Kids and Money: Is It O.K. to Play Financial Favorites?

When parents give more financial aid to one child than another, it can cause family discord, especially if the dealings have been kept secret. Here's how to handle financial favoritism

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Life tends to deal different financial hands to siblings. One may land a high-paying job or settle down with a highly paid partner; another may always struggle to keep his or her head above water. That reality doesn’t make it any easier for parents to decide when to give more financial help to one child than another — or less complicated.

I had a client years ago in New York who experienced financial favoritism first hand. Her name was Linda and she had grown up in a relatively affluent home. Her parents paid for both of their daughters’ college educations and helped them with down payments for their homes. They had been treated equally. Or so Linda thought — until her father died. As executor of his will, she discovered that her parents had been financially supporting her sister for most of her adult life. The amount of money they’d given her over time was staggering. Linda, a successful advertising executive, was angry. I remember her telling me she felt like she’d worked hard her whole life to achieve the lifestyle her irresponsible sister had handed to her all along.

Of course, there are two sides to every story. In Linda’s case, her sister had long been unstable. She was in and out of unhealthy relationships and unable to hold a job while trying to raise two children. Her parents were concerned about her well-being and that of their grandchildren and had stepped in to help. Over the years, their handouts created a dependency. When their father died, Linda’s sister — now in her 50s — turned to her for the monthly payouts she’d received from their parents. While Linda understood her parents’ good intent, she was left feeling betrayed and saddled with a financial dilemma she wasn’t prepared for.

(MORE: When Dementia Derails Your Parents’ Finances)

Officially, a parent’s money is his or her own to spend — or give away — as desired. But when financial favoritism is discovered, it can impact family relationships in a significant way. Parents who are providing very different levels of support to their children may want to ask themselves the following questions to ensure they are thinking through all the issues.

When should you let the cat out of the bag?
If your support is minor, temporary or extremely sensitive, it’s probably appropriate to keep mum. However, you should disclose your support if it could impact your other children in the future. This is absolutely necessary if you anticipate them having to chip in to help their brother or sister when you’re no longer able.

Should you tell them why?
Explanation can give you the opportunity to clear the air. However, even if you explain your thinking, your children may disagree with your rationale. You know your children best, so be prepared for different reactions from your children after they learn about financial support for a sibling — especially if they consider that sibling to be irresponsible.

(MORE: Women Can’t Have It All, but They Can at Least Simplify Their Finances)

Have you made promises you can’t keep?
If you’re using money that you’ve set aside for other obligations — like funding your grandchildren’s tuition — be honest about it. It’s likely the child you’re supporting doesn’t want to spend away his or her niece or nephew’s college funds. Being candid with the person in need about how he or she is impacting your own finances may motivate that child to act more responsibly. Regardless, let your other children know if you may have to renege your offer to fund a down payment on their home or your grandchild’s college education.

In the long run, will you have been fair?
I know one couple who thought their unmarried daughter in a low-earning profession would definitely need some extra cash someday. So they left more money in their will to her than to their other daughters. Lo and behold, she married, became a successful lawyer and outearned both of her sisters. No one can predict the future, so consider being equitable when you plan your inheritance.

Wanting to fix things for your children is natural, and it may be tempting to favor a certain one. Whatever the reason, carefully consider how your actions will affect your relationship with your other children and the relationship between them. Open communication may not always make everyone agree with your decisions, but it can at least provide all members of the family with a clear view of your wishes.

Suzanna De Baca is vice president of wealth strategies at Ameriprise Financial.

16 comments
JasonF
JasonF

For most families, a share-and-share alike will is most appropriate.


However, there is a time where equal is NOT fair or appropriate or fair:

-- One of the siblings has a (decades) long problem with alcoholism, substance abuse, gambling, trouble with the law, etc. Until that person cleans-up his or her act, giving money to that person fuels the addiction.  However, should the 'black sheep' stay clean and toe the line for five years, I would re-evaluate the situation and consider giving that sibling a larger portion.


-- When one of the siblings has a seriously disabled child. When this happens, one of the parents is probably going to stay home and be a full-time caretaker. That family is going to have huge expenses and is going to need help--especially making sure that the non-disabled siblings needs are not neglected. If it's a lifelong and severe disability, it's a good idea to consult an elder law attorney about setting up a trust for this child and how to leave money to it.


-- When one of the siblings is seriously disabled due to a situation that is not his or her fault. This becomes tricky when the healthy sibling(s) don't believe that the disabled sibling is really disabled. In that case, have a family meeting with the non-disabled sibling(s) only.  Discuss the disabled sibling's diagnosis, how it was made and the prognosis. You might want to ask for the disabled sibling's relevant medical reports. Explain to the non-disabled siblings that you are trying to set things up so that the disabled sibling doesn't become a burden on themselves. If the non-disabled siblings still hold to their guns, there's only one thing left to do--don't give them ANYTHING. Such a person is a good-for-nothing and and needs to fend for himself/herself.  If the non-disabled siblings are understanding, there are things that can be done--for example, buying each of them a long-term disability policy, in the estate, giving the disabled a few small trinkets and allowing the non-disabled to share and share alike the rest of the contents.


