Including Adult Children in Your Plan

by George Chamberlin

Family dynamics are an important influence in the process of discovering a client’s goals and objectives and creating a wealth plan designed to support those goals. What clients want for their adult children, as well as what those children need, is an important subject for discussion and planning attention with your advisor. There are the children who are successful professionals, artists and athletes and those who are gamblers, criminals or simply lacking ambition and drive. There are special needs children and children who have suffered a disabling disease or injury. In short, there is no “normal” or typical child but a variety of children and circumstances an advisor can help a client address in their planning.

Whatever the situation, leaving some type of legacy to their children is important to most clients who have them. While a client may wait until death to pass a legacy on, planning must take place well before then and some clients may wish to see the plan coming to fruition with some transfers to children coming during the client’s lifetime. Perhaps even more important than the amount of money or assets to be left is how a legacy, including money, is left to the children and what the children are expected to do with it.

To illustrate this point, we will consider a few common examples that should get you thinking about your family and what might work best for them and for you. For example, in many families, a parent may have worked to establish a family business or would like to leave a legacy in which the adult children may participate, leading to opportunities and concerns including:

• Perpetuating shared family values and finding a way to pass on a family legacy that is meaningful , though not defined in dollar terms;
• How to handle family business succession – encouraging and mentoring children involved in the business and making alternate provision for those who are not – using fairness and common sense in the transition;
• Working out how multiple children and their families can share a beloved family vacation home in terms of usage together or separately, ongoing expenses and maintenance, renting and more; and,
• Engaging in funding charitable interests, including approaches such as children choosing charities and projects which will receive family money designated for charity or working in and for a family charitable organization (e.g., family foundation or supporting organization) possibly for a salary.

Adult children often face problems and challenges in their lives as well as the consequences of poor decisions and behavior. In most cases, clients will want to help and help effectively. This means addressing issues such as

• A child’s inability to handle money or creditor issues, including those of current and former spouses;
• Working around a child’s substance abuse problems, gambling and the like, while providing a safety net for them;
• Accommodating the special needs child, ensuring lifetime care and extras; and,
• Providing partial funding or rewards related to desirable goals such as investment in a child’s first home or new business where the child lacks sufficient funds to accomplish this goal without assistance.

A client may wish to influence children and help them to learn lessons and values that may be beneficial in life, such as any of the following (this list is meant to suggest ideas, it is not exhaustive):

• How to instill responsibility and an understanding of finances;
• Preparing children to hold positions of trust – such as fiduciary, trustee, power of attorney – that may play into the parents’ estate plan as well as in their own lives;
• Recognizing the difference between high achievers, low achievers, motivated, unmotivated and other variations of personalities your children may exemplify or encounter; and,
• Motivating the underachiever or rewarding the child who works in a low-paying job that serves a positive social purpose such as teaching, ministering, nursing and the like.

Whether you have asked yourself one or more of the above questions, or other similar questions concerning how your adult children and their lives might play into your wealth plan, your advisor should be able to provide you with ideas and suggestions for handling those questions that come up in discussion process. In addition, your advisor will work with your estate planner, accountant and other professionals to make sure the plan happens. This approach is intended to help you make the most of your opportunities within your family circle and enhance your personal experience and wealth plan.

George Chamberlin has been working in the legal and financial industry for over thirty years, including working at Wealthcare Capital Management from 2002-2009. George practiced law for several years before focusing on writing, planning and software development in the estate planning and financial planning areas. During his time at Wealthcare, George wrote weekly e-mails for advisors and their clients, engaged in basic and advanced financial planning and estate planning as well as working on a variety of other Wealthcare projects. Since 2009, George has worked as a registered investment adviser representative in his own firm, meeting and planning with clients, and more recently as a consultant to financial advisors, including Wealthcare advisors, on a variety of matters including advanced financial and estate planning.

George Chamberlin & Mentor RIA Consulting ©2015