Parenting Grown Children: What Dr. Spock Forgot to Tell Us

Money Matters: Health insurance for your grown kids is not an indulgence

Paterfamilias and I had dinner with friends the other night--friends whose oldest child is about to graduate from college. They are recovering from the $50,000 a year it's been costing them and looking forward to his independence, particularly his financial independence. He doesn't, of course, know exactly what he wants to do. He's hoping to take a year or two to figure it out.

That brought back a lot of memories for me and the pater. When our kids graduated from college--lickety-split, within one year of each other (talk about recovering from tuition stress)--our daughter headed out to the West Coast : She loved painting and wanted to be an artist. Our son went to New England: He wanted to see if he could make it as a writer. Both of them took part time jobs to support themselves--to pay their share of a shared room in a group house and their share of the spaghetti that they lived on. So they were independent--except that they did not put aside any of their earnings from part-time work for health insurance. Naturally not. What 22-year-old who has had nothing more than some sports-related injuries to deal with, thinks about health care coverage.

But we did. There they were, far from home and on their own. But what if something terrible happened to them--an illness that put them in the hospital or required high-priced specialist care. Naturally, we'd want to make sure they were in the best hospital for their problem and hire the best physicians we could find. There is nothing in life that we love or treasure more than our children. So we took out so-called catastrophic health insurance policies for them. I say for them--it was not something they were going to do. And we didn't see it as an indulgence. We weren't insuring them so much as our assets. A 10-day stay in a hospital and a few visits to a specialist could wipe out our savings.

Our friends at dinner hadn't had the chance to think this little "dependence" issue through yet. One thing that has changed in the past year or two is that several states have passed laws allowing parents to cover their adult children--most set limits at 26 years of ag but in Florida, it's 30.

Insurance for those young adults is something worth planning for. We'll all need our assets for the little luxuries of life for our children's children--when they finally arrive.

Empty Nesters: Filling the adult child's nest--with you

Lots of self-help tips for parents of grown children center on what to do when the adult kids move back to the family home. But now there's a new trend: The U.S. Census reports that there is a 75 percent increase in parents under the age of 65 who are now living with their adult children--in their children's homes.

What's behind this reverse trend? Some of it is the troubled economy--foreclosures, loss of jobs (older baby boomers have a particularly tough time re-attaching once they've lost employment) and overall difficulty making ends meet. 

According to the census data, the average size of both families and households grew from 2000 to 2007, after shrinking slightly in the 1990s. The average family in 2007 had 3.2 people, up from 3.14 in 2000.

Money Matters: The Brits are just like us.

The Brits are not just our friends across the pond: They seem to be very much like us when it comes to giving their adult children a financial boost. A recent survey by the insurance company Liverpool Victoria had these findings:

94  percent of parents surveyed still make financial contributions to their children's education and major financial purchases, such as houses and cars.

55 percent assist with general costs of living, even more so during the credit crunch.

In the current economic climate [it's just as bad over there as it is here], the parents are the hardest hit and tend to bypass their own needs to help out the kids.

Eight out of 10 of those with grandchildren were helping to support both generations

Almost half of parents aged 70 or older said they were still helping their children financially.

Almost two-thirds of mums and dads said they helped their adult children because "they need the assistance", while 17 per cent said their child had asked them for financial support.

Money Matters: How much of a helping hand do we owe our children

A recent blog on Tellinitlikeitis, looks at the issue of what we owe our adult children. Grown children who demand help buying a house or regular babysitting or loans that are really gifts--that can feel like parental failure, and parents may be culpable for being enablers when this happens. Many of us get much joy from giving our children gifts--significant gifts such as help with a down payment on a house. But things can get out of hand.
For those in that position--their adult children are demanding, whether it's for goods or services--may be interested in this point in the blog:

"When children become adults, parents do not owe them a down payment on a house or money for the furniture. Parents do not have an obligation to baby-sit or to take their grandchildren into their home when the parents go on vacation. If parents want to do it, it is a favor, not an obligation. Parents do not “owe” their grown children financial help or an inheritance regardless of how much money a parent has. Parents must learn to cut the financial umbilical cord for their own sake and for the sake of their children."

Here are some books that address the point: Eileen Gallo and  John J. Gallo,: Silver Spoon Kids : How Successful Parents Raise Responsible Children; Gary W. Buffone: Choking on the Silver Spoon: Keeping Your Kids Healthy, Wealthy and Wise in a Land of Plenty.

Money Matters: Helping support a grown child

At last, a financial planner who isn't all bean-counter and estate-protector. There is, says Aaron Katsman, more to having an adult child move back home than rental agreements or fees for food. And more to providing them with a temporary stipend than a loan contract.

Keying in on the recent, economy-based phenomenon of older adult children--in their 30s and 40s--losing a job and either moving back home or needing significant financial assistance, he makes some points that struck a common-sense chord with me:

"Isn’t the point of having money, aside for trying to provide a comfortable lifestyle, to try and help out those less fortunate? Wouldn’t a struggling daughter fit that bill?"

"If parents are themselves stretched financially, they don’t have to actually shell out money for the child. Rather, they can provide a roof and help that way."

"Neither parents nor children view moving back home as a desirable outcome, but if left with no choice, would you actually refuse to support your child?"

You can read more on this blog, http://bizzywomen.com/

Money Matters: Letting the kids in on estate planning

A few weeks ago I blogged about having "The Chat" with your grown children--the chat being about where your assets are and how they can track them down when you're no longer here to tell them. When my mother had The Chat with me, it always gave me the creeps. And now I  am my mother.

