Rich People Can Harm Their Children by Giving Them Cash
April 28th, 2010 Filed under: ab trust,Executor Fees,sample wills,Trusts attorney — Estate Planning Author
You wouldn’t think this is logical. How could you hurt your kids by giving them money? Over the long term if you continually give your kids the maximum tax free cash gift (currently $13,000 per year) and they come to expect it, you are only enabling their consumer lifestyle and aren’t really teaching them to be self sufficient.
Obviously there are exceptions. If your children already do perfectly well on their own and your gift is just a bonus they don’t need, then the risk of hurting their success is greatly diminished. But if your gift is enabling them to live a lifestyle they can’t afford then they are now dependent on you. What does this do? It practically ensures that they won’t be able to support themselves when you’re gone or when the money runs out. Their focus shifts away from your loving relationship and more toward protecting their inheritance. Family squabbles are frequent in cases such as these.
If you want to help your children succeed without enabling them, give them an education. Help cover their advanced degrees. If you can give them the tools to better themselves its far more valuable than giving them a house.
I intend to be wealthy someday. I have two children I want to help. But I have to be careful to do it in a way that doesn’t cripple their ability to manage their own lives and thus pass bad habits onto my future grandchildren. Knowledge, self reliance, independence, free thinking; these are all traits I want my kids to have. I will help with their educations. I will help in emergencies only, but not on a regular basis. Debts they obtain are their own. I am not an ATM for their convenience.
If you have achieved financial independence then helping your family is a natural goal. Just be careful to look to the longer term potential of what you’re giving them. It may be doing more harm than good.
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The author enjoys writing about other home related topics as well, including kids camo bedding and rolling duffle bags.
