Are your adult children grateful for their trust funds?

[Anonymous]

Anonymous wrote:Have others found that their (adult) children appear unappreciative of the trusts you have established for them? While they will receive more one day when my spouse and I pass away (hopefully not for many years!), they each have very substantial trusts that more than cover each of their needs every year, and then some. We made a conscious decision that giving unfettered access to tens of millions of dollars for each of our children would not be the right decision for our family; yet it feels as though the lack of personal control over this money has made them take it for granted as if it were not actually "given" to them.

Although it seems counterintuitive, does the lack of personal control over funds in a trust ultimately make your adult children less appreciative with money, and therefore less responsible? Or is this a phase they will grow out of? (They are all still in their twenties.)

You spoiled your children for decades, and you're suddenly surprised that your years of effort successfully implanted the message that the world person them vast riches for free?

You thought they would be just greedy and selfish enough, but not too much?
Hilarious.

[Anonymous]

Anonymous wrote:Start living it up now. Plan big family trips and create spectacular memories.

and then start donating meaningfully to causes who serve people in need. I guaranty those people will truly appreciate it, and you will do more good that way.

This is why you need an ethhic church, so you can donate to people with high generic overlap with yourself, once your kids have plenty.

[Anonymous]

Anonymous wrote:Have others found that their (adult) children appear unappreciative of the trusts you have established for them? While they will receive more one day when my spouse and I pass away (hopefully not for many years!), they each have very substantial trusts that more than cover each of their needs every year, and then some. We made a conscious decision that giving unfettered access to tens of millions of dollars for each of our children would not be the right decision for our family; yet it feels as though the lack of personal control over this money has made them take it for granted as if it were not actually "given" to them.

Although it seems counterintuitive, does the lack of personal control over funds in a trust ultimately make your adult children less appreciative with money, and therefore less responsible? Or is this a phase they will grow out of? (They are all still in their twenties.)

Congratulations on your legacy!

[Anonymous]

Anonymous wrote:

Anonymous wrote:You raised your kids to be ungrateful. I know plenty of families living off accumulated wealth of prior generations that are perfectly humble and grateful people.

+1. Seems this way to me as well.

Also giving the kids access to trusts in their twenties was probably a mistake. I grew up well off and am privileged to have come from generational wealth. My parents were very generous with helping me in my twenties, but there was no access to a huge trust fund. My siblings and I learned to be grateful for their help and to cover as much of our living expenses as possible independently.

Also, are you (the parents) hard working or also beneficiaries of generational wealth? While one of my parents comes from a wealthy family, both of my parents worked very hard in their careers until they retired and they’ve always lived modestly but given generously. They set a good example growing up. On the flip side, I know many people I grew up with who came from family money- their parents lived high on the hog despite not having real careers, and now there is not much left for their kids and grandkids.

I’ve read so many times on DCUM that people think that giving funds to descendants when they’re younger (20s and 30s) would have helped so much more in their lives than getting it all those years later. But I guess you run the risk of having entitled kids.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Start living it up now. Plan big family trips and create spectacular memories.

and then start donating meaningfully to causes who serve people in need. I guaranty those people will truly appreciate it, and you will do more good that way.

This is why you need an ethhic church, so you can donate to people with high generic overlap with yourself, once your kids have plenty.

[Anonymous]

Anonymous wrote:Have others found that their (adult) children appear unappreciative of the trusts you have established for them? While they will receive more one day when my spouse and I pass away (hopefully not for many years!), they each have very substantial trusts that more than cover each of their needs every year, and then some. We made a conscious decision that giving unfettered access to tens of millions of dollars for each of our children would not be the right decision for our family; yet it feels as though the lack of personal control over this money has made them take it for granted as if it were not actually "given" to them.

Although it seems counterintuitive, does the lack of personal control over funds in a trust ultimately make your adult children less appreciative with money, and therefore less responsible? Or is this a phase they will grow out of? (They are all still in their twenties.)

My kids don't get their trusts until they are in their 30s for this reason. I suppose we got better advice when we set them up this way.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Have others found that their (adult) children appear unappreciative of the trusts you have established for them? While they will receive more one day when my spouse and I pass away (hopefully not for many years!), they each have very substantial trusts that more than cover each of their needs every year, and then some. We made a conscious decision that giving unfettered access to tens of millions of dollars for each of our children would not be the right decision for our family; yet it feels as though the lack of personal control over this money has made them take it for granted as if it were not actually "given" to them.

Although it seems counterintuitive, does the lack of personal control over funds in a trust ultimately make your adult children less appreciative with money, and therefore less responsible? Or is this a phase they will grow out of? (They are all still in their twenties.)

You’re putting strings on the money so they probably don’t appreciate it as much as if you’d trust them to use it as they see fit. It’s there, great, but anything with strings attached doesn’t actually seem like a gift.

