Does Investing in Younger Relatives Pay?

[pasttense]

Does investing in younger relatives pay? I am not referring to children or grandchildren; instead something like nieces/nephews or younger cousins. I am referring to this in a material/financial sense, not an emotional sense. But something like helping them out when they are just starting out, which they repay in a multitude of ways (labor (fix a porch) or money) when you are old and sick. Probably some of you were recipients of generosity from aunts/uncles when you were younger. Did this create a sense of obligation in you later on in life? Did you repay? How?

 

[kumquat]

I had a childless and widowed great-aunt who was quite well to do. We used to do things for her because we liked her, liked to and wanted to. She appreciated it. She once offered to finance a Masters degree for me. I turned her down, not for any potential obligation later, but because I wasn't about to quit a j*b I actually loved. Treat the kids well and they will treat you well.

The rest of this is not an answer to your question but I'll add it. When DD was born (and named for her) she gave her a small (1K) monetary gift, also for DS when he was born. She also left us a bit ($10K) when she passed. This was out of a 7-digit estate. Did we feel slighted, no, we felt it was her's to do with as she wanted (various charities) and were glad she did.

If you try to create an obligation the kids will know it and possibly resent it. Just be yourself. If you are naturally generous, be that. If not don't. Just be nice and they will probably reciprocate.

 

[traineeinvestor]

If you try to create an obligation the kids will know it and possibly resent it. Just be yourself. If you are naturally generous, be that. If not don't. Just be nice and they will probably reciprocate.

I agree with this. You can't buy affection - although sometimes I do wonder and there are no guarantees that whatever you give (whether material or not) will be reciprocated.

 

[kyounge1956]

This came up recently in my life. My niece needed money for college. I was helped with my college expenses by various relatives, but as I think about it, I feel that they were setting an example rather than putting me under an obligation. So, if I expect anything as a result of the help I gave my niece, I think it would be for her to "pay forward" (i.e. help out her nieces or other relatives in the future), not "pay back". If she does, I will consider my investment in a young relative to have paid well.

I hope I never find myself both unable to care for myself & home and too poor to pay people to do it, but if I do, I hope my young relatives help me because they want to, not because they feel like they have to.

 

[Fireup2020]

But something like helping them out when they are just starting out, which they repay in a multitude of ways (labor (fix a porch) or money) when you are old and sick. Probably some of you were recipients of generosity from aunts/uncles when you were younger. Did this create a sense of obligation in you later on in life? Did you repay? How?

Reading your post made me scrunch up my face and shake my head. As others have said, you cannot "buy" this kind of "obligation" - and if that is how your family works, then I am pleased to not be a part of it. Quid pro quo is what this is. I believe many people perform their acts of kindness to kind people. The ones who EXPECT it are easily identifiable and thus, can be avoided. I second the "pay it forward" philosophy. When I give my nieces $$$, I do not expect them to ever pay it back, and I can only hope that when they are older and successful, they will help others in their lives who need assistance or a nudge (monetary help or a porch fixed or cookies baked, etc.) My "older" (65+) friends tell me they treasure my friendship, laughter, and this is what is priceless (and they cookies too!)

 

[FIREd]

I have no kids but I have been saving money for my niece ever since she was born. She will get the money when she turns 18. Hopefully, there will be enough money for her to pay her college tuition and maybe buy a car. I know that her parents can't save that much money for her, so I am happy to help. Nobody knows that I have been saving that money for her so it will be a surprise. But I don't expect anything in return.

 

[rescueme]

Just to put a personal spin on the question, based upon our specific situation.

My wife/me had the "honor" to raise a special needs child (now an adult).

While he's doing fine (living on his own, day to day without our direct help), he was always considered the "odd person" in our extended family.

For many years, he was (and still is) shunned by the rest of the family, because he is different.

When it came time to create a (Special Needs) Trust to see his needs (financially) after we are gone, the decision had to be made about the disposition of our remainder estate. Our son (under SSD income, along with income from a sheltered workshop), has no needs for any of our existing estate value.

After we're gone, the estate will continue to grow in value till his passing, and then passed on to our various charities. It projected worth? Let's just say more than a few dollars ...

Will anything be passed on to our neices/nephews? Nope. We would rather leave it to our named charities, for the benefit of folks that truly need a helping hand. All it would have taken was an act of interest/kindness to give our estate to a member of our extended family.

Family is what you are born into; it's not your choice....

 

[calmloki]

....

Family is what you are born into; it's not your choice....

