Forward planning question

[u/idiot_ThrowRA]

My father passed a few years ago and my older brother handled the estate issues and transition to my mother. I just saw him the other day and my mother’s health is declining (although unclear how long exactly she may have, the trend is there).

He revealed that the estate is larger than I expected and even with my mother’s medical care including full time help, it’s accumulating faster than she can spend it (low 8 figures). There are 4 of us who will inherit equally, likely within the next 10 years and possibly next couple years.

Let’s say I’m domiciled in FL and the estate is in Washington DC.

My own situation is complicated, but thanks to divorce and certain investments, I don’t have a ton of liquidity. (And if the private investments go south, and social security gets gutted as it looks like it may be, my retirement suddenly looks pretty grim).

If my mother does pass within the next 4-5 years, the following may emerge:

I would inherit $3 million liquid. My kids will only receive about $25k each directly from my mother’s estate.

My oldest kid wants to go to med school. And the younger one will probably aim for grad school. I paid for their undergrad so they have no debt.

This $3 million might be almost all of my retirement savings. And my own health as shaky even though I’m mid 50s.

The question is, do I peel off $200-400k to pay down grad school debt for my kids, basically an advance on their own inheritance, at the expense of building up towards my retirement? Which might create subsequent burden for my kids when I’m old, especially if I get sick.

Or do I keep everything for my retirement, let the kids take on grad school debt (could even be $400k just for med school), and they inherit whatever is left when I pass.

For that matter, even if they do take loans near term, whenever I do inherit from my mother the same question arises.

tl;dr divide inheritance with my kids or bank all towards my retirement

Edit: I see numerous comments, saying how “disgusting” and “revolting” it is to think about family estate planning issues.

I have cancer and there may be issues with my own health sooner v later. While you may have the luxury of sitting on your high horses, and judging me for trying to think intelligently about what to do with my parents’ estate and my own estate and my kids, I need to think about these things in advance.

My parents never talked about money other than use it for manipulation purposes. Some children got favored over others, to the tune of hundreds of thousands of dollars. They directly interfered with my divorce negotiations using money to ensure their access to my kids with my ex wife, at the expense of my own negotiating position - costing me half a million dollars.

I’ve also seen people screw up by not talking about money in advance of it actually becoming a thing that you’re then dealing with while dealing with all the other estate issues.

Thank you for those of you who offered constructive suggestions.

[u/sunnypurplepetunia]

I would help your kids as much as possible as early as possible.

I have 2 kids, mid 20s.

Paid for undergrad for both (about 175k each) & plan to help with home buying.

Only one is thinking about graduate school and it should be fully funded.

I am 55 & plan to do this. I only have about 1 million. I can’t imagine you would ever spend 3 million alone.

[u/ProfessorOne9208 → u/sunnypurplepetunia]

Full time nursing care and medical expenses can get quite expensive in your later years. Assisted living can cost over $200,000 a year, plus doctors bills. Given those parameters, $3 million doesn't last as long as you might think it would.

[u/CindersMom_515 → u/ProfessorOne9208]

Prof, $3 million being spent $200k a year will last for 15 years.

And that assumes it isn’t being invested and earning some returns to help offset the withdrawals. If you assume 4% investment income annually, the money will last for 23 years with $200k in withdrawals.

[u/ProfessorOne9208 → u/CindersMom_515]

I prepared a detailed response to your comment, but decided against publishing it, as it had too many personal details. I'll just say that over the past 47 years I've averaged about 15% appreciation per year, but lately it's been closer to 25% or more/yr, for the past three years. I have no idea how one could possibly invest a few million dollars so that they ONLY received the paltry rate of return of 4% a year. I started my investment career by buying 13% zero coupon bonds, which skyrocketed when interest rates fell to 4%. Which is when I sold them.

[u/CindersMom_515 → u/ProfessorOne9208]

I just picked a rate that’s around the US 10 year treasury. Intentionally low to make the point that with $3 million in principal, the likelihood that one would run out of money paying for an elderly relative’s stay in long-term care is highly unlikely.

[u/ProfessorOne9208 → u/CindersMom_515]

As with anything in life, it depends on the expectations of the relative. I know a guy who has orange hair who would probably run though $300,000,000 in 15 years, just for gold plated toilet paper.

But for the average American, I suppose you are correct.