Trusts should be a bit like tax incentives. Incentivize the behavior you want. If they don't like it they can just leave the money there for the next generation.

[Anonymous]

Anonymous wrote:No trust funds here, but both kids have expressed gratitude for having their college paid with no loans. Most of their friends were not as lucky.

Same. Very few people had their entire undergrad and law school paid for by their parents, plus they bought me my first car. They didn't provide any help after I got my law degree, and they plan to leave their money to a cause they want to support, where it will be used to help people who need it. I am very grateful, and I'm paying it forward to the next generation.

[Anonymous]

Not only are my kids ungrateful about their trusts, but they also trash the yacht and never park the Bugatti in the correct parking garage.

Complete ingrates!

On a serious note...I do think the example set by the parents is important. Have cousins who had fairly large trusts established for them that they could access at 21 (around $10MM each in the 1990s).

The grandfather made all the money and set up a trust for the dad who basically never worked.

Well, one of the cousins blew all the money and the other blew most of it. Neither worked a career, just a series of lifestyle jobs.

They both managed to marry OK, but live pretty MC lifestyles.

[Anonymous]

Anonymous wrote:

Anonymous wrote:How much are you distributing to them each year?

I'm an adult child (late 30s) with a trust fund and I wrestle with this myself. I think of generational wealth as having three levels of benefit. Level one is freedom from worry about job loss, car repairs, unexpected expenses, etc. You have a large enough safety net you don't worry about the financial problems most everyone else does. Level two is the freedom to decouple where you live and how you spend your time from working for a living wage. Maybe you move to Jackson Hole and live an adventurous life without working. Or you work for a nonprofit whose mission you believe in. Level three is removing money as a limiting factor for how you spend your time. I think this is what many people think of when they think of trust fund kids - like oh the Alps are getting some great snow, let's fly out to Zermatt tomorrow and enjoy it! See also: the billionaire travel circuit.

We're firmly in level one. We don't have to worry about losing our jobs, car repairs, not making mortgage payments, etc. And since money is a primary stressor in people's lives this is huge and I try to be grateful for it every day. However. My parents are the classic midwesterners with protestant work ethics and all. So while the money is there for us to enjoy a level two lifestyle they've made it clear they want us all to be working full time and, so far, in jobs that can support our lifestyles. And on one hand I understand that impulse but on the other...man. I only live in the DC area for work and I hate living here. I believe strongly that you can give back to society in other ways and still live a happy, fulfilling life. And even within the context of living here there are things I would spend more money on but feel like we can't afford it (household cleaners, more landscaping/yard work, etc).

At the end of the day I remind myself that it's their money and they could give it all away to the circus if they want. I focus on how fortunate I am and try to live in that space but yeah, sometimes I do feel something like resentment sneaking in. That my parent's want to pass their money down to their children but at the same time I don't have access to it now to make different choices in my life can be frustrating.

Also, I didn't start having transparent conversations around family finances with my dad until I was in my mid-30s. My two (younger) siblings still don't have a clear picture of where things stand. Our parents paid our way through college and made sure we had a reliable car at graduation but we've only started getting larger outlays of money for things like downpayments in the last couple years and this year will be our first receiving small recurring trust distributions. I'm always curious about how other families handle things though - so are you distributing enough money for them to not work and live wherever they want? Are they aware of how much money is in their trust(s)?

OTOH, some of us want our kids to see that money now. We do (and will continue) to gift our kids $$ to "make their life easier". In a heartbeat I'd give you (if you were my kid) the money to get out of DC and get a job somewhere you want to live. Life is too short to work and live somewhere you don't want to be. However, like your parents we still require the kids to have full time jobs and career goals. They just know there is the Level 1 fall backs so they don't have to stress about finances. So far both kids are well adjusted adults, fiscally frugal and saving a ton. It helps that most of their friends are recent college grads with loans and car payments so they don't want to take fancy trips/etc.

I think that's awesome. I wasn't trying to imply one way was better than another.

Nobody in my family has been in a position to pass down wealth like this before so we don't have any history of best practices to fall back on. Every option has its pros and cons so for my part I focus on being thankful and working to navigate a path towards living where I want to without larger trust distributions. That said, I have three young children who I expect will inherit even more than I will and threading that needle is already something I'm starting to worry about.

