Most parents struggle with the ongoing issue of how much financial support to give to their children. The problem becomes that much more pressing when their son or daughter seeks help during his or her separation and/or divorce. Especially in these tough economic times when seniors find their retirement and pension funds less secure, there will be issues affecting family relationships.
Jack held off offering his daughter Bonnie money when she and her husband separated. In the beginning, his soon to be ex son-in-law was meeting his responsibilities. But then Phil lost his job and Jack came through with a monthly check to pay for her household expenses.
Bonnie appreciated her dad's help. Once her divorce was finalized (and Phil got a job), Jack assumed he would be off the hook. Instead he found, a year later, he was still digging into his wallet.
Parents who want to help their children during this difficult time ask the following questions:
When should I withdraw financial support?
While there is no easy answer, the rule of thumb is not to create a dependency situation. Circumstances vary in each case, but keep in mind that when you offer to help your divorcing child financially, you are setting a precedent for the future -- not only for that child, but also for any other child who might one day come to you with a similar request.
Should I loan the money or make it a gift?
Even if it's a loan -- "Only give what you can afford not to get back." If you expect your child to pay you back, establish a realistic pay-back plan. You can avoid creating a dependency if you pay for a particular expense (rent for a year, for example), instead of giving a blanket loan. One attorney suggested considering a promissory note to accompany a loan as this then becomes a marital debt and is added to the financial affidavit. The loan has a better chance of being repaid once the assets are divided.
Should I specify how the money is spent?
For better or worse, once the money leaves your hands, consider it a fait accompli. If your son or daughter has been financially irresponsible in the past -- thrown away money, run up high credit card debt, taken money for granted -- you may have to set limits right from the start. Remember, you are dealing with an adult. Just hope that the money you so generously shelled out will be used wisely.
What if my child comes back asking for another loan?
That's easy. Gently remind him or her that you have expenses, and that there are other means for obtaining the money.
Am I being selfish if I turn down a request?
It's not easy to draw the line, but it's also wrong to lose sight of your needs, your spouse's, or other family members you are taking care of. More and more baby boomers are members of the club sandwich generation, responsible for kids living at home and elderly parents who are living to a ripe old age.
You're not being selfish if a gift to your child is going to compromise your lifestyle or cause you to put your retirement plans on hold. Even if your plans seem "frivolous" -- that safari trip you've waited your whole life to go on -- you have a right to use your money as you see fit.
Am I being fair to the other family members if I support my neediest child?
If maintaining your divorced child's standard of living means creating tension and resentment, you better think again. Be aware that a loan to your divorced child can build guilt and resentment that can last a lifetime.
Case in point: Cathy is sixteen and a straight A student. Instead of going to that private college she set her sights on, she is attending her local community college. Why? Her parents used her college fund to pay off her divorced sister's mortgage.
The best policy is to be open and honest with other family members about the kind of financial help you are giving your divorced child. Money lending (or gifting) can be especially dicey when one of the parents is remarried. Partners may not always agree how the money should be spent or how "desperate" the divorced child's situation is.
The best kind of support may not cost a dime.
Know that there are many ways you can communicate your love and support without having to open your purse strings: open your home, fix dinner, offer to babysit, carpool, attend your grandchildren's sports events, research lawyers and divorce tax consultants, take your child and grandchildren on vacation, etc. By relieving the day-to-day burden you will be showing your generosity.
As a parent your role is not to provide long-term financial support unless there is no other recourse. As I said earlier, circumstances vary. But generally speaking, your goal is to point your divorced or separated adult child toward financial independence. Doing too much and for too long is as bad as doing too little.
There are many more tips how to help your son or daughter pre- or post-divorce in my book "Your Child's Divorce: What to Expect - What You Can Do" (Impact Publishers, 2006.)