Dependent Support question

[Just_Steve]

DD 24 collage grad, pays her car insurance and pays her student loans, works full-time, saves her money and buys every thing she needs with her own money. She's still on my retires health insurance until 26 because there is no cost to me, I pay her phone because I want to. She will probably me moving after her commitment with her employer for the busy summer season.

DS 20 doing the 3 year plan for his associates But he's doing the best he can. DS works 20 hrs a week pays his own car insurance. He's still on my retires health insurance until 26 because there is no cost to me I pay his phone because I want to.
Neither one eats meals at home more than twice a week so minimal food cost.
They will both be gone when they are gone, both are responsible young adults and I'm in no rush to push them out. There are no conflics amongst us so it's all good.

 

[Sojourner]

I have a relative who never got a degree, dropped out of a training program, and took a lousy part-time job, because his parents supplied him with a house, car, and money to make ends meet.
It has gone on for 40 years He can hardly wait for the parent to die, to get the big cash payout.

I think OP will be supporting this "child" until death, because OP cannot face the fact that sometimes the best education is failure or suffering.

Yeah, I'm afraid that OP is falling into the unfortunate trap of "killing him with kindness" when it comes to his 37 year-old son. It's pretty well established that adult children who receive substantial amounts of financial assistance from their wealthy parents do not achieve as much success as children who don't receive such assistance. This is extensively documented in chapter 5 of the classic book The Millionaire Next Door. I would strongly suggest OP read this book (especially chapter 5) for an objective look at the possible harm (albeit unintentional) they are doing to their son.

A brief snippet from TMND explains the core issue.

Conversely, what is the effect of cash gifts that are knowingly earmarked for consumption and the propping up of a certain lifestyle? We find that the giving of such gifts is the single most significant factor that explains lack of productivity among the adult children of the affluent. All too often such "temporary" gifts affect the recipient's psyche. Cash gifts earmarked for consumption dampen one's initiative and productivity. They become habit forming. These gifts then must be extended throughout most of the recipient's life.

 

[REWahoo]

I view providing financial support to healthy, able-bodied adult children the same way I view breast feeding. If you don't wean them from it once they reach a certain age, it's not pretty.

And if having an opinion is being judgmental, I'll respect your right to have an opinion on the subject.

 

[Texas Proud]

We don't have kids but my best friend has stepchildren. The kids, aged 17-21, don't have jobs. Two live at home with their mom, paying no rent and one lives on campus out of state. They don't drive and they all say they can't find jobs.

What have others done in this situation? It drives my friend crazy because she worked from teen years on, financed her own education, car, apartment, etc. She and her husband are constantly asked to chip in for this and that, and they don't have enough savings to ER or even to buy a home in So CA. She wants to help the kids to a degree, but when they don't take the initiative to get drivers licenses and seriously look for work, she has an issue with taking cash from their own needs to fund things for the kids.

There are a lot of jobs out there that they can get... they just do not want to do them... they do not pay well and they would have to work long hours, but as of right now it is MUCH easier to stay at home and say 'I cannot find a job' and get paid....

 

[Cobra9777]

During college, we paid everything except daily spending money and bills after they moved off campus. They both had jobs for that stuff. We also gave them each a new car after graduating college with a job.

After college, they each lived for a while in rental houses we owned. They paid rent and took care of most maintenance but the rent was a "deal." DD still lives in the rental, while DS bought his own place. We gifted him money for the down-payment from the profit on selling the rental. DD will get the same deal. They are now 28 and 24 and haven't lived at home since leaving for college, except for 3 summers between the 2 of them.

Only other support I can think of is I still pay registration on the 2 cars, which are in my name, and I still carry the 2 cars on our insurance. They reimburse me for the insurance cost, but right now it's cheaper for them versus having their own policies. We're also very generous with gifts for Christmas and birthdays, stuff like nice patio furniture that we know they want but can't really afford.

