Giving money to children can be helpful or a mistake

Moneyline

Dollars & Sense

January 09, 2000|By Liz Pulliam | Liz Pulliam,LOS ANGELES TIMES

You recently answered a woman whose husband was resisting her efforts to give their children money by suggesting that he had a control problem.

In fact, there are excellent philosophical reasons for not giving money to adult children. Just to name one: Making one's own way in life is more fun, rewarding and fulfilling than just having the way paved. Thus, if parents give kids money, they might destroy the kids' initiative and self-reliance, which in my mind is a terrible thing to do.

When thinking about estate planning, tax reduction is not the first thing to consider -- the most important thing is family success.

Yours is an interesting point. I assumed that both parents had agreed on the basic philosophy that they wanted to help their children financially; the husband was, in fact, doling out money to the kids in small amounts but not enough to help them buy a house or start a business, which was the wife's goal.

I also assumed that adult children would be that -- adults, with personalities and money styles pretty well set.

Someone who is chronically in debt probably won't be helped much by a financial gift; the relief will be temporary and last only until he or she racks up more credit-card charges. Someone who handles money well, on the other hand, probably won't be corrupted into a directionless loser by a cash infusion.

Those are broad assumptions, of course, and might not always be true, but I think that for every trust-fund delinquent there are many more hard-working people grateful for parental help in getting an education, buying a home or starting a business. What might actually be more destructive is the habit of turning to Mom and Dad for every small financial crisis.

I do agree that as adults we have a responsibility to pay for the necessities and to save for the inevitable rainy days on our own.

In previous columns, I discussed how different families have different money philosophies. Some feel nothing short of an obligation to share the wealth with the next generation, while others have your sink-or-swim attitude. Many are somewhere in between, trying to decide when to give, how to give and on what basis (financial need, equal shares, etc.). What's right for one family might not be right for another.

Parents are under no obligation to help their adult children, but many choose to do so, and the results are as varied as the families themselves.

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