Unrelated to your point but another source of potential frustration I think about is how siblings can affect you. I have two siblings and two of us are, I think, very strong with money. The third has never been good with it from a young age and one of my parents' values has been to treat everyone perfectly equally. For example when they bought each of us a car they gave us a price range and then wrote checks to the two buying less expensive cars to equal out the gift to the dollar. And so I think the kid who's not great with money acts as a bit of a limiting factor when it comes to distributions. Anyway, we'll see how this early trial run goes and maybe that'll change. The common thread is that when you get tangled up in family money like this you find that your life is more impacted by the decisions and actions of others (in this case, your parents and a sibling). That reliance/dependence on others as an adult can be chafing but it means less reliance on an employer so, once again, it's tradeoffs all the way down haha

[Anonymous]

Rather than giving them trust funds, you could fully fund their education, including living expenses, through a particular degree or age, buy them their first car, pay for their wedding, chip in on a house downpayment, pay for big family vacations that everyone will enjoy, fund your grandchildren's 529 plans and perhaps offer to pay for your grandchildren's private school and sports. I've seen this approach work very nicely for an extended family member. All of their kids had an excellent education and went on to have meaningful careers; so far, they are still in first marriages and have many grandchildren. The family is close, perhaps partly because they go on at least one fabulous vacation per year (think Caribbean resort, giant ski mansion on the slopes, etc.). The difference here is that they never created a codependent financial relationship. They promised them an education, a car, and a wedding. Everything else along the way has been a surprise.

[Anonymous]

Anonymous wrote:Rather than giving them trust funds, you could fully fund their education, including living expenses, through a particular degree or age, buy them their first car, pay for their wedding, chip in on a house downpayment, pay for big family vacations that everyone will enjoy, fund your grandchildren's 529 plans and perhaps offer to pay for your grandchildren's private school and sports. I've seen this approach work very nicely for an extended family member. All of their kids had an excellent education and went on to have meaningful careers; so far, they are still in first marriages and have many grandchildren. The family is close, perhaps partly because they go on at least one fabulous vacation per year (think Caribbean resort, giant ski mansion on the slopes, etc.). The difference here is that they never created a codependent financial relationship. They promised them an education, a car, and a wedding. Everything else along the way has been a surprise.

It can work well or horribly. The parents still have to be fine with kids' individual choices and not try to dictate how the kids will live their lives in order to get the next chunk of $$$s.

It's one thing if the kid has a drug habit or is a criminal or an extreme case...but you can't decide you just don't like a spouse, or you want to have input on what private school or what house you buy and where, etc.

I know someone like this where the wealthy grandparent wants to micromanage everything, even though they don't think they are micromanaging.

[Anonymous]

What trust fund?

[Anonymous]

Anonymous wrote:

Anonymous wrote:Rather than giving them trust funds, you could fully fund their education, including living expenses, through a particular degree or age, buy them their first car, pay for their wedding, chip in on a house downpayment, pay for big family vacations that everyone will enjoy, fund your grandchildren's 529 plans and perhaps offer to pay for your grandchildren's private school and sports. I've seen this approach work very nicely for an extended family member. All of their kids had an excellent education and went on to have meaningful careers; so far, they are still in first marriages and have many grandchildren. The family is close, perhaps partly because they go on at least one fabulous vacation per year (think Caribbean resort, giant ski mansion on the slopes, etc.). The difference here is that they never created a codependent financial relationship. They promised them an education, a car, and a wedding. Everything else along the way has been a surprise.

It can work well or horribly. The parents still have to be fine with kids' individual choices and not try to dictate how the kids will live their lives in order to get the next chunk of $$$s.

It's one thing if the kid has a drug habit or is a criminal or an extreme case...but you can't decide you just don't like a spouse, or you want to have input on what private school or what house you buy and where, etc.

I know someone like this where the wealthy grandparent wants to micromanage everything, even though they don't think they are micromanaging.

In this scenario, they aren't giving them any chunks of money. They pay for school, a car, a wedding, and extended family vacations. They pay for their grandchildren's 529 plans (but they remain the owners of the plans, with grandchildren as the beneficiaries). They may offer to pay for private school and perhaps set up a trust to pay for it if they die because, in this case, they would have established a codependency.

[Anonymous]

Anonymous wrote:Rather than giving them trust funds, you could fully fund their education, including living expenses, through a particular degree or age, buy them their first car, pay for their wedding, chip in on a house downpayment, pay for big family vacations that everyone will enjoy, fund your grandchildren's 529 plans and perhaps offer to pay for your grandchildren's private school and sports. I've seen this approach work very nicely for an extended family member. All of their kids had an excellent education and went on to have meaningful careers; so far, they are still in first marriages and have many grandchildren. The family is close, perhaps partly because they go on at least one fabulous vacation per year (think Caribbean resort, giant ski mansion on the slopes, etc.). The difference here is that they never created a codependent financial relationship. They promised them an education, a car, and a wedding. Everything else along the way has been a surprise.

This is essentially what we are doing. Kids always went to private schools, paid for college, bought first car, have always travelled extensively, etc. However, even with that there will is money left that will probably need to be put into a trust fund. It's not always either or.