It appears increasingly probable that our retirement plan will result in a large legacy. So as long as the kids continue to be responsible adults, we are happy to help them out now. DD talks about grad school from time to time and we have offered to help if needed. She has enough savings but we'd hate to see her exhaust the savings or take out loans when it's a comparatively trivial amount for us.

 

[RunningBum]

After college, they each lived for a while in rental houses we owned. They paid rent and took care of most maintenance but the rent was a "deal."

When I looked at this, in order to write off the expenses, I'd have to charge market rent, or at least something close to this, which defeated the purpose of the assistance. For discount rent, I'd have to declare the income, but not get the write-offs. There may be ways around this but it seemed a bit sketchy.

It appears increasingly probable that our retirement plan will result in a large legacy. So as long as the kids continue to be responsible adults, we are happy to help them out now.

My thought as well. A little help now, rather than having him hit the lottery when I die.

 

[aja8888]

I am paying for DD's wedding in April 2018. It will be worth it. She is 38 and never been married, and she found a great guy!! (he will be the son I never had)

Along the way we have supported (temporary basis) three of DW's children from her past marriage. They all got divorced within a three year period of each other. Must have been something in the water at that time.

We are still helping DW's granddaughter thru college (some living expense monies). She has no college debt as she managed to get grants along the way. She's a great kid and a keeper.

 

[Cobra9777]

When I looked at this, in order to write off the expenses, I'd have to charge market rent, or at least something close to this, which defeated the purpose of the assistance. For discount rent, I'd have to declare the income, but not get the write-offs. There may be ways around this but it seemed a bit sketchy.

I wrote off property tax, insurance, and depreciation. As I said, the kids paid most maintenance, and we had a written lease agreement to that effect. So if the IRS ever comes knocking, my defense will be that rent + maintenance = FMV rent. And my evidence will be lack of maintenance expenses on Schedule E. Worst case, I'd be more than happy to unwind the depreciation recapture on the one I just sold. Odds of an audit are pretty low I think because the rent was somewhat close, rent went up every year, and rental income was positive in the mid-to-high single digit percentages.

 

[Texas Proud]

I'm remembering why I didn't post anything about getting that townhouse now. Most people are just answering the question, but we have a few judgmental types here.


Let's say I have $100M. My kid wants to do something like be a social worker or a teacher and improve the world. Those kind of jobs are admirable but don't pay too well. Wouldn't it make sense to pay for some things so the kid doesn't have to live in a low rent area and drive an unreliable car? I'd rather give them some money than have them quit and take a higher paying job they hate that provides no value to society.


My situation is somewhere between that and my kid being a lazy irresponsible spender who can't hold onto a decent job. I can't speak for the OP.

I would agree with this.... as long as they were doing something and not saying 'I cannot find a job'.... there are a lot of charities that need help and if I had $100 mill then you can work for 'free' and I can pay the bills... but doing WORK is the important part in this stmt...

The question then becomes at what wealth level do you start?

I would also do the Warren Buffet on inheritance... leave the kids $1 mill each and the rest goes to charity... (you can make it a bit higher, but you get the idea)....

 

[Blue Collar Guy]

I got cut off at 22, YMMV

+2

On my 16th birthday, i was told by my dad i had to buy my own clothes, pay for my own haircuts. My first purchase was a pair of sneakers from Modell's the left one was a size 10.5 the right was an 11, i think i paid $2.50. I shoved toilet paper into the toe portion of the 11. Mind you i had a job since 14 at a fruit store after school. My mom knew i was cheap so for Christmas and Easter and Birthdays i got clothes. I softened the approach with my own son. I paid for A's and 50 % for B's at school. He worked
at 16 , week ends during college and full time in the summer, it was understood. I regret some of my hard lined approach. I wanted a tough kid. He told me he loved me on Fathers day and took me out for dinner so i guess I did ok. None of us whats right, we just try our best.