+1. We've offered a sum to both niece and nephew for each successful semester of college. We are about to open a 529 plan for the new child of the son of a friend - the son lived with us for a while and is taking over management of our rentals. I have far more respect for him and faith in him than in niece and nephew - he's not blood, but he has a finely tuned sense of reciprocity that the young relatives don't. I help him, when I call for help from him he's there. Solid. Years ago he talked about having a big enough place that he could put up all the older folks he's associated with as they move into their dotage - don't think any of the old folks plan to take him up on it, but darn nice to have expressed. Niece and nephew, while sweet and smart respectively, can't be trusted past arm's reach and have lots of excuses they can't help if called upon. A shame, as it colors how I feel about them. Maybe they'll improve in a decade or so, thus far....not much progress.

 

[Gone4Good]

Yup, our generosity was nicely repaid with ingratitude and a growing sense of entitlement. Money well spent.

 

[bbbamI]

I have never received any help from my aunts and uncles, but that's ok. They didn't have it to give and I managed to make my own way.

I don't have children or siblings so my nephew and niece by marriage will inherit everything we have. Through the years we have given them money and things...not because we wanted to get on the good side of them; we did it because we wanted to and expected nothing except a 'thank you' of which they gave.

They know they will have power over our lives/finances when we become unable to make decisions for ourselves. It doesn't matter to them how much they get in the end. They will do it because they love us and we love them. They have grown up to be very trustworthy adults and will do for us out of love instead of greed or obligation.

The way I look at it; do something for me because you care, not because you feel you must.

 

[GoodSense]

I echo others' responses. People do nice things for others because they like and respect them, not because they feel guilted into it.

I visit my husband's grandpa every chance I get if I am in his part of the country. He's just turning 90. He's the one of the most fascinating people I've ever met -- generous, kind, funny and full of stories. He's told us his wife's medical bills drained all of their savings so nobody should expect an inheritance of any kind. It never stopped his kids and grandkids from visiting him & helping him out!

 

[haha]

Quid pro quo is what this is.

Also called reciprocal obligtion. Most of the social structure of the world has been this way, and in most places continues this way. Only in our very recent experience has it weakened, and mostly in English speaking countries. It remains to be seen if the more Utopian systems like the one you describe will work as well, or as long.

For example, how many old parents have been bitterly disappointed as they lie unvisited in their nursing homes?

Ha

 

[Urchina]

We save a pittance each month (and really that's what it is) for nieces and nephews, a young cousin who shows tremendous promise but whose parents have scant resources, and our godchildren. Nobody else knows we do this and we will decide, as the kids grow older, whether or not to give them the money (it's earmarked for college or higher education (such as a trade or vocational school or a year abroad)).

I can say that I did not receive financial help from any relatives (except my parents) when I was in school -- but I recieved the love and attention and care that only dear friends or family can give. Regular family dinners at an aunt's; living with another aunt and uncle one summer so I could work a job: a quiet place to study in high school when my brother's tempests made our house stressful for me (next-door-neighbors); living with a grandmother as I transitioned to a first job; a first apartment lovingly furnished with wool rugs and an oak table and chairs (that we still use daily) from another grandmother (she kept them in storage for me for two years, thinking I would like them some day, without me knowing about it); small gifts thoughtfully chosen and supportive of my emerging life throughout my childhood and growing-up years from myriad family and friends.

If you asked any of these people what they expected in return, I think they'd have given you a blank look. The things we do when we are driven by love have the most power and the least obligation. This is also true of the things we receive.

 

[DangerMouse]

We have no children however we try and help out younger generations of family and friends where we deem it appropriate. We do it with no expectation of anything in return. Rather we see it as in investment hoping that these recipients are able to become decent members of society. Growing up, we never had anyone help us financially and it would have been useful. We also try and give our time and encouragement to expose themselves to the greater world than the one they exist in with their parents. We try to reinforce that the sky is the limits when it comes to careers, they can aim above what their parents achieved.

We pay private school fees for one set of relatives. If we didn't, their parents would not be able to afford it, and given that they are not the brightest sparks, they would probably slip thru the cracks of the public system.

Our plan on our departure from this earth is to leave some money to 3/6 of our nieces/nephews, the other 3/6 have shown they are a waste of space and any money left would be gone in a mega-second with nothing to show. The chosen ones will get enough to help them with a start in life, but not enough that they think they can stay at home all day playing computer games and watching TV.

 

[Martha]

Also called reciprocal obligtion. Most of the social structure of the world has been this way, and in most places continues this way. Only in our very recent experience has it weakened, and mostly in English speaking countries. It remains to be seen if the more Utopian systems like the one you describe will work as well, or as long.

For example, how many old parents have been bitterly disappointed as they lie unvisited in their nursing homes?

Ha

It isn't a specific obligation but a societal one. You invite someone to dinner, they invite you later. You take care of your family, they take care of you. The motives are not bad and don't have much to do with guilt, it was just the way it was and the duty was a good and a positive thing. There is some indication that this sense of duty has eroded.

