Should You Accept Family Money?

When I was a young adult, out of college and into my first years of marriage, I cringed at the thought of getting money from my parents. I felt it would give them control over me in some fashion and fiercely wanted my independence. I wanted to prove myself. I thought there would be ‘strings’ attached to the use of the money.

Daughters and sons of very wealthy families sometimes want to disown the family wealth in order to prove themselves. Some grown children move thousands of miles away and change their names in order to avoid the ‘taint’ of the wealth and family name.

Many of you probably feel the same way. Perhaps though, you are doing your parents a disservice by refusing their gifts. Lets explore the topic of parents giving money to grown offspring.

Why do parents want to give adult offspring money?

If you understand why your parents are offering support, you may make a better decision on whether or not to accept it. They may be offering it for their own benefit, more than yours.

Providing college money can help cushion that murky time between high school graduation and fully leaving the nest.

College graduates have historically been more financially successful than non-college graduates. Parental pride in ‘my daughter the doctor’ may play a role in their desire to fund at least part of school expenses. Plus, with a college education it is more likely that the kids will be on their own quicker.

Getting them out of the nest and on their own is a big goal of most parents. Giving initial help to adult offspring can be one way of helping them stay out of the parental nest.

Making sure the grandchildren have the desired benefits enhances their peace of mind.

It is true that grandparents love to ‘spoil’ the grandkids (I know this because I am a grandparent). If they perceive that the parents can’t provide certain benefits, they are moved to assist. This not only includes helping out with money but also with time. Lots of grandparents help out with child care.

Helping kids over a rough spot can make a parent feel useful.

Most parents are going to intervene if they see a grown child being abused in a marriage. Sometimes parents will offer temporary funding to tide the family over in times of unusual circumstances (such as job losses or extreme medical expenses, etc). It is just part of being a parent, you never lose that feeling of being responsible for this wonderful being you brought into the world.

Parents may be trying to keep the family together.

It is a somewhat modern phenomena for parents to arrange to pay trip expenses for multi-generation vacations. We did this in 2012 – taking the family to Yellowstone – and it was one of our very best vacations ever. Parental heart’s warm when they see their descendants enjoying each other together.

They may just be executing a portion of their estate plan.

In Canada, parents can give unlimited, tax free amounts to anyone anytime. In the US, taxpayers can each gift $14,000 a year (changing each year to adjust for inflation) to as many people as they want. If parents think their estate may be subject to unwanted taxation, and can afford to give some of it away during their lifetimes, gifting as part of estate planning is the ticket.

When my Mom died in 1996, her estate had to pay over $80,000 in estate taxes (which is around $126,000 in 2016 dollars). Knowing how hard they worked to accumulate that $80,000 made it emotionally difficult to pay out those tax dollars. We vowed to do what we could to avoid having our estate taxed, so we give annual gifts in amounts we can afford, to our two adult offspring and their families.

Why do adult children want to refuse that money?

We want independence.

Mostly, I think, it is because adult offspring don’t want to be controlled by parents. Unless handled very carefully, accepting parental monetary gifts can lead to parental expectations on how lifes are lived and money is spent – even if it isn’t the money they gave. You have to understand any conditions that may come (either consciously or unconsciously) with the gift. Talk it over with them.

We want to prove ourselves.

Making your own way in the world gives a person confidence. Being able to handle your circumstances without parental help proves that you can hack it out in the world. If you feel this way and are refusing a parental gift, help your Mom/Dad understand that your self-image/self-worth is tied up in proving yourself.

We fear the parents can’t afford to give.

Some parents give til it hurts – even when they might not have enough to support themselves later. When adult offspring suspect this situation, they may be tempted to refuse monetary gifts. If this is the case and you fear the parents may be hurt emotionally by your refusal, you could set the gifted money aside for use to help out parents later on.

We think it may get in the way of an adult relationship with our parent.

We don’t want our Mom or Dad to think that we just call or visit in order to get a gift. If you accept gifts from time to time, be sure to call or visit frequently at non-gift times.

When do parents become reluctant to give money?

Perhaps you are eager to accept monetary or other gifts from your parents, yet they seem to avoid giving. Understanding their motivation may help you accept the situation. It is, after all, their money.

Parents rethink gifting when they disapprove of how the money was used.

Parents do watch to see how offspring utilize monetary resources. In fact, some estate planners recommend gifting as a means of determining how the kid will spend your estate after your death. If they start thinking their adult kids are num-nuts, parents might decide to stop gifting or even disinherit the kids.

Parents rethink gifting when it affects the adult offspring’s ability to function independently.

Perhaps the parent finally realized that rushing in to ‘save’ their adult offspring from the consequences of bad decisions is keeping their kid from realizing his or her full potential.

Family helps family – is a typical sentiment. One generation helping the next is also historically typical. If you are uncomfortable receiving gifts, try to think of it from the giver’s viewpoint. The giver will always get something out of the giving. Then make your decision, and find a way to let the giver know why you made that decision.

Do you accept gifts from parents?


Should You Accept Family Money? — 3 Comments

  1. I accept it as a gift at birthday time, as it is hard for them to know what I like … physically giving money solves this problem.

  2. Depends on whether you’re responsible enough to manage money and to repay it or meet whatever goal is involved, in a timely way.

    I helped my son purchase a house because he was living in a dangerous firetrap. After I fell down the unlit, sagging (undoubtedly out of code) steps to the second floor (almost breaking my ankle) and then he came home from a two-week vacation to find the place up to his ankles in sewage, he agreed to let me help him out of there.

    However, he is very responsible with money; has a good job; and has a credit rating that defies belief. He covers all the costs of maintenance, taxes, insurance, & the like, and he carries a life insurance policy that would cover the debt should anything happen to him. And…he was recently able to refinance the place and get me off the deed.

    But it must be said: I have friends who underwrite their adult children’s financial dramas at their own risk… If you can’t accept the responsibility that comes with borrowing (from anyone: Bank of America or Bank of Dad…), then don’t do it.

  3. I moved out rather quickly (wasn’t even in my 20s yet) and my parents felt helping me with money was the right thing to do. I accepted their help for a while, but when I landed my first serious job I realized I should refuse any family money they offered.

    At first, they were offended! But slowly they began understanding my need to be independent.

    The only family member who can’t seem to grasp the concept of financial independence is my grandma 🙂 Sometimes we literally fight because she still thinks of me as the little girl who couldn’t carry her own backpack from school! I guess old habits never change.

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