 

[bclover]

My sons are in college. They got our hand me down cars son they have no car note. We do the 15% rule. No matter what they make they give up 15% to me for their cell phones. They have to save 15 %. The rest is theirs. They are expected to pay for their books. We never did the you're 18 you are now an adult thing. Mainly because aft at 18 I was still a kid

 

[RunningBum]

Don't kid yourself about Buffett, he's set his kids up as chair of charity foundations that he's funded. Warren Buffett’s Double Standard | The American Conservative

Here is how it works. Warren Buffett or some other very wealthy individual sets up a charity. To be sure, anyone can do this, but the care of one’s loved ones requires greater amounts than anyone but a billionaire has. That rich person then transfers assets, stocks, bonds, real estate—whatever—into the trust behind the charity. He or she gets a tax write-off on all as a charitable donation. The tax break accrues at the current value of the assets, even if the billionaire acquired them at much lower cost. No question here of capital gains taxes either. After pocketing the tax breaks, the billionaire then puts one or more loved ones into high office at the foundation and sees to it that a handsome salary goes with the position, as well as, perhaps, lavish prerequisites, such as a car and driver, a residence, even a private jet. The arrangement then gives that loved one a handsome income and other benefits from the assets, as if they came in an inheritance, but with not a dime paid in taxes. On the contrary, the transfer comes equipped with tax benefits.


To be sure, the loved ones set up this way pay taxes on the income they receive. If the foundation is cleverly written, they can, however, avoid taxes on the prerequisites. All the charity must do is claim that the perks are an essential part of the job.

2 of the 3 kids have also served on the Berkshire Hathaway board, which was probably a pretty cushy deal.

 

[braumeister]

My folks got me into college, but that was as far as they could stretch it. NYC bus driver and SAHM. Scholarships and Air Force ROTC kept me in school, and spending money came from summer jobs and little holiday jobs (back in those days you could actually get a job as a mail carrier for a couple of weeks during Christmas break, and lots of small stores would pay you for a few hours of shelf stocking in the evening). There was no money for a dorm, so I lived at home during college, which meant about four hours commuting every day. Got most of my homework and a lot of my sleeping done on the NYC subway. Once I graduated, I started trying to pay my folks back for bringing me up.

And you know, I never once thought of that as being deprived. My parents loved me and did what they could for me. I can understand that affluent parents also love their kids and want to do what they can. Although a situation like the OP might seem like another world compared to how I lived, I don't see anything wrong with it, beyond the fact that there should be a plan to get DS on the road to self-sufficiency.

 

[Curmudgeon]

I support my daughter 100%, but she's 17 so I'm OK with that. My son is 19 and I support him close to 0% - he's in college and has a scholarship, & works for his room & board. I'll pay health/auto insurance until he has a full-time job.
IMO, once a kid gets to 18, they either need to be self-supporting, or in school full-time, in which case we can discuss support - which may come in the form of a loan.
Since I'm retired, I don't see the sense in offering much financial support: Anything I give them now, increases the chance that they'll have to support me later, if my money runs out. And I NEVER want to be in that situation. Anything I save, increases the money I can give them when I pass on.

 

[Bestwifeever]

Every family is different. If I thought one of my kids needed help, financial or otherwise, at any age, I'd be there for him or her in a minute, come hell or high water (DH, not so much �&#56834. I'm sure that is how the OP feels. By the grace of God imo that has not happened.

 

[pacergal]

Parenting is an individual thing, what is right and works for you and your family.
As long as my kids are working, pursuing education, and/or positively moving forward in the working adult world, I don't mind helping out financially or otherwise. They are pretty much independent at this time, but we do help out here and there.
We currently gift our kids money each year. We have helped with college, rent, cell phones, etc. as needed, and I don't mind a bit. If I felt my kids were taking advantage of the offers of help, that would be a totally different story.

 

[haha]

I read a statistic recently that over 1/2 of kids age 18-34 are still living at home or dependents of their parents.

So 34 year olds are kids? Kids that until recently were too old to qualify for the army.

Ha

 

[joeea]

How many of you provide substantial support for your children...

No.

My children have learned to live within their means. It isn't clear why your 37y/o unmarried son cannot.

