CFI Blog

The Surprising Suggestion for Who Should Receive Your Estate If You Have No Children

“Inheritance taxes are so high that the happiest mourner at a rich man’s funeral is usually Uncle Sam.”
–Olin Miller

My wife and I have no children. Not only does this create additional planning issues for us regarding care when we are older, but eventually, when we depart this earth and discover what’s on the other side, someone, somewhere, will have to deal with our assets.

I think because we have no children, I wind up getting what seems to me to be a disproportionate share of clients who also have no children – hey, I’m not complaining, as I’m always honored when people hire me to be a planner, regardless of their situation! One of the questions that I ask them – actually, I ask all of my clients this question, but it’s a harder question for my childless clients – is where they want their assets to go when they slip the surly bonds of earth.

This is an important question to ask because it is possible, although unlikely, depending on state laws, for the state that they live in to receive their estate. When someone dies without a will, it is called dying intestate. State laws then govern the hierarchy of who gets the estate. It’s usually kids, then parents, then siblings, then more distant relatives like aunts, uncles, nieces, nephews, cousins, and the like. In Texas, you have to go through a lot of potential relatives before you exhaust the list. After those are exhausted, then the estate could go to the state, a process called an escheat.

But, really, do you want to give your estate to state? If you did, you’d volunteer to pay more in taxes each year, merrily sending a little extra check when filing your tax returns.

I realize that this outcome is highly unlikely. A more likely outcome is that long lost cousin Vern appears out of the woodwork after living 50 years as the good-for-nothing decrepit leech on society, not lifting a finger to do a day of work in his life, and voila! He wins the jackpot of life as the closest living relative who can lay claim to your estate. His life of depravity is rewarded by him receiving the bounty of a lifetime of hard work on your part.

A lot of people who have no children don’t face their mortality and make a will. They figure it will all work out when they’re gone. They run the risk of a distant and undeserving family member winning the jackpot.

There are better ways to do it.

Potential Recipients of Your Estate

There are many potential recipients of your estate when you peel the garlic. Let’s look at a few of them.


your estate to relative

This one seems like the most obvious one. They’re the ones you shared Thanksgiving dinner with. You may have changed their diapers, or they may have changed yours. You do share a familial and blood bond with them even if you didn’t live with them for any period of your life.

However, you also want to make sure that they’re deserving of your bequest. You don’t want to create a generation of teat suckers who can’t wait to attend your funeral so they get the big payday.

Most of my clients who are in a situation where they’re discussing estate planning have adult relatives. Some of them don’t need the money. Those who do are often in the situation where they need the life lesson more than they need the money.

One alternative a few clients have worked out is creating a trust for the college education funds of younger family members or future generations. They can give a hand up to future generations without creating a cycle of dependency or rewarding bad behavior.

There are also many relatives to whom my clients want to bestow a blessing. That’s also fine, although I think everyone would be happier if that occurred through gifting rather than through inheritance.


Charity as your estate

Many of my clients have done well in their lives and realize that, while the outcome was a direct result of hard work, it was an indirect result of many other influences that put them in the position where hard work could lead to their success. They are a small part of a greater whole and they want to give back to the greater whole that enabled them to have success.

Again, I think charities are a great recipient. I’m charitable (such as what I did in my appearance on Who Wants to be a Millionaire) as well, but again, I think that people receive more value out of physically giving to their favorite charities than they do leaving something in the will; the exception to this would be leveraging life insurance to increase how much of your estate you can give to a charity.

Insurance Companies and the Bank

bank and insurance company


  1. I admit, I’m going to do a little semantic sleight of hand here.

I’m not suggesting that you name a bank or an insurance company in your will.

However, I am suggesting that you may want to give them a sizeable chunk of what would otherwise become your estate.

Before diving into why I’m going to make this (outrageous!) suggestion, let’s establish the primary basic questions that almost everyone who comes to me wants to answer:

  1. When can I retire?
  2. How much can I spend per month in retirement?
  3. How much do I need to save now in order to retire at age X spending $Y per month?

Boiled down to its basics, personal finance is all about answering those questions. Sure, the existing generation of roboadvisors can tell you what to invest in, but that is a useless answer if you can’t answer the others first. Subsequent questions like how much to set aside for the kids’ college fund, insurance needs, and more advanced topics like asset protection and our topic today – the will and the estate – come as a result of answering those first few basic questions. Otherwise, the equation becomes a lot simpler: work until you die, spend what you make, and insure against the loss of ability to work.

When I answer questions 1 and 2 for clients, there’s almost always a follow on question, whether or not it’s actually asked:

If I retire when you say I can and spend what you say I can, will I run out of money?

After all, there’s no use in planning on leaving a nice little pile of change behind for your favorite niece or for the Sock Lint Foundation if you run out of money and wind up constrained to eking out a living off of Social Security payments.

For as much as we’d like to believe that we’re altruistic, altruism comes pretty high up in Maslow’s hierarchy of needs. Food, shelter, security, and its kin are all more important to us, no matter how much we love our distant relatives or our favorite charities.

In general, people would rather have a set, known amount of income to meet their expenses than to have the equivalent amount of assets which would generate a return to pay for those expenses.

How do we achieve that?


The insurance company will take money today and give you a stream of income for the rest of your life.

But, as we saw in “Annuity Dollar Cost Averaging,” we may not necessarily maximize our lifetime income by buying a lump sum of annuities today. We may be better off spreading out the purchases over time.

How can we save our assets to accomplish this?

One potential answer is using a reverse mortgage. As we saw in “Reversing My Stand Against Reverse Mortgages,” the use of reverse mortgages can be a good way to delay tapping into other assets to meet income needs. Plus, if you have no kids, why not give your house to the bank when you’re gone and get a stream of money from it in the meantime (subject to, of course, meeting some other conditions)? Note: If you have kids, leaving the house to them isn’t a great idea, either.

So, it’s possible that, in order to maximize your happiness and security, you want to give a sizeable portion of your estate to two very unlikely recipients: the insurance company and the bank. If you’re risk averse (and a lot of potential retirees are even more risk averse than they think), this may be the way to go for you.

Author Profile

John Davis
John Davis is a nationally recognized expert on credit reporting, credit scoring, and identity theft. He has written four books about his expertise in the field and has been featured extensively in numerous media outlets such as The Wall Street Journal, The Washington Post, CNN, CBS News, CNBC, Fox Business, and many more. With over 20 years of experience helping consumers understand their credit and identity protection rights, John is passionate about empowering people to take control of their finances. He works with financial institutions to develop consumer-friendly policies that promote financial literacy and responsible borrowing habits.

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