How common is it for young adults to receive life changing amounts of money from family?

[Anonymous]

I am MC and have several friends with UMC/UC parents who have been gifted money, land, or a house. They all started out in a neighborhood similar to ours (think police and teachers live here) or in condos and are now in million $ homes.

[Anonymous]

I left home at 18, and after many years accepting my free labor on the dairy farm (I started milking cows when I was 8) my parents gave me not a dime. I worked myself through undergraduate and graduate school.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Can’t give you a precise answer but our trust is set up so that if we die while the kids are in college, school is paid for. After that they don’t get anything until about 35 and then again at 40 or 45. I think the split was 30/70.

I’d rethink this and give money sooner before 35. What if they want to marry? Or buy a house before kids or even be able to afford kids? Dh and I waited for kids. We wanted to save money and buy a house. But then we needed infertility treatments. Money earlier would have made a huge difference. It wouldn’t have changed our career trajectories though.

+1

This mentality of throwing your children to the wolves when they are young and really need help - and conversely, helping them later on when they no longer need help - is so stupid. So many life expenses are frontloaded at precisely the time that income is lowest.

For example, college. You can graduate summa cum laude and no one pays you a dime (apart from possibly scholarships) - you still need to find a way to eat. Same goes for graduate school, weddings, down payments on a house, buying a car, furniture and having kids. Far better would be, if you have the resources, to give each of your kids $500,000 between the ages of 18-28 and allow them to enter adulthood with no debt (other than a mortgage later on), a healthy emergency fund and possibly even some investments that will have plenty of time to compound. This is not so much money that they can be dilettantes but enough so they are not burdened by excessive struggles.

It will probably even teach them financial responsbility. If they know they're getting $500,000 and no more, for example, they may opt to go to UMD and keep more of the cash instead of going to Swarthmore and blowing $250,000 on a Russian Lit degree.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Can’t give you a precise answer but our trust is set up so that if we die while the kids are in college, school is paid for. After that they don’t get anything until about 35 and then again at 40 or 45. I think the split was 30/70.

I’d rethink this and give money sooner before 35. What if they want to marry? Or buy a house before kids or even be able to afford kids? Dh and I waited for kids. We wanted to save money and buy a house. But then we needed infertility treatments. Money earlier would have made a huge difference. It wouldn’t have changed our career trajectories though.

Yes. Most trusts have provisions for medical or education that eclipse any age thresholds.

I’ve been receiving annual gifting since my early 20s.

[Anonymous]

I'm wondering about this decision as well. I will inherit $1.5-2M. Some of it will be used to supplement my retirement, but hopefully the investment performance will be such that it's growth counterbalances whatever I need to use. My father right now is able to pay for his assisted living place with his SSI, dividend income and retirement draws that are less than the money the retirement investments are making.

If something happens to me, my 2 teen DDs would inherit the money in equal portions when they are 30, per the trust. Until I pass away and they inherit, I (or then my cousin) would act as trustee if they need resources from the trust prior to that. So, the question is, what should come out of the trust prior to their turning 30? Education in excess of their college funds would be one. The downpayment on their first house to get them started in real estate appreciation would be another. Beyond that, it just depends.

I certainly don't want the trust to be their bank and them not cultivate the work ethic and pride in achieving life goals with their own actions and hard work. I haven't even decided if I want to tell them about this trust anytime soon. Probably not until their mid 20's, if I hear they are starting to make job decisions, starting family decisions, etc based on having to wait a long time before they can afford it. For example the PP above who mentioned putting off having children because of affordability and then running into infertility challenges.

When that time comes I certainly will be talking with them about the importance of letting most of it grow for their own retirement choices, not blowing it all near-term. Meanwhile I can gift them education money, first house downpayments, medical bill help if something catastrophic happens, wedding costs if not too extravagant, etc. and not mention exactly where the money is coming from. Just that I have some extra to be able to help out.

[Anonymous]

Anonymous wrote:Ethan Allen daughter here. I think I am a little bitter but less so than years ago. My elderly mother is the sole parent left. In her younger years when she was still working and I was getting married she always cried poor but then two months later she'd have brand new EA furniture. Or have a carpenter come in to build custom cabinetry to house all her crystal and fine china collection. When we were getting married i asked her if she could help pay for the food at the hall. We had a 100 people at the wedding but the hall was a church hall. She looked askance and said "you know I'm poor". Then she'd turn around and buy more furniture three months later. It just bothered me. I was asking her to cover 4k worth of catering. We were not having caviar. My hubby and I were paying honeymoon etc. We ended up paying for everything except dress. I can't remember what dress cost but witj alteratons veil Etc it was about 600. I think had she really been poor it would have been ok. For example my mother in law was a Catholic school teacher who had been widowed for years so we didn't want her to cover anything. Although she wanted to pay for rehearsal dinner. We agreed to her offer and split it with her.

