Ask Me Help Desk - Money and Adult Children

In a fairly wealthy family (i.e. with a net worth in the low millions), is it more common or less common for the parents to give extra financial boosts to their offspring in early adulthood (let's say in their twenties or later)? If so, why, and in what form (i.e. trust funds, etc.)? If not, why?

I assume this question might bring some strong opinions to the table. I would really like to know what people think or know from experience.

Extra boost, just what is that.

If I make 40,000 a year and pay 20 percent of my income so they can go to college,

A person makig a million a year, if they give 20 percent, it is the same giving by percent, just one goes to Harvard, the other goes to community college

My Dad believes strongly in education. He has helped me, in spite of being broke himself, to educate myself and my kids.

There is a philosophy I learned from him that is counter to the beliefs of many. At work, I am always willing to go the extra mile and help others if time allows. I was chastised repeatedly for doing so, "don't help him, he'll just expect it all the time then."

Then, in AA, a wise person explained the process of giving money away. "If a drunk is to finally hit bottom, maybe the few dollars I gave him bought his last bottle." There is a rule there, of course. Don't "lend" money you ever expect to get back.

Anyone can make a difference.

I'm curious as to why you are asking the question.

I'm not entirely sure what you mean by "financial boost", so my remarks may not be altogether what you are looking for. As far as handing cash over to their adult kids, I can't say I've been privy to those sorts of details on many occasions, though I have encountered it (and when I have, the boosts have been pretty substantial). What seems to be more common--in my experience, at least--is the adult children of wealthy parents faring uncannily well on the job market (this is a kind of financial boost). I've known a great many people over the years who, within a few years or so of graduating college, ended up with fantastically high paying jobs. Now, I've known some of these people well enough to be reasonably confidant that they weren't out looking for the sorts of jobs they ended up with. I've also known a number of people with wealthy parents who were in a position to take cool jobs that didn't necessarily pay very well. That, together with the lifestyle they were able to maintain, led me to believe that they were getting some fairly substantial support from their families, though in what form that support was delivered I don't know.

What I've also seen, though less often, is people who spend the years after college (into their early-30's, say) pursuing various sorts of pet projects, though never holding a paying job, all the while traveling and maintaining a reasonably up-scale lifestyle. But whether they were living off trusts or were receiving money from their families I don't know.

Not sure if this helps. Sorry if I went off the rails.

In my experience most children are not financially responsible until they are in their 30's. If they need help I help with what I can, but any substantial amount should be put into a trust that can't be touched for a while.

Akoue, that's closer to what I'm asking about.

Regarding the other responses, while I can appreciate what you're talking about, the question is really pertaining to life after college.

I've been in Europe for a number of years now, and I'm trying to gain a sense of what might be more typical in the states in situations regarding this specific degree of wealth and adult children. That there are some pretty substantial cultural differences as far as these things go. Here, for example, it doesn't matter how much or how little you have; parents live for their kids, even when they're grown. I suppose it would be fair to say that familial wealth is usually shared to a significant degree. I know a number of adult children from lower to middle class families whose parents have bought them houses, believe it or not. I know that more or less any adult child that comes from higher levels of wealth is usually pretty taken care of. I won't say that this happens every time, but taking care of one's family, no matter what age, including on financial fronts, is generally seen as important. Back home in the states, I feel like things are different.

Certainly it's going to be different from family to family.

For the purposes of this conversation, I want to stick to the subject of families of fair financial standing, as described above, and what is considered typical when it comes to their adult children, through their mid-twenties and into their early thirties or later.

As far as nepotism and similar career boosts go, I am familiar with the standard. Those are favors that most parents in privileged positions are almost always willing to provide. Sometimes that means taking their adult children into their own companies, and other times it can mean being given a slight advantage through any potential connections in other fields. I suppose my question isn't really about that though. I'm asking about money more than networking favors.

So, when a family is in a reasonable financial position, let's say with a net worth in the low millions, is it more common or less common for the adult children to be given financial boosts, be they in the form of gifts, like cash, trust funds, investments into any businesses owned by their adult children, or even a nice car, an apartment, etc. If so, how common is it?

Or is it more reasonable to assume that parents in this position usually expect their adult children to build their lives under complete independence, in this case financially, which would mean the exclusion of any really significant financial contributions from the part of the parents?

In the latter case, the adult children would still be privy to the inheritance of the remaining estate, but they would not receive substantial aid until then.

I am very curious to hear what you know on this subject, be it from personal experience or even from observation, and I would also be interested in hearing your personal opinions on this topic as well.

First, I notice you didn't answer MY question. Second, I tend to doubt if many of the members here fall into the class of family you are looking for.

You're certainly right about the cultural differences. In Europe--at least, in many parts of Europe--it is far more common for families to support their children in manifold ways well into adulthood. In my experience, it is also more common to find the general pooling of resources (at any income level).

In the US, of course, the Horatio Alger ideal lives on, although it has become more attenuated. My sense is that families at the income level about which you are asking are in a position to give more kinds of help, so that help may not always come in the form of cash (nepotism is just one example). One thing I've observed quite often, in the US, is parents giving their children help when the kids run into some sort of snag: There often has to be the sense that the kid tried and couldn't do it on his or her own, and so has now merited some extra help. In Europe, this requirement doesn't appear to be so strictly enforced.

For my part, I have more sympathy with the European model. The Horatio-Alger-rugged-individualist approach in the US strikes me as, well, misguided. At the same time, of course, there is the problem of infantilization (something one sees quite a bit of in Italy, as I'm sure you know). I tend to think, however, that Americans overreact to this by recoiling back to the notion that the kids have to prove themselves worthy of help by trying and failing first.

Thought I'd take another crack at it. Caveat: The evidence for my claims is strictly anecdotal.

Quote:

Originally Posted by linnealand

so, when a family is in a reasonable financial position, let's say with a net worth in the low millions, is it more common or less common for the adult children to be given financial boosts, be they in the form of gifts, like cash, trust funds, investments into any businesses owned by their adult children, or even a nice car, an apartment, etc. If so, how common is it?

It's tricky. Families of lower incomes give gifts too, but they may be in the $50-$500 range. I suspect the differences here really are going to be not in the giving itself but rather what is given. So, since you are asking about frequency and not the, what, magnitude of the gifts, I am tempted to think that there isn't a big difference here. If we take magnitude (can't think of a better word for it) into account, then, yes, it is of course far more common to see people at the income level about which you are interested giving things like apartments and the like.

Quote:

or is it more reasonable to assume that parents in this position usually expect their adult children to build their lives under complete independence, in this case financially, which would mean the exclusion of any really significant financial contributions from the part of the parents?

This is purely anecdotal, again, but I have found this attitude to be rather more prevalent among middle-income families than among the wealthy (a net worth in the low millions is definitely more than "a reasonable financial positon").

Hope this is helpful.