Economic Subsidies Can Be Harmful to your Heirs
Siblings Joe and Jane (names changed) were a couple of years apart in age. Their Mom and Dad raised them in the same household, gave them the same allowance, assigned them corresponding chores to contribute to the family work, showed them the same thrifty examples and ethical bill paying behavior. Their Mom and Dad taught both to save for the things they wanted. Joe and Jane both thanked their Mom and Dad for paying their tuition, room and board through 4 years of college.
But then their paths diverged.
Joe married, was drafted into the Army. While in the Army he divorced and moved back home with his Mom and Dad. He lived with them without contributing until they forced the issue. Although he then found a salaried job, Joe continued to live with his Mom and Dad, paying minimal amounts towards the household expenses. Joe was subsidized by Mom and Dad. He learned that is was OK to be addicted to their financial help.
Jane also married, but went to work in a management trainee job. When her husband enlisted in the service, she followed to his assigned base and worked part time during her first pregnancy. They were very poor but (following the honorable discharge) continued to save and work towards the day when they would be economically stable. This couple did not request, nor were they offered, economic subsidies. They learned to be self-sufficient.
Joe and Jane both knew that their Mom and Dad had managed to scrape together a considerable sum of money and that they were to be the main inheritors. When first their Mom and later their Dad died, Joe and Jane did inherit a sizable sum of money in the form of stocks and bonds. This money was split fairly evenly between them.
This economic windfall came at a critical point for Joe – following shortly on his loosing his job. Having the money enabled him to avoid seeking a new job. He became dependent on the inheritance for his day to day living expenses – continuing his addiction to his Mom and Dads economic assistance.
The inheritance did not reach Jane at a critical point. She was immersed in a productive, satisfying career at the time. She continued to be self-sufficient.
Today, Joe is broke, living in his Mom and Dad’s house (which is in dire need of repair and has no insurance) owing money to just about everyone.
Today, Jane is still married, still employed and has taught herself investment principles to continue to grow the inheritances received. She occasionally provides financial assistance to Joe.
The above facts reflect that Joe’s Mom and Dad provided economic subsidies at critical points in Joe’s life. It altered Joe’s view of what life owed him. He saw that his needs were met without his contributions. This inhibited his ability to find his way financially. He came to expect the world to take care of him.
Psychologists and counselors indicate that this addition to remittance is a potential hazard to heirs.
Offering economic subsidies to your offspring at critical points can damage, instead of helping, them. Inheritors (indeed all people) need to be presented with the opportunity to overcome difficulties in order to develop a strong sense of self sufficiency.