Lots of retirees are interested in assisting their adult children financially these days. The children, now in their 30s, 40s or 50s, may have lost a job, gotten a divorce or have their own children ready to go to college.
But the parents themselves may find themselves in a precarious position – they don’t want to deplete their retirement savings.
A story in the Wall Street Journal says the parents first responsibility is to themselves. They raised their children and now they must make sure they have the money to keep themselves going. They may live to 90 or older.
Still, the article says, many parents want to help. So the writer suggests making a loan as an advance on the child’s inheritance. The child must sign a promissory note at low interest due in 30 years or when the estate settles.
It is a method to give one child some money while still treating all the children equally. The money gets repaid to the estate.
The children may appreciate it too because it is not a handout.
A third way to help is to guarantee a bank loan.
Yet another way is a one time gift that is exempted from federal taxes to a child in bad straits. But the author says this should be a one-time deal.