An Estate Planning Lawyer’s Perspective On Financially Supporting Your Adult Children

Estate planning lawyers are not here to dictate your values to you.  You are the same person you have always been, with the same goals you have always had.  Your estate planning attorney’s role is to help you achieve those goals.  If your children require your financial support, even if they are beyond their early 20s, an estate planning lawyer will not judge you for that.  It is simply reality for you, as it is for many parents of young adults.  Most expenses, from housing to education to groceries, cost a lot more than they did a generation ago.  From the perspective of long-term financial planning, though, you should build financial support for your children into your budget, rather than giving them money upon request.  A Bronx estate planning lawyer can help you work out the details.

Do Spend Down Your Assets Starting Now, but Don’t Take Early Withdrawals From Your Retirement Savings

We have all heard the urban legend about the wealthy couple who kept millions of dollars in a trust fund for their son, but they instructed the trustee not to pay out any money until the son married within the family’s religion.  This scenario applies to you not only because you know better than to try to use money to control your children, but also because you do not have millions of dollars to keep in a trust fund for a family member who probably has enough of his own money that he can live without it.

Your kids need money to pay student loans and credit card debt and to pursue the distant dream of qualifying for a home mortgage.  The worst thing you can do is wait until your son or daughter’s financial situation goes from bad to worse and then implement a series of bailouts which, since you didn’t budget for them, require you to withdraw money from your retirement accounts.  Early withdrawals from retirement savings are costly in terms of penalties and taxes.

It is a better idea to give your kids cash gifts every year, even in years when they insist that they do not need the money.  You can give up to $17,000 per recipient per year tax free, but if you can’t afford that big a gift, then give what you can afford.  Your kids can save the money or use it to pay down debts or avoid taking on new debts.  For example, gifts from parents can result in young adults taking out less money in student loans.  If they truly have nothing to spend the money on, they can keep it in the bank and eventually use it toward a down payment on a house.

Schedule a Confidential Consultation With a Bronx Estate Planning Attorney

An estate planning lawyer can help you decide the most cost-effective way to provide financial support for your adult children.  Contact Cavallo & Cavallo in the Bronx, New York to set up a consultation.

Source:

cnbc.com/select/parents-are-overextending-themselves-to-help-their-adult-children/