--When one of the siblings chooses a career that is morally and ethically satisfying but pays little. I know of a Jewish man who left half of his estate to his daughter, a schoolteacher married to another schoolteacher, and the rest to be split up between his sons who were money grubbing lawyers. He wrote an ethical will explaining exactly why he did what he did. The sons were not happy but the rabbi and others convinced them that he had acted appropriately and fairly. Had she married a successful accountant and not a schoolteacher, the father would have rewritten his will to a share and share alike will.


ALWAYS keep in mind that situations change. Re-evaluate your estate plan every five years OR when a significant event occurs.

ndelafuente49
ndelafuente49

The last child that is left behind with the elderly parents always gets all of the parents hard earned monies/pensions/401K/annuities/real estate etc even if they do well themselves. They also end up inheriting the older siblings monetary contributions to the struggling parents trying to raise a young family or the elderly parents needing money for medicines etc. If you are born last in a family you just hit the lottery for the first 50 years of your life. This is mainly due to the increasing dependency of the parents on their last child as they age into old age especially because their nest starts clearing.Older children always lose out because they become vulnerable because of their love for their parents and their inexperience at being cut throats. Parents can make tall promises to their earning sons and daughters to garnish their children's wages, promises that they had no intentions of keeping.Then turn around and give everything to the youngest one still at home and failing to launch or have launched but dont have the years yet to catch up the the older siblings earning potential. The parents feel guilty needlessly and blame themselves. They give extra help to the one left behind to overcome their own guilt. This is human nature. Unless all of their children are drug addicts or are in trouble with the law, parents do not have the ability to see their children impartially. This is the nature of the human being. Ultimately it is all about hitting the lottery one way or another. The odds of winning are in your favour if you are the child left behind in your parent's home or if you are the only child to your parent.

KarenWagoner
KarenWagoner

It is really sad that some people will sell their soul and hurt their siblings so badly just because of greed.  I don't know how people who steal their brothers or sisters inheritance can live with themselves, but God sees everything and I can't help thinking that justice will be served at some time, by him.

Bee12
Bee12

I'm dealing with the fallout from the above with my husband's side of the family.  His sister got $100,000 from their father about 15 years ago.  Left him on a pension, blind and my husband and I had to look after him as he had no other assets.  Her husband was at the time and still is on a well over six figure salary, we survive on my secretary's salary as my husband has health issues.  

My father in law has since died and his ex wife, my mother in law, came into $150k 3 years ago and immediately got invited to go live with my sister in law.  18 months later, when sister in law had run through all her money, we got a hysterical call from my mother in law that her daughter was throwing her out and my husband had to immediately drive 24 hours away to collect her in our small old hatchback.  We found out later that sister in law also got the one family heirloom that was suppose to go to my child, which was a small wooden hair comb that had belonged to her great great great grandmother on her father's side.  My mother in law had set aside the larger ivory comb set for her daughter's child.  Family tradition meant that my daughter was suppose to get the ivory set as the eldest granddaughter but as soon as my husband's niece was born two years after my daughter my mother in law decided she'd "break" tradition. Then she decided that my daughter didn't need "all" the wooden combs so she was only getting one because my sister in law wanted the others. Now its all gone to my sister in law.

Mother in law is now ill in hospital and my sister in law is planning on coming down to go through her mother's things to see if there is anything she should get and has already informed my husband that she wants the funeral insurance money as well.  Her mother isn't even dead yet and may yet live for another 30 years.  

My husband always knew there would be no inheritance for him.  We realised we wouldn't get a dime and didn't care but we looked after my father in law and we now have my parents to look after who are even older than my mother in law.  What is so annoying is that my sister in law drained over $250k from her parents, first one and then the other and then left us to look after them.   My mother in law still tries to borrow money out of my daughter's college fund, which on a secretary's salary is fairly minimal, so she can fly up and visit her daughter or buy things for her daughter's children.   She honestly cannot see how unfair it is and when she doesn't get her way she has "turns" which just happen to never happen when anyone is within sight of her.  She and her husband cheerily handed over all their money that was meant to give them a good financially secure life and then turned to us and expect us to take on an additional financial burden of looking after them as well as taking away our family time to run them around.  My mother in law even asked if I could borrow money from my family for her because her daughter ran up a $15k credit card bill on my mother in law's credit card while she was living with her.   

JulieTaylor
JulieTaylor

I had two brothers.  My older brother died ten years ago, then my dad died and then my mom.  My younger brother took the money my dad left me and wouldn't give it to me until I talked to him. (my brother)  He and I are estranged and I never got that money.  Mom sided with him and he felt very justified in keeping my inheritance.  Mom died and left me a trailer and left him a very nice house.  He was trustee and to this day hasn't shown me the trust even after I paid $500 to a lawyer to make him show it.  He tried to get me to sign a quit claim to the trailer and I wouldn't do it.  He has the house on the market in spite of this.   He kept everything she owned, inside and outside of the trailer and house including her vehicles.  He hasn't filed taxes since he was 20 yrs old and now he is 51.  He was enabled his whole life and now I am suffering the brunt of that enabling.  The whole thing leaves me very hurt and emotionally and psychologically confused.  Who would do that to their sister.  I also don't understand why my mom didn't make it so he couldn't take everything.  She used to tell me to not let him have everything, but didn't do anything to help.   I can't believe this is what our lives came to.

