Advice Please Regarding Young Adult Childen Finances

[HI Bill]

I almost think it is better (in the long run) if kids are raised as if the parents don't have a lot of money.

Yep! I have a coworker who stands to inherit 10s of millions, and it appears to have made her less-than-motivated. She might be in her late 50s by the time it happens, though!

 

[ivinsfan]

One of the many benefits of acquiring wealth in your life time is you can help your children to acquire more wealth and make it easier on them then it was on you. How we do this is really a personal choice, but it is the earners choice. Your seeking advice is not wrong, but prudent. Because as others have pointed out helping our children too much can have the unintended consequences of diminishing their personal drive leading to a life of sloth.

Below is the outline of the restrictive covenant on my next revision of my living trust, hope it helps the OP.

Restrictive Covenants:


Prior to age 50 the beneficiaries shall be provided with income only, with the exception of the following 4 capital access scenarios:
1) Medical expenses exceeding their ability to pay
2) Education of Children of the beneficiaries exceeding the income generated for Catholic schools through high school, and in state college tuition.
3) Purchase of their first house, when they have saved an equal amount of funds towards a down payment.
To start or purchase a business after obtaining the age of 30 but prior to 40, with matching saved funds at a ratio of 1 saved 2 from trust

After obtaining the age of 50 Beneficiaries shall have unfettered access to principle and income subject to spendthrift provisions, drug abuse or other self destructive behaviors. The beneficiaries shall reduce their percentage of benefit in direct proportion to the capital distribution out of the trust as it relates to a co-beneficiary.

Why did you pick the age of fifty? What's your reasoning behind that number? What happen after they reach fifty, does the checkbook magically open?

 

[Ready2Go]

Send them to Dave Ramsey Financial Peace University. I plan to send my kids after they graduate.

 

[GravitySucks]

One of the many benefits of acquiring wealth in your life time is you can help your children to acquire more wealth and make it easier on them then it was on you. How we do this is really a personal choice, but it is the earners choice. Your seeking advice is not wrong, but prudent. Because as others have pointed out helping our children too much can have the unintended consequences of diminishing their personal drive leading to a life of sloth.

Below is the outline of the restrictive covenant on my next revision of my living trust, hope it helps the OP.

Restrictive Covenants:


Prior to age 50 the beneficiaries shall be provided with income only, with the exception of the following 4 capital access scenarios:
1)Medical expenses exceeding their ability to pay
2)Education of Children of the beneficiaries exceeding the income generated for Catholic schools through high school, and in state college tuition.
3)Purchase of their first house, when they have saved an equal amount of funds towards a down payment.
To start or purchase a business after obtaining the age of 30 but prior to 40, with matching saved funds at a ratio of 1 saved 2 from trust

After obtaining the age of 50 Beneficiaries shall have unfettered access to principle and income subject to spendthrift provisions, drug abuse or other self destructive behaviors. The beneficiaries shall reduce their percentage of benefit in direct proportion to the capital distribution out of the trust as it relates to a co-beneficiary.

Who will decide if they are spendthrifts?
What alcohol or drug use levels are acceptable and who decides?
Why 50 instead of 40 or 60?
Just wondering how these things work.

 

[Scuba]

I worked for a family owned large business for many years. The family is VERY wealthy, but the kids had to work hard in the business and one shared with me that they didn’t get much family wealth. The family didn’t live extravagantly and their efforts to encourage their kids to stay in the family business and work hard seemed to work well. There were kids who weren’t a part of the business, and I don’t know how that affected their share of family wealth.

 

[iloveyoga]

I worked for a family owned large business for many years. The family is VERY wealthy, but the kids had to work hard in the business and one shared with me that they didn’t get much family wealth. The family didn’t live extravagantly and their efforts to encourage their kids to stay in the family business and work hard seemed to work well. There were kids who weren’t a part of the business, and I don’t know how that affected their share of family wealth.

I'm convinced that knowing the value of hard work is one of the best gifts you can give your adult children. Then you have to worry about your grandkids getting too much too easy too early!