Money and family -- is there any combination that is more emotionally charged and fraught with the potential for lingering resentment? I can't think of one! Why is this true? And is there any way to defuse the strong feelings money issues arouse in family members?
A family shares things -- a home, their time, values and experiences --and the members support each other through their individual trials and triumphs. Each person contributes his or her talents and efforts and has a vested interest in the success of the family and all of the members of it. Rough patches and misunderstandings arise, but thanks to their undying bond everyone keeps their egos in check and does whatever it takes to make it work. It's all about unconditional acceptance.
Sound like your family? Not mine either. Or any real family I have known up close. It's an ideal we might strive for, but reality is much more complicated and messy. In most families some members make personal sacrifices and may occasionally--or even constantly--remind the others of what they have done. Many families have an overachiever and an underachiever; an ant and a grasshopper. Because real families are made up of imperfect people, these differences in ability and temperament are handled (and often mishandled) differently by each family. And every person perceives the words and actions of the others through his or her own unique filter. All of this makes families, even loving, well-meaning ones, emotional powder kegs.
Add to this volatile organism money, which triggers intense feelings of greed, fear, shame and power. Talking about money is taboo in many famililes; regardless, everyone in the family knows who has it and who doesn't. Inequality almost always leads to resentment, though it may be suppressed for many years in the name of keeping the peace. But over time, children grow to adulthood, parents age, possibly become disabled and eventually die, and issues boil to the surface.
What, if anything, can parents do to manage such an inherently explosive issue?
- Decide what you consider a fair way to dole out resources. Do you want to give an equal amount to each child, or do you want to provide extra support to a child who has struggled or chosen a path that has not led him or her to financial security? Your personal or family philosophy will inform this decision. When you meet with your financial planner and estate attorney, tell them your wishes so that they can help you incorporate them in plans and documents. Talk to your adult children about your choice as well -- they may not agree, but at least they will not make inaccurate assumptions or be surprised by what happens later on in life.
- Some families create a shared loan fund and leave it to their adult children to govern its use. A pool of money is set aside in an account that is available to all family members. Siblings may borrow from the fund, rather than hitting up mom and dad, as needed for education, down payments, etc. All participants must agree to repay responsibly so that the money is there when someone else needs it. This works well for families with an equal and strong sense of fairness and obligation.
- One child often bears more of the responsibility of caring for aging or ailing parents -- due to proximity or a strong caregiving personality or both. Consider providing reasonable compensation for these services. Too many times, the caregiving child grows resentful, and the sacrifices he or she has willingly chosen to make are thrown in the faces of other siblings on a regular basis. We've seen cases as well, where the caregiving child has started finding ways to compensate him or herself on the sly, triggering anger and resentment in the other siblings. It's better to recognize up front that the services provided have value and pay accordingly.
- Choosing your most capable child as your trustee and/or personal representative seems logical, but it creates tremendous tensions between siblings. Suddenly, one sibling has authority over the others. This magnifies any brewing resentments. A better solution might be to name a more neutral party to these roles -- another close family member or friend perhaps.
- Educating your children early and often about money issues may be the best way to inoculate your family against future money wars. While openly discussing money may seem unnatural and even rude in our culture, assuming your children will just pick it up and figure things out makes no more sense with regard to money than it does with sex or drugs.
Every family is unique and extraordinary, and dysfunctional in its own special way. It's worth giving some thought and care to how money issues are handled -- no need to make things any more difficult than they already are.
Annette Simon
Copyright 2009 Money Dames
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