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All About Leaving Money to Adult Children

All About Leaving Money to Adult Children

Buy an insurance policy. Establish an IRA or 401(k). Open almost any kind of financial account. 

Among the many (MANY!) documents you’ll sign is one in which you’ll be asked to name a beneficiary, often a primary and secondary one. 

This is the question of “Where (or to whom) do you want these funds to go upon your passing?”  

Most people answer instantly, almost automatically, “My spouse first, then to my children equally.” Surely many of them are thinking of the famous proverb: “A good man leaves an inheritance to his children’s children…” (Proverbs 13:22a, ESV).

It’s fairly easy to do. With a few strokes of a pen, you can arrange to transfer a tremendous amount of money to your children upon your death.

Here’s what’s interesting to me about this practice: I watch people spend enormous amounts of time thinking about their financial plan and analyzing various investment choices. That’s not wrong. In fact, it’s smart. We should do that. My question is: Why, then, do so many give so little thought to how their wealth will be passed on? 

If you are one of those people who says, “Why should I care; I’ll be dead!” I recommend you click away now. Because what I’m about to say, you probably won’t like.

The Impact of an Inheritance

The fact that you are still reading tells me you care deeply about how your heirs will be affected by the inheritance you’re leaving behind.  

When I discuss this subject with clients I often hear comments like “Our son John would never spend even 5% of that inheritance. His sister, on the other hand, would likely spend it all in a month!”

Candid remarks like this are usually followed by painful stories. I hear about children who have never been able to manage money, children who have used inherited money to make choices that resulted in great pain and suffering. Jesus’s parable of The Prodigal Son in Luke’s gospel is a vivid example of this.

This sober reality should prompt all parents to at least ask the question: Should we leave our estate to all our children equally?  

I know. This is a touchy subject. It’s way too complicated and deep to resolve in one short discussion.  

So, let me share with you a better question than the one I started with. It’s one I’ve adapted from Ron Blue, the renowned financial advisor and author. It’s a question I’m convinced we should ask about all our prospective beneficiaries:

Will _____ be able to steward this inheritance wisely? 

The Marks of a Good Steward

What do I mean by the word steward? Our culture doesn’t use that word very much. 

A steward is a person who’s been entrusted with the responsibility of overseeing or managing someone else’s possessions.

This idea of stewardship is the fundamental teaching of Scripture when it comes to money. Psalm 24:1 says God owns the earth and everything in it. It all belongs to him. Yet, in his graciousness and generosity, he shares it with us. 

Isn’t that amazing? God entrusts us with good gifts to enjoy, but he also wants us to use those resources for his glory and for the good of others. And one day, the Bible says, as stewards, we will have to give an account to God, the Owner of all things, for how we have used the money and possessions he gave us to watch over.

Ideally, all our heirs would understand these biblical truths and be living them out. But they may not be. So, we have to consider each beneficiary: 

  • Do they see money as a divine blessing that’s meant to be used to bless others? 
  • Do they have the maturity and wisdom to use this inheritance generously and unselfishly? 

If you can’t answer “yes” to such questions, then a prospective beneficiary isn’t ready to receive a big windfall. 

Preparing Good Stewards

So, how can we prepare the next stewards?  Is there anything we can do? Especially if we’re talking about adult children with a bad track record.  

You certainly don’t want to revert back to preteen methods of giving an “allowance” and hovering over them, trying to control how much they give, save, or spend. Once our children are grown, those control days are long gone. 

But you can still advise and guide.  For example, some of my clients have given their children a monetary gift following a heartfelt conversation, or along with a letter of what God expects of stewards. This isn’t “controlling,” but it is a way to call your heirs to do the right thing.  

I admit this is a delicate line to walk. It’s especially hard when an adult child never moves toward being a better steward. Do you keep such an irresponsible heir in equal standing? Do you put their inheritance in some sort of trust, where access is monitored by a trustee or executor, and only a small amount is parceled out at a time? What would God want you to do? 

These are hard questions. And I don’t have any easy answers for you because each situation is unique, and I don’t know the particulars you are facing. 

I do know, however, God has “given us everything we need for a godly life” (2 Peter 1:3 NIV). We have God’s Word to show us the right way to live, God’s Spirit to guide and empower us in that way, and God’s people to encourage and support us along the way. Because of these resources, in every situation that requires hard choices, we can do these three things:

  1. Search the Scriptures. And as you do, pray with the psalmist, “Open my eyes to see the wonderful truths in your instructions” (Psalms 119:18 NLT)   
  2. Pray for discernment and the courage needed to follow the leading of the Holy Spirit (Galatians 5:19)–whatever that might be. 
  3. Utilize the extensive wisdom that’s available in the Body of Christ. Remember, the Scriptures tell us, “Without counsel plans fail, but with many advisers they succeed” (Proverbs 15:22 ESV). Perhaps you could ask your pastor for counsel. Or solicit the insight of a respected lay leader in your church who’s a financial professional. Maybe you’d want to seek out a godly man or woman in your congregation who’s navigated a similar situation. Another option is to spend time reading the advice of a respected Christian author who has written on the subject you’re dealing with. In this case–the issue of whether to leave money to adult children–I heartily recommend Ron Blue’s wise book, Splitting Heirs.

With those helps–the Word of God, the Spirit of God, and the people of God–may you exercise wise stewardship of the resources God has placed in your care.

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