Here's an update on letting your adult children know about your estate planning, with advice from legal experts in this article. The key point: Regardless of the wealth of a family, "an annual family meeting can help you create a comfortable forum for discussing your values, priorities and goals related to managing money -- and important details about your wishes for the disposition of your estate. Family meetings also enable parents to clarify their intentions related to any possible misunderstanding that might arise from disproportionate splits of an estate. This is especially important when re-marriages and second families are involved, or when parents want to name charities or unknown entities as beneficiaries."

A practical note: "Identify your executor and specify where you keep your will and other important documents and investment account statements. ...At least one family member should be aware of the location of important records."

There now, that shouldn't be too bad. If only we could divorce money from emotion.

Re-Nesting: To have or have not a contract with your adult children

Parents of 20-somethings--especially recent college graduates--are experiencing a steady march of children returning to the nest. It's a hostile economy out there: difficult job market; horrendous credit crunch; rising prices for everything. And it's not just the 20-somethings, as the reports noted in earlier blog entries make clear. But all that raises the question of what sort of rules should parents set when the kids come back to the nest.
An interesting discussion of the issue is in a recent College Times story:

Written contract or no?  "Experts say there is no right answer because the dynamics of each family are different." That said, CT's experts say, it's important "to have a plan, preferably in writing, that spells out the new relationship. It can be as simple as a contribution toward household expenses, or it can be chapter and verse, but the reunited family needs rules."
One of the experts quoted is John  L. Graham, a business professor at University of California at Irvine who co-authored a book about the move-back phenomenon, "Together Again, A Creative Guide to Successful Multigenerational Living." It's not only about young adults returning to the nest but elderly parents moving in as well.

Re-Nesting: They can go home again

We've got yet another study on grown children and money. This time it's not about how we parents are helping them pay their bills or buy a house  (we can be so wonderfully generous, can't we?), but about the pressures that force them home again and how we ought to deal with the boomerang kids.

A recent story in the Washington Post looked at the three-year trend for moving back home: nearly half the about-to-be college grads plan to do so after they graduate. The survey, courtesy of MonsterTrak, also found an uptick in this year's rate-of-return: where 22 percent of last year's survey respondents said they planned to live at home for six months or so, a year later, 43 percent of them are still there. Chief among the reasons for staying put:debt--college loan and credit card.

Moving back home for an extended time isn't necessarily healthy for either the parents or the grown children. They lose their independence and we get to see our grown child's habits up close and personal.

The Post story listed some issues that should be discussed "before the bags are unpacked." These start with rent [will it be levied], length of stay and personal financial information.  The experts quoted in the story say we parents have a right to that information in order to keep tabs on our adult child's progress toward independence [and a move out of the house].  "If they don't want to be accountable to you,"  the advice reads, "then they need to get up and out of your house."

Tough love. And a form of love that doesn't sit too well with some of us. Having to have a contract with our children? Ick. Charging them rent? You'd have to be in desperate financial straits--unless you were putting it in a savings account for them so they'd have a nest egg ready when they're ready to move onward and out.

Any other thoughts on where you'd come down on dealing with a re-feathered nest?

Money Matters: Setting limits when you make a loan

When you lend your grown kids money--and it's a loan, not a gift--you may be risking a whole new set of pressures on your relationship. "What seems straightforward can become a straitjacket if families aren't careful," a recent news story reports. It asks the key questions:  How do you keep family harmony when money is given to one child and not others? What happens if a son or daughter can't -- or won't -- repay the loan?

Some pointers::

1. Call it what it is--a loan or a gift? If you actually don't expect any payback, give the money unconditionally; otherwise it's not really a gift, but a debt in grandiose disguise.

A loan is much more work.

2. Discuss the need.

"If parents are going to be the bank, they should act like the bank," says a financial adviser. "You've got to treat it seriously; kids need to understand this is not petty cash."

3. Keep it simple

Draft a document stating how the loan will be structured. Get a promissory note in writing and set a repayment schedule. "You've got to set the tone. All the other family members are watching."

4. Don't play favorites

Not all children are the same, but parents generally prefer to keep things equal among their children. 

One solution is to reduce the borrower's share of a trust or inheritance by the amount of the loan, which counts as part of your assets.

Final words of advice from a financial adviser: "If you've got a challenging relationship with your kids, you for sure don't want to be their banker. If you have a good relationship with your kids, you want to be careful about being their banker. Nothing can make a good relationship go bad than money." 

Re-Nesting: It's not just the 20-somethings who are moving back home

Here's a shocker of a report: Grown children are moving back in with their parents. Not just the 20 somethings who are starting to make their way in the world, but the 40s and even 50s who have been out in the world and on their own. The slumping economy and credit crunch have a lot to do with it. You might say, everything to do with it.

The trend has become notable in the past six months. The grown children who move back in are either single, single-again, laid off from a job, unable to make ends meet with the job they have or hoping a brief time at home at no- or low-cost will help them put together the wherewithal to buy a house or move up in the world. You can read a recent AP story here.

One point the story makes is this: Such moves can be a drain on parental retirement resources, and financial advisers are saying that they have to show their clients--the parents--where to draw the financial line.

It's a point an AARP story makes even when it's younger grown children who move back home. There's a need to plan for it--emotionally as well as fiscally.