dgharris48
dgharris48

Talk about playing favorites, what about wanting to leave equal or more to the siblings who have not taken care of their parents and the one who has given up 10 yrs of their life is the one who is sitting on the sidelines?  I have lived with my 95 yr old mother for over 10 yrs.  Very manipulative and controlling.  In ten yrs I have had my brother come 4 times to give me 3 days off.  My baby sister is busy living life and my other sister is busy with family.  BUT me.....I am suppose to devote every minute to mom.  HOWEVER, she wants to make sure they are taken care of before the one who is taking care of her.....HELP me understand this one.

Foxlor
Foxlor

My mother always spent extra on my golden sibling and it was apparent to my spouse and previous significant others.  I never gave it much thought until this past year when my now widowed mother called me saying the "kids" (in their 50's) had not only cutbacks at work but a layoff and she had been helping them but now was down to several thousand dollars from her life insurance from my dads passing. Help, they are ready to lose the house.  Now I had in the past an accident that entailed me with a 2 year limited working condition. There was no financial assistance offer from my mother or sibling.  I told her they are adults they will have to work it out on their own. This after paying full freight on the kids kids university tuition as well as my siblings not to mention cars purchased for them.  Myself, I went back to school on the GI bill and worked weekends, not a semester of tuition or offer of a text book purchase. Oh yes, my sibling that can't balance a check book has been named executor of her estate; yes, my inheritance will be a doozy.  Now my mom has it mind that she will need my help since I have always been a saver and in my first house since college and the kids are in their third and heavily upside down. At least they will have the memories of their McMansion, Harleys, 4x4's, campers, Corvettes, big screen TV's, boats while my wife and I drove modest cars 10 years and still watch a cathode ray tube tv,but all paid for.  Yep, I am watching the Titanic sink and will not throw out any life preservers.

lokiii
lokiii

Family helps family, if the help is unending, then the ones doling out the aid need to reevaluate the situation and determine if the original cause is  still ongoing or have you turned into a welfare check.  People need to be allowed to crash and burn sometimes to get it together its sad to say.  Personally, I am glad my family helped me out when I was out of work for a year.  I can honestly say I would have been on the street without their help.  Now when I finally got my house back in order.  I did not necessarily have money to pay them back with immediately, but I did things that made a financial impact to them.  I rebuilt their fence for $600 when it would have cost $3000 for a company to come in and do it.  Now my brother kinda scratches his head when I get my parents nice gifts, but in my mind it's a way to show appreciation and give some back.

Thanks for all the help Mom and Dad

Commentonitall
Commentonitall

Reading this article I have come to realize a similar situation exists in my life.  I'm the youngest and only male in my family.  My parents are baby boomers raised in all the traditional trappings that go with that generation.  My sisters have received quite a bit of help over the years, while I made it all on my own.  I bought a house, I landed a job and I built my credit without asking for a dime.  I thought both my siblings had done the same.  Come to find out this is not necessarily the case.  My question is do people notice that if they are male their sisters get more help given similar circumstances to the ones I listed above?  Just curious.

ndelafuente49
ndelafuente49

@KarenWagoner  You become helpless and move on. God has already rewarded these greedy people with a lottery. How could he have done this if he was truly impartial?

purplegirl666
purplegirl666

@dgharris48 i know how you feel. my mom wants to transfer the house to my oldest brother. although, i currently live with her and take care of her. I was really hurt when she said that she trusts him only and none of the others siblings or myself. i want noting to do with my mom now. she disgusts me. i sacrifice so much for her and this is what i get? i wont sacrifice for her anymore. i told her that if she is incapacitated to make my brother responsible not me. im mot gonna take care of her if she doesn't feel that i deserve anything and she doesn't trust me. the hell with her!

ndelafuente49
ndelafuente49

@Commentonitall Hmm! In my family it was the other way around. My mother took my  sister's inheritance from my grandpa and my dad and handed it over to me. I'm the youngest and my sister older to me by 7 years and she put me through medical college after my Dad died. My mother made tall promises to her to leech off my sister and even had my sister postpone her marriage until I finished med school. Even then since my sister was already 29 years old, she could find a good husband and she married a homeless person of foreign origin. Before her marriage my sister also repaid the bank the mortgage that my Dad had taken on his home. It seemed like the harder my sister worked to keep a roof over her father's family, the more evil  and greedy my mom became. Then one fine day my sister came to know through relatives that my mother had told them that she had no intentions of giving my sister an equal share in my deceased Dad's real estate and that I was going to inherit it all. Can you believe a woman having no consciousness and so evil and lacking compassion for her own daughter?

JeffreyLeonardo
JeffreyLeonardo

Keith replied I cant believe that a stay at home mom able to make $7345 in one month on the computer. did you see this(Click on menu Home)  

Sandahl192
Sandahl192

I don't think gender is an issue.  There are many stories from sisters whose brother(s) were the favorite.