Do you intend to support him for the rest of his life?

 

[Sojourner]

No he is not drug dependent or have health issues. He works full time, recently changing jobs after 4 years elsewhere. He does not have a college education or skill training. Tried college several times but couldn’t hack it. He is 37y/o unmarried.

If he is working full time and is a not suffering from any major issues (your statement above implies he's both mentally and physically healthy), then why do you feel the need to pay for his cell phone, his car payment and insurance, and his food and rent? What do you think would happen if you told him you were no longer going to subsidize him, and that he will need to live within his own means from now on?

My children have learned to live within their means. It isn't clear why your 37y/o unmarried son cannot.

From the information given by the OP, I would agree it's entirely unclear why so much ongoing economic assistance is being given.

 

[Luck_Club]

I’m curious to see if I’m in the minority or majority with this issue.

Is there anyone else out there in a similar situation?

This is an issue near and dear to my heart. I Have a brother who is as luck would have it a tad over 40. His entire life he has been the benefactor of Economic Out Patient Care from my mother. I love him dearly, and occasionally have found myself digging into my pocket for small sums every now and then.

He is lazy, Not that there is anything wrong with that. Many people who have wealth are a result of finding the lowest and most expedient way to make money...ie Lazy. However, it is much more than that, it has been said that not only is he loosing the game, he doesn't even realize there is a game going on.

So after watching this take place for the better part of 25 or so years, I come to my own son, 17 in July. Who for other reasons seems to be always getting the raw deal in life. I am truly torn on what to do over the next 6 or so years as he steps through the first threshold to the "real world". Currently nothing I say gets through. He is smarter than the old man, and will defend a position, just as long as it isn't the same as mine, without really knowing if it is defense-able. I'd like to, because i think I can, begin to transfer wealth and help them achieve a significantly higher level than DW and I have. But if one is succeeding and the other isn't how can I give to one and not the other? How could I as Mr Money says, "send my soldiers out to die"?

So is it wrong to help support your son and pass on some of the gifts life has provided you to make it easier on him, I don't know. However, over the next few years I may need to figure it out.

Do I let him fail and fail early cutting off all support at the first mistake? These are emotional decisions facing an analytical mind.

 

[socca]

How many of you provide substantial support for your children.

IMO supporting kids and gifting to kids are entirely different animals. I've been fortunate to receive generous financial gifts from my relatives over the years, but I've never considered that income as support. A beneficiary could reasonably include the promise of support in a personal budget, while a gift is considered a one-time event that may not be repeated.

Some of my siblings and step-siblings 'decided' to treat the gifts as support, with radical effects on their life trajectories (usually not good, IMO). Fortunately, there are options available to parents who would like to avoid having their kids view gifts as support.

 

[Texas Proud]

I have been thinking about this a bit... and after careful consideration I have come to this line of thought...


If your child has some kind of major mental or physical disability, then it is perfectly fine to support them...

If they just have minor mental or physical disabilities, then providing some kind of scattered support when needed is OK...

If they are able bodied, I would never provide support... especially paying for phone, cable or any other luxury they think they need...

If they got into some kind of trouble I might gift them something to get them out, but that is not an ongoing option... it will be once or twice and done...

 

[Koolau]

Officially, we don't help the kids on-going needs. They are all doing pretty well. We HAVE given them things like house down-payment assistance but they didn't ask for the help. Additionally we provide $1K to $2K for their Roth IRAs (as long as they don't get into them.) YMMV

 

[iloveyoga]

Our sons are both close to 40. They were both essentially out in the world at 18 for various reasons. We helped in the early years when needed for rent or groceries. Have never paid their ongoing bills for anything. They have been fully self supporting for many years now and we are very proud of them. Best of all they are great dads and husbands.

 

[gerntz]

We didn't support kid for 10 years after college. Let him figure it out - which he did we think. But now the thing is he's going to get it all in the end anyway. As a result, we gift significantly to his family a few times per year to make their lives easier & for the educational benefit of their kids. They aren't extravagant. We're happy.