Dear Liz: I am reasonably well off thanks to hard work, some luck and a hard-earned (by my mother) inheritance. I don’t spend much because I prefer a simple life, so the money has piled up over the decades.
I have two children. One has a college degree, a decent job, and is saving for retirement. The other dropped out, became an actor and lives hand-to-mouth, getting very little paid-acting work. I want to help my kids while I’m alive, not wait to leave them money. I will help my worker bee to buy a home but I am at a loss how to help my actor. I hate to reward a lifestyle of “I can’t work a 9-to-5 job because I need to be free to audition.” On the other hand, don’t affluent parents help their artistic kids pursue their dreams?
What kind of financial advisor or family dynamics expert can I consult? Do you have any suggestions? I don’t need a money manager as the funds are handled well already. I need help to disburse funds in keeping with my values.
Answer: Talk to your estate planning attorney. If you don’t have one, get one. These professionals do more than draw up wills and trusts to distribute your assets after you’re gone. They also can help advise you about disbursements during your lifetime, including any gift tax implications. A fee-only financial planner who charges by the hour could be another good resource for you.
In answer to your question about affluent parents, some do help their children pursue dreams that aren’t wildly remunerative. The parents might supplement the income of an altruistic daughter who wants to teach in a low-income school or a talented son who needs time to build up a portfolio of artwork for a gallery show. It’s the parents’ choice, obviously, and there’s certainly no requirement they support career choices they think are questionable.
You have many options to be fair to your kids without enabling them. For example, you could put aside an amount equal to the down payment you’re giving your daughter and let your son know the money’s available when he’s “ready” to buy a home. That is so much nicer than saying, “When you snap out of your delusion that you’re going to make a living in a field where so few actually do.”
Here is a solution that I thought was great. an elderly gentleman had the same situation and in his trust the two kids would submit their W-2 form to trustee and he would double it each year. That same thing could be done while she is alive by giving a percentage each year. I thought that was a great idea. Luckily I only have one so I give him the $13,000 + that is allowed.