I had two unmarried great aunts who were always kind to my family. I regret that they died before I could properly thank them. As a child I was not good about acknowledging gifts. I try to do things in their memory. For example, my great aunts paid for my braces when I was a child, I paid for my niece's braces. I told my niece that my great aunts had done that for me and someday I expect that she would be the type of person who will help someone out when they need it.

 

[REWahoo]

Martha, we're following the same "pay it forward" concept you describe with your niece. My FIL and MIL set up college savings accounts for our two daughters, money that really came in handy in helping pay for their education. We knew there was nothing we could do to adequately express our appreciation other than doing the same for our grandchildren. We've established 529's and other tuition payment plans that should fund two years of their expenses.

One slight drawback - they had to come up with the cash for three grandkids while we have five...

 

[youbet]

Martha, REWahoo......

I couldn't agree with you folks more. Doing similar things here.

 

[haha]

It isn't a specific obligation but a societal one. You invite someone to dinner, they invite you later. You take care of your family, they take care of you.

I am not really sure I understand what you are saying. What you describe sounds specific to me, and in agreement what what I intended to say. Perhaps in traditional Scandinavian sociey this is broadened to "society", but in most cultures it is quite specific, and underlain by an important and detailed series of rules. A long way from general priciples such as "give it forward". Think the Muslim world, Africa, Ireland, etc., etc.

In an extremely diverse society such as the US I would assert that many people (perhaps a sizable minority) could not begin to concieve of society at large. They see their group, and may have strong loyalties within this group but anywhere from minimal to negative loyalties to outgroups.

Ha

 

[Martha]

I am not really sure I understand what you are saying. What you describe sounds specific to me, and in agreement what what I intended to say. Perhaps in traditional Scandinavian sociey this is broadened to "society", but in most cultures it is quite specific, and underlain by an important and detailed series of rules. A long way from general priciples such as "give it forward". Think the Muslim world, Africa, Ireland, etc., etc.

In an extremely diverse society such as the US I would assert that many people (perhaps a sizable minority) could not begin to concieve of society at large. They see their group, and may have strong loyalties within this group but anywhere from minimal to negative loyalties to outgroups.

Ha

Yes, I was being specific, a bit different from the play it forward concept in the second paragraph of my post. You invite someone over to eat and without really thinking about it you expect a similar invitation in return. You send Christmas cards you get Christmas cards. You raise your kids, and they care for you or at least watch out for you when you get old or sick. This is what may be breaking down to some extent. I really wanted to emphasize that this duty doesn't have anything to do with "guilting" people, but it just was the way things worked, part of your duty as a family member or a friend.

 

[Kroeran]

I have no kids but I have been saving money for my niece ever since she was born. She will get the money when she turns 18. Hopefully, there will be enough money for her to pay her college tuition and maybe buy a car. I know that her parents can't save that much money for her, so I am happy to help. Nobody knows that I have been saving that money for her so it will be a surprise. But I don't expect anything in return.

to ensure the gift is well used and that it benefits her rather than undermines her motivation, I would recommend that you use the money to initially bribe her into staying in school as long as possible.

If there is some left over after that, help her buy her first house, or buy tools for a business, always using the money to invest in her future and independence.

 

[Kroeran]

I have never received any help from my aunts and uncles, but that's ok. They didn't have it to give and I managed to make my own way.

I don't have children or siblings so my nephew and niece by marriage will inherit everything we have. Through the years we have given them money and things...not because we wanted to get on the good side of them; we did it because we wanted to and expected nothing except a 'thank you' of which they gave.

They know they will have power over our lives/finances when we become unable to make decisions for ourselves. It doesn't matter to them how much they get in the end. They will do it because they love us and we love them. They have grown up to be very trustworthy adults and will do for us out of love instead of greed or obligation.

The way I look at it; do something for me because you care, not because you feel you must.

the problem comes when decent people are put in a position of relying on others that are not inherently decent, or who are putting on an act of decency, or who may change as they get older or into difficulty, or are not used to dealing with financial issues that have a lot of zeros.

for persons with an excess of resources, my advice to anyone heading into some form of early or age-related mental incompetence is to determine the income you will need to get to 100 living in a top-flight assisted living facility, buy indexed annuities to cover twice that amount, and have a committee of family plus one institutional professional oversee the writing of cheques on that account, with close to irrevocable pre-payment to the assisted living facility set up.

also, think about the living will and who controls it. The DW of a collegue of mine manages a nursing home. One of the problems they have is relatives not permitting the legal pulling of the plug on brain-dead residents on ventilators, as they don't want the pension cheques or annuities to stop coming.

distribute surplus funds ahead of time to close family to ensure mortages may be paid off and educations completed. Stick everything else in a fire and forget broadly based stock index fund which pays out every Christmas to beneficiaries in a pre-determined formula, subject to your override.