What kind of a loser asks mommy to help pay for the wedding? If she wanted to, she would have offered.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Ethan Allen daughter here. I think I am a little bitter but less so than years ago. My elderly mother is the sole parent left. In her younger years when she was still working and I was getting married she always cried poor but then two months later she'd have brand new EA furniture. Or have a carpenter come in to build custom cabinetry to house all her crystal and fine china collection. When we were getting married i asked her if she could help pay for the food at the hall. We had a 100 people at the wedding but the hall was a church hall. She looked askance and said "you know I'm poor". Then she'd turn around and buy more furniture three months later. It just bothered me. I was asking her to cover 4k worth of catering. We were not having caviar. My hubby and I were paying honeymoon etc. We ended up paying for everything except dress. I can't remember what dress cost but witj alteratons veil Etc it was about 600. I think had she really been poor it would have been ok. For example my mother in law was a Catholic school teacher who had been widowed for years so we didn't want her to cover anything. Although she wanted to pay for rehearsal dinner. We agreed to her offer and split it with her.

What kind of a loser asks mommy to help pay for the wedding? If she wanted to, she would have offered.

I think it’s completely reasonable to ask a parent if they could cover a small portion of the wedding. Up until recently, it was very common for the daughter’s parents to pay for everything. So it is uncommon for the daughter’s parents to pay for none of it at all or almost nothing. It seems these days the daughter’s parents and hopefully the groom’s parents give them a contribution toward the total cost and the bride/groom pay the rest out of their income.

[Anonymous]

It happens 17.4% of the time.

[Anonymous]

"life changing" has an 'unexpected/needed the money' connotation. I don't think a windfall is ever really unexpected as far as inheritances go.

[Anonymous]

Well we could not have gotten a loan on our $890K home (15% down) without a loan of 10K and a gift of 10K. We have 500K in equity now and that’s a good chunk of our net worth. The loan was from my dad who makes maybe 350 a year, and has no other source of money.

So 20K was life-changing for me, but I’m sure it wouldn’t be for a lot of people. And actually it wouldn’t be now.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Can’t give you a precise answer but our trust is set up so that if we die while the kids are in college, school is paid for. After that they don’t get anything until about 35 and then again at 40 or 45. I think the split was 30/70.

I’d rethink this and give money sooner before 35. What if they want to marry? Or buy a house before kids or even be able to afford kids? Dh and I waited for kids. We wanted to save money and buy a house. But then we needed infertility treatments. Money earlier would have made a huge difference. It wouldn’t have changed our career trajectories though.

I was going to say the same thing. My nephew and niece lost their parents at 19/21, and that is a really tough age to be left without any financial support. Speaking for myself, while my parents were pretty poor (single teacher income) and couldn’t even pay for college, it was hugely helpful to be able to move back in with them right after college for a year while I worked and got my bearings.

[Anonymous]

Not really on the same level, but sort of related -- my sister is relocating her son to Boston this weekend where he got a job. He's a recent college grad. She mentioned that they had to co-sign on an apartment lease. She wondered about the kids who don't have that level of support.

[Anonymous]

Anonymous wrote:"life changing" has an 'unexpected/needed the money' connotation. I don't think a windfall is ever really unexpected as far as inheritances go.

For us, getting help with the down payment on our house was literally life changing. My parents and my spouse's parents each gave us $20k - and with that, we got our first footing in the real estate market, in a city that was affordable at the time but where prices have now skyrocketed. We have a kind of security because of that money, that we never had before. I am so grateful for that help, and I realize how lucky we were to get it.

[Anonymous]

This is an interesting thread. DH and I both grew up UC and did not have to worry about paying for college, grad school or our wedding - which we know is very fortunate. That said, both of our families had plenty of money but made it clear we were on our own after college (despite paying for grad school). We also didn’t live extravagant lives growing up - nice houses but not mansions, nice vacations but not over the top, etc. We met in NYC where we both moved after college and struggled to pay rent in such an expensive city like many, when we got married had to save up our own down payment and neither of our families was willing to help, or even give us a loan for renovations, etc. I think it definitely pushed us to make our own success and have a desire to work hard so we could have a nice life. We are mid 40s now with a HHI of $800K so doing very well.

It’s interesting though because most of our friends’ parents heavily supplemented their incomes in their 20s, paying their rent and for vacations or other extras. Almost all had significant help buying their first homes, with their children’s private school tuitions and more. DH and I definitely had moments of resentment that our parents would not do the same.

However, DH’s dad just passed away and we inherited around $5 million. We honestly had no clue that was coming (and there will be more assets when his mom passes eventually) but it’s funny because we really could have used a little of that money in our 20s and 30s to take the edge off. At this point we already have strong savings, well funded 529s for our kids’ educations, good retirement savings/plans, etc.

We decided to split the money into trusts for our two kids and have been trying to find a way to give them access to it in their 20s after graduating college, but stipulating what it can and can’t be used for. But it’s a fine line because we always want them to be accountable for paying enough of their own way so they aren’t just living off a trust and unmotivated.

[Anonymous]

Anonymous wrote:Not really on the same level, but sort of related -- my sister is relocating her son to Boston this weekend where he got a job. He's a recent college grad. She mentioned that they had to co-sign on an apartment lease. She wondered about the kids who don't have that level of support.

I’m in my late 50s and moved from a rural area to a large East coast metro area in my early 20s. There was no such thing as a credit check, lease co-sign, etc. And thank god, because my parents definitely would not have been able to help. I would have never asked them to spare them of the embarrassment of such a request. I think about this fairly often as I would have never been able to leave home and “seek my fortune.”