to breed
Even so a lot happens... a few resscessions, high interest periods, a sharemarket crash, and the recent financial debackles. ALL of these wehave survived, even rebuilt mid life, or been unfortunate maybe could not.
Baby boomers never "expected" the handouts, just as previous generations didnt
Yet we now have that expectation of the current generations....
Certainly a modern kiwi concept
The "crap bit of land" is the 'inheritance' from above. Didn't save for it did they, and it's an appreciating asset.
Two generations later, with the appreciating asset doing it's job, what happened to all the belongings of the original grrandparents. What about the clthing, feeding, skills, contacts they helped build (that others don't have).
One of the major difficulties with privilege and with not actually coming from nothing, is not realising when you have more than nothing.
My g.grandparents on the paternal side owned a farm station called "Siberia" near Ashhurst. (not the same one as out back of Taihape). But he consider real money to be in his horses. Until he annoyed the wrong person and they systematically bankrupted him. so my grandfather had to start again, from an indebted position, ZERO appreciating asset, zero "hand out land" even crap stuff to start his farm. First up, he had to pay off his fathers debts because back then they didn't just vanish via bankruptcy/C11 on death. then he had to start working for raise deposit/loan for the land.
Like many young people who already think they're smart. Think they've got an app for that. the biggest danger is they don't know how little they know, just you don't even realise the handouts your family got (that others don't have access to)
(big problem with government and socialist types too - they don't realise where much of their basic assumptions are provided for them from others)... it's the moral hazard of generational success, and why such things tend to go in cycles.
Cowboy your quote, " the biggest danger is they don't know how little they know..." is 100% on the money!!!
I was 29 years old before i truly realised how little i knew and decided to change. I stopped being a smart-arse and started learning from wiser people around me. Literally within a few years i was in a completely different financial position.
People can't move forward until they realise the limitations of their knowledge base. Once they accept their limitations then they are in a position to learn. This seems such obvious advice however few people seem to realise it. There is a world of difference between being a "smart-arse" and being "smart".
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