Financial planning: Jacob, Esau and inheritance
As originally appeared in The Jerusalem Post on November 17, 2023.
“Beware how you trifle with your marvellous inheritance, this great land of ordered liberty, for if we stumble and fall freedom and civilization everywhere will go down in ruin.” -Henry Cabot Lodge
In this week’s Torah portion, we learn about the relationship between Jacob and Esau. We read (Genesis 25:29-34):
Now Jacob cooked a pottage, and Esau came from the field, and he was faint.
And Esau said to Jacob, “Pour into [me] some of this red, red [pottage], for I am faint”; he was therefore named Edom.
And Jacob said, “Sell me as of this day your birthright.”
Esau replied, “Behold, I am going to die; so why do I need this birthright?”
And Jacob said, “Swear to me as of this day”; so he swore to him, and he sold his birthright to Jacob.
And Jacob gave Esau bread and a pottage of lentils, and he ate and drank and arose and left, and Esau despised the birthright.
He sold his birthright for lentils. Couldn’t even hold out for Kubeh? The Ibn Ezra comments: “FIRST SELL ME YOUR BIRTHRIGHT: The meaning of the term “birthright” is receiving a double portion of the father’s wealth. And as for the logic of his statement: I AM AT THE POINT OF DEATH (lit. walking towards death): Every day, when hunting, Esau put his life in danger, there being animals who might kill him. It was a clear possibility that he might die before his father.”
Esau is telling Jacob that there is no point keeping the birthright as he is “going to die”. Due to his lifestyle as a hunter, Esau doesn’t expect to receive his father’s inheritance. He expects to predecease Isaac. As such, he might as well get something for being firstborn.
I often tell people that issues of inheritance can tear apart the best of families. I am often met with a shrug and, “That may be true in other families, but my kids all get along great and nothing bad will happen.” From experience, I can tell you that that approach just doesn’t always work out. Each sibling has their own agenda with what to do with the money and if things aren’t spelled out clearly in a will, bad things can happen. As Rashi comments, Cham said to his brothers, “Adam had two sons, and one killed the other because of the inheritance of the world” (Rashi, Genesis 4:25)
I’d like to focus on whether one should count on an inheritance or not when doing financial planning. One of the more complicated issues when doing financial plans for clients is how to relate to an expected inheritance. On the one hand, if you are expecting a sizeable amount, to bury your head in the sand is unrealistic, on the other hand, the whole issue is rather morbid. While for financial planning purposes, it’s important to know what type of inheritance you will be receiving, Jews especially tend to shy away from such topics, which may bring an Ayin Hara- the evil eye.
Maybe it’s the fact that I am no longer 25 but the lion’s share of meetings I have, or conversations with friends, focus on issues of caring for elderly parents. Obviously, as an extension of the topic, the issue of inheritance becomes relevant. Recently I met a couple, and this issue came up. I asked them if they had any idea as to what type of potential inheritance, they may receive. (their parents should live to 120). I received an answer that typified the approach parents take to this issue. The wife said that she had no clue as to her parents’ assets, as they never spoke about it. The husband knew he was coming into a very sizeable amount of money, and potentially soon as his only remaining parent wasn’t in good health (she should have a speedy recovery).
When doing financial plans, when the issue of inheritance comes up, usually the knee-jerk initial reaction is that ”we don’t want to rely on it.” This is generally my approach. Though I was raised in a home where my mother, of blessed memory, took the evil eye very seriously, that’s not my reason for not wanting to rely on an inheritance. It’s because I strongly believe in planning based on what you have, not what you may or may not receive. If you are planning to buy a house, figure your price based on your current assets. I too often see people ‘over-buy’ i.e. buy more than they can afford, because they estimate that in 7-10 years they are going to come into a large inheritance. There are two problems with this. 1- In most cases you have no idea as to when you are going to get this money.2- Things happen that can significantly impact one’s net worth, and potential inheritance negatively.
So how should we deal with the issue of potential inheritance? There are those who say that the children should ask point blank, what they should expect as an inheritance, or as a gift, and then they can plan accordingly. I really don’t like that approach, for the reasons above plus I think it’s morbid. It’s very important to remember that if the parent is clearly uncomfortable discussing these matters, then let it go. Honoring one’s parents must take precedence.
No one likes to discuss matters of death, neither the children nor the parents, and believe it or not, not even the financial advisor. If the parents are forthcoming, great, have a discussion. If not, drop it. Just live with what you have.
The information contained in this article reflects the opinion of the author and not necessarily the opinion of Portfolio Resources Group, Inc. or its affiliates.
Aaron Katsman is the author of Retirement GPS: How to Navigate Your Way to A Secure Financial Future with Global Investing (McGraw-Hill), and is a licensed financial professional both in the United States and Israel, and helps people who open investment accounts in the United States. Securities are offered through Portfolio Resources Group, Inc. (www.prginc.net). Member FINRA, SIPC, MSRB, SIFMA, FSI. For more information, call (02) 624-0995 visit www.aaronkatsman.com or email aaron@lighthousecapital.co.il.
