Right Age to Give Inheritance to Your Child

All of us feel the urge to leave something for our children when we die. A big house, an established business or maybe a big equity portfolio. We get this urge in our late 30s or early 40s, we accumulate, accumulate and accumulate until we're 85 and then we have this big pile, we die and that money goes to our children. The only problem with this system is that when your child gets this "selfless" inheritance, he or she is already 60 years old :)

Currently I'm reading a book called Die with Zero, in that the author describes how our selfless act of leaving inheritance might be one of the most selfish acts that we perform in our lives. We keep the money ours till the time we are alive and only pass it on to our children when we have no other choice…

The author discusses that every human has an optimal time for getting inheritance. And that is surely not when he is 60 years old. And also surely not 18 years old as well. According to a survey most people think that the most optimal time for getting inheritance is somewhere around 25 to 40. That is when you have the most amount of energy, for anything. You could travel the world at 25 but not at 60. You could start a business at 30 but maybe not at 60. You could go pursue your favourite film making course when you're 28 but maybe not when you're 55. The inheritance holds a lot of value and energy if it arrives early for your child. Your child can do whatever he or she wishes to do with it.

Often the biggest point is, what if he messes it up? He's just 28, he'll most likely take a wrong decision with that money. But I'd like to ask, what are the chances? Even if there is a 50% chance that he might not mess up that inheritance but do something useful, it still makes sense, because what are we comparing this to? A 55 year old getting inheritance will 90% not mess it up but the primary reason is that he will do nothing with that inheritance, he will hoard that money till he is 85 and repeat the same cycle. Generation after generation the pile will keep getting bigger and it would be of no use. In fact there are enough cases that we can see where too much power with no outlet to express is in fact suffocating.

What's the way out? I'm not saying give everything to your child when he's 25 but can we all come together and do a small experiment? Can a 25-30 year old start a small SIP for his child today which won't be for his education but would be his or her inheritance which the child will receive when he's 25 or 30? Imagine that if you were in that place today. You're 27 and you received 50 lakhs or 80 lakhs today. And you have no obligation regarding that. This is not a very big amount, it's not that you're receiving 10 crores or 20 crores but it is enough money with which you can do whatever you want to do with that. Put it in an FD, build that app that you wanted to, make a short film using that money, invest that money in the stock markets, start a business. Absolutely anything that you want to do. Sounds satisfying right? This is the exact feeling that you can give to your child if you start thinking about this today.

I really don't know if this makes sense but I'm stuck on this idea for the past few days and trying to correlate that with my life and thinking about how things could have been different and whether this is really better than receiving inheritance when you're 60 or 70 years old.

So you can start thinking about this today itself even if you're 25 and don't have a kid. It's better to think about these things early on, your future kid might thank you for this day :)