My Grandma Ann came from dirt floors and 13 brothers and sisters. She left high school to work and help support her family after her father died at the age of 40. Later, she put herself through business school to become a secretary and from there, built a life with my grandfather along with becoming a REALTOR® and landlord.
When she would visit us in Oklahoma, she would comb the real estate pages and was in awe of the prices compared to California real estate. She was four months away from her 100th birthday when she passed away after having a stroke. She left a legacy for three generations of our family, children, grandchildren, and great-grandchildren.
A Trust Allowed a Legacy
She had set up a trust decades ago to ensure her wishes were carried out after her passing. A trust let her stipulate detailed instructions about how she wanted her assets handled. Her trust stated that 50% of her assets were to be split between her 3 living children and the remaining 50% was split between grandchildren and great-grandchildren. In addition, the trust stated that the great-grandchildren were to use their inheritance for education, tuition, studying abroad, or savings & investing. She did not want them to spend the money on day-to-day expenses.
My mom was the trustee and it’s taken her almost two years to work with all of the banks and the annuity company to get everything settled. This summer, she got the last distribution from one last account my grandmother had. This piece was small monetarily but had the most impact on our family. It opened up conversations with each of my children about what they wanted to do with this money. (The first round of money was set aside in college accounts for each of them.)
Guiding Kids Through Financial Decisions
I knew my oldest would be very responsible with her choices and since she only has one more year of college left, we talked about a Roth IRA, putting it in a bank account or using it for graduate school expenses. She decided she wanted to start a Roth IRA. This money will now grow tax free for her and all the earnings will come out tax free.
My middle child just finished his freshman year of college so he wanted to add the money to his 529 account. I actually set up separate 529 accounts for the first round of money they received from the trust so they could see that money grow and know it was from her so we added his portion to this separate 529. Hopefully, that account will be untouched and he can have that as the start to investing after he graduates. (You can now transfer money left in a 529 to a Roth IRA if you meet all of the requirements.)
My youngest was the one I struggled with a bit. He’s a teenager and loves to spend his money! I debated even telling him about these additional funds and thought I would just make the decision for him. We’ve been trying to open a Fidelity Youth account for him for several months and have had some trouble getting it set up. This weekend, we got through the final steps and are able to transfer money into it. He asked if I could “donate” some money to start his account with. I couldn’t believe this created the perfect moment to have a conversation with him about the money from his “Granny Annie.” I told him what her wishes were and he was extremely respectful and thoughtful. We discussed a Roth IRA, his 529, and his investment account. He decided he wanted to put the money in his investment account.
The Power of Legacy
After talking to him, it hit me what an amazing legacy she left us. It gave us the opportunity to reminisce about my grandmother and educate my children on personal finance. Many times when we’re talking to clients about where they want their money to go after they pass, they’ll say, “I’ll be gone. I won’t care.” Sometimes we tend to agree with them. This experience with my children has 100% changed my opinion on this and made me see how important a legacy can be. It’s not the amount of money that you leave, it’s the thoughtfulness and the connection your loved ones will feel after you’re gone. I told each of my children, years from now, when you look at this account, you’ll know – My Grandma Ann started this for me.
