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I have recently paid attention to calls for help by retirees seeking ways to support a needy child who is, for medical or mental reason, unable to manage to live independently without ongoing financial support. I resonate with such worry, which mirrors mine.
Naturally, I keep a warm heart for all my extended family members despite occasional differential preferences for some over others. My children, nieces and nephews follow the current US economy into a K-shaped future: some with up-sloping prospects, others heading straight down to poverty. Now the cold cash from settling my parents’ estate throws an urgency on the decision on how it is used effectively using a warm heart and a cool head.
I wish for my share of the money to go to the most financially needy family members. My (overthinking) analyses are as follows:
There is no right choice to pick, just a personal imagination of the future path for each choice. I invite those who care to share in this thought exercise. Thanks for reading and more.
Quan,
Did you consider a single premium immediate or deferred annuity? It would guarantee a monthly payment for life, protect the principle from them getting access to it, and remove the responsibility of you or someone else having to manage it and tell them “no, they can’t have it”.
Quan, you have a generous heart. When I read your post, the first thing I thought of was a family member who set up some kind of trust that would benefit multiple generations of his and his wife’s branch of the family, but it is restricted to education. Not just college, but even things like piano lessons for the youngest members. I bring it up as a thought to consider that is different than some of the others have said. Chris
I must confess I possess no knowledge of US medical, disability, and healthcare benefits or how these systems interact with income. I am unable to offer insight into your particular dilemma.
But perhaps an outsider’s perspective has value, I can only pose questions from uncertainty. So, I offer these thoughts for your consideration.
Must the solution be binary? Life rarely operates in absolutes, yet we often frame choices as stark either-or options. Might there exist a combination of different options?
Would a hybrid approach merit exploration? Perhaps modest engagement with your first option could preserve social and medical support while allowing some financial assistance during a crisis. This might grant you something invaluable: time to discern the long-term optimal solution.
Maybe a small step forward can create breathing room for deeper reflection.
Wise words, Mark. Your coffee must be extra good today!
You’re absolutely right about the overlap. I’m reminded of a 90-year-old friend who is currently agonizing over whether to stop funding alcohol rehab and legal bails for his 65-year-old son. While his ‘Cool Head’ wants to lock the money away in ‘Option 3’ (Emergency Only), his fatherly heart keeps pulling him back into ‘Option 2’ (Housing and Subsidy). It’s a stark reminder that a ‘Heartache’ can eventually cloud the ‘Head’—and that some family relationships simply cannot be managed by a spreadsheet.
My thought exercise is a vain effort to feel a degree of control in a random world of life.
I like door number three, and establishing, but not funding a SNT. I would make the SNT one of my beneficiaries. If appropriate, I’d think about buying life insurance, probably term, and naming the SNT as beneficiary.
Very interesting approach. My concern is the empty SNT with future funding means it essentially kicks the ‘Cool Head’ can down the road. It imposes the emotional and logistical burden of these difficult decision-making processes on another family member or the successor trustee. I’m wary of leaving behind a complex ‘safety net’ that requires someone else to do the heavy lifting I wasn’t willing to finish myself.
#1 is especially risky if there is any history of substance abuse. A nephew (son of my no-contact and by-then-deceased sibling) inherited lump sum cash from my father’s estate. Within months he died of a drug overdose. (My father had died two decades earlier, and his estate passed to us only when my stepmother recently died, so my dad would have had no reason to think this would happen.)
I would ask what I could do to change the trajectory straight down to poverty.
Why are they headed that way, could it be changed? Would giving them money in any way change it?
That is the heart of the ‘overthinking.’ While we’d love for money to be a pivot point for a better life, the reality of medical or mental health struggles is that they often move independently of a bank balance. Giving money can provide a ‘floor’ (housing/safety), but it doesn’t always provide a ‘ladder’ (upward mobility). My goal is to prevent a total crash without throwing good money after a situation that the recipient isn’t currently equipped to change.
The additional challenge is the structural reality of the ‘K-shaped’ economy: few opportunities are available for those with personal health or legal crises.
For the great majority of HD readers, our needy family members are old enough that attempting to change their downward trajectory through current expenditures is equivalent to buying a lottery ticket. They are wedded to their ways.
I’m dealing with the same issue in my family and I picked #3 for the win. The individual has not yet run out of money, but that day is coming. I try every few years to encourage frugality with zero effect. No work history, thus no Social Security. Asset rich, cash poor. The free money spigot recently closed.
I’ve set aside and invested a sum that should cover basic living expenses for 30 years after beginning monthly payments. My plan is to wait until all their assets are sold or lost through foreclosure, etc.
This has the added advantage of making me look like a hero when the time comes instead of a bum – there’s a hole in their bucket and filling it now is equivalent to transferring it to vendors of trinkets.
Another advantage to #3: if the impossible happens and they don’t need my help, it’ll add to my children’s inheritance.