A bit late, but- The 4% rule that was (likely, because author did not cite references) used to determine the $400,000 number comes from the Trinity Study, wher

A bit late, but- The 4% rule that was (likely, because author did not cite references) used to determine the $400,000 number comes from the Trinity Study, where the study authors made a determination of a safe withdrawal rate that is likely to leave the principal intact in a 30 year retirement, after adjusting for inflation. A 3.5% withdrawal rate will similarly have a >95% chance of lasting for perpituity if we assume the future acts similarly to the last 100+ years of historical data. These both assume your spending is indexed to inflation. So the $230,000 you provided is zero. Starting with $10,000,000 at 3.5%, taxed 15%, we are left with $297,500 for the parents to spend as they wish. Giving $28k to the kids is a small fraction of this that leaves lots left. There's also a couple thousand to add to this due to standard deduction, other tax strategies, etc.