Think Twice (or Three Times) Before Giving Adult Children an “Advance” on Their Inheritance

Perhaps you have considered giving money to your adult children sooner rather than later, maybe as an “advance” on their inheritance.  After all, it would certainly be nice to see and experience how your financial assistance helps them pursue their dreams and achieve their goals.  However, before acting on your generous inclinations, I hope you consider the potential problems.

For instance, what if one of your children could use some help right now while your other children don’t need any help?  If you give one child money, do family dynamics require you to give the same amount to each of your children, regardless of need?  Your other children may very well think so.  Do you really want to set the stage for the family drama that could unfold by violating the “fairness principle?”

Another factor to consider, particularly with respect to large gifts, is whether your children are mature enough to handle a sizable amount of money on their own.  It’s one thing to watch your children make sound financial decisions and achieve success as a result of your generosity, but quite another to watch them squander the money you worked so hard to attain and preserve.

Finally, while you and your spouse might be healthy now, people are living longer than ever before, and the majority of us will require long-term care at some point in our lives.  Long-term care is already expensive, and costs are expected to rise significantly in the future.  Besides your health, your fortunes could change dramatically in other ways as well.  The last thing you want is to discover five, ten, or twenty years down the road that you no longer have the money to support yourself, let alone to afford the lifestyle you have now.

What you do with your money is your business, of course.  I just hope you think long and hard before giving your adult children a significant financial gift.  As always, if you’d like help weighing your family’s needs and how to proceed, please just reach out.

Until next time, take care…