When I tell people I plan to die with zero, with no money left to give, their reaction is often, "What about the kids?" But I don't think those two goals, of supporting my children and leaving nothing behind, are mutually exclusive. I want to give money to my children when they can best use it to plan for their futures, and while I'm still around to see them thrive.
I wrote a whole book on the subject because I believe that we can all lead richer and happier lives when we reframe our understanding of what a legacy is. And if you wait until you're gone to have your children inherit your money, I'd even argue that you're leaving your kids' legacy to chance.
Here is how to make a "Die with Zero" plan that works for you.
For any income group in the United States, the age when people receive inheritances peaks at around 60, according to data from the Federal Reserve Board. Overall, the data falls into a bell-shaped distribution. So for every 100 people who inherit at around age 40 (which is 20 years before the age of peak inheritances), there are 100 people who inherit around age 80.
If you could get a financial windfall, large or small, would you prefer to get it at 60 or at 30? Back in April of 2019, I was curious about what people's answer to this question would be, so I posted this informal Twitter poll:
Only 6% of the more than 3,500 respondents said the optimal age to inherit money is 46 or older. Most people thought the optimal age is 26 to 35. That sounds about right to me — people this age are typically old enough to be responsible with money, yet young enough for it to do them a lot of good.
If you have the means to give your children financial support, I would recommend that you do it when they're in their 20s and 30s, when they most need it: to make bolder career moves, to make a down payment on a house, or to start a family with less financial stress. Or, if you think another age is better, give then. But be deliberate about the time of the gift and the amount. You can't do either if you wait until you're gone.
Personally, I've funded 529 college savings plans for my daughters, who are 13 and 16. I've also set up a trust that benefits my children. The money in it is still my own, and I contribute to it as I see fit. Since my stepson is 29 and has a different set of responsibilities, he has already received 90% of his "inheritance" from the trust, in the form of money he used to buy a house.
Video by David Fang
I do have a will, which is only for handling what I have in case I die unexpectedly. But when I realized I had money in my will for people who are older than me, like my mom, sister, and brother, it made me think: What about now? Do I want to give anything now, when they can enjoy those gifts more than later? My answer was yes.
Another side benefit of giving money at deliberate points in your kids' lives is that it disentangles your money from theirs. Whether you're giving them money right now or putting it in a trust for them to access when they're older, the moment you've set that money aside it becomes their money, to plan with as they see fit.
I urge everyone to look at your numbers and devise a plan that works for you. You might decide, for example, that although you don't yet have the full amount you want to ultimately give them but you do have enough for, say, 5% of each year's salary, do that. The most important thing is to make the plan, and have those deliberate conversations with yourself and your family about your money goals.
Ultimately, I'd urge you to think of your legacy more broadly than the money and property you give your children. Your real legacy consists of what your children will remember about you after you're gone. And those memories all come from the experiences and the lessons you share with them.
One of the biggest and most impactful resources you have to give to your kids is time with you. I don't mean this in a schmaltzy, best-things-in-life-are-free way. I would also argue that the best things in life aren't actually free, because everything you do takes away from something else you could be doing.
Spending time with your family usually means not spending that time earning money, and vice versa. This means that every time you go to work to make money — yes, in part for your children — you are simultaneously taking time away from them.
In many cases, trading time for money makes perfect sense, which is why most of us go to work in the first place; but past a certain point of income and work hours, this trade-off is a bad deal that actually undermines your goal of leaving a legacy. So take a minute to think about what's really best for you and your kids, and remember how valuable your time is.
Bill Perkins is the CEO of Skylar Capital.
The article "Why You Should Give Money Now, and Not in Your Will" originally published on Grow+Acorns.