How to strategically cut the financial cord with adult children (2024)

FAQs

How to strategically cut the financial cord with adult children? ›

Don't cut the financial cord in one day. Give your child some notice, such as a month or two for cell phone bills and maybe six months to move out, and let them know you're not going to be paying their bills anymore. Put it on a calendar and give a copy of it to your child.

In order to decide when to cut the financial cord, ask yourself these questions: Are your adult children capable of supporting themselves? Have your children reached milestones in which they no longer need the same help anymore? Examples include graduating from college or getting a full-time job.

One way to do this is by leaving the money in a trust, and appointing someone as trustee (the person who controls trust assets) you think will do a good job of doling out the money on behalf of, or to, the beneficiary.

Create a Plan and Communicate It

Swantner recommends creating a firm plan that gradually reduces the child's financial dependence. You might, for example, stop paying the cell phone bill this month, the grocery bill next month, and then let your child know that in six months, she's responsible for her own rent.

A rule of thumb when it comes to lending a hand to adult children is to make sure the added expense doesn't impede your ability to meet your own financial goals. Of course, every situation is different. But it really comes down to whether you have the resources available to support your kids' goals as well as your own.

Key points. Even as adults, we need the acceptance and approval of our parents. We want them to continually be proud of us; that feeling never vanishes. When we're criticized by our parents, it often makes us feel useless and worthless instead of evoking in us the desire for change.

Not only does it protect family assets and make your wishes known, but it also allows you to continue helping your minor child or adult child even after you're gone. Trusts are vital estate planning documents that can: Provide benefits while you are still alive. Help you plan for distributions of your property.

Set up a trust

One of the easiest ways to shield your assets is to pass them to your child through a trust. The trust can be created today if you want to give money to your child now, or it can be created in your will and go into effect after you are gone.

In California, for example, the aggregate 529 plan balance limit is $529,000. “Donors can gift up to $15,000 each year to each beneficiary under the annual gift tax exclusion, including into a college savings fund for that beneficiary," said Goldman.

How do you tell a family member to stop asking for money? ›

DON'T EXPLAIN OR MAKE EXCUSES.

Say, “I'm sorry, but I can't give you a loan.” When the person asks, “Why not?” just repeat your statement. Eventually, your friend or family member will stop asking.

In this situation, your first decision is to approach your daughter in a vulnerable way and describe how her behavior is impacting you. You could say something like, "We love you, but we are struggling and feel a bit helpless because you aren't paying us back.

The Bible strongly encourages us to care for members of our family especially older people, children, and those who may be in need. I Timothy 5:8 says, "Anyone who does not provide for their relatives, and especially for their own household, has denied the faith and is worse than an unbeliever."

Once a child turns 18, the child is legally responsible for his or her own medical bills unless the parent signs an agreement with the medical provider to pay those bills. As for other debts incurred by children under 18, parents generally are not legally liable for these debts.

If they are spending the money you give them to fund something that is destructive to their life (gambling addiction, drugs or alcohol addiction)… its time to give up. If they continually make bad choices and don't listen to financial advice… its time to give up.

Even though your children may require less physical support as they grow into adulthood, they still benefit from emotional support at any age. Be there for your children to answer questions, listen to concerns, encourage interests, praise accomplishments, and provide advice when prompted.

Paying your adult child's debt could create a dependency that's difficult to break. They may not practice good financial habits if they know you'll be there to bail them out. Make it known that you're helping them out just one time, and enforce strong financial boundaries if your child comes back to you for help.

Financial help can take many forms

Unfortunately, footing the bill can also risk your own financial security, especially if you're saving for retirement. Even so, most parents who say their child is not entirely financially independent (72%) think it is extremely or very likely they will eventually be.