How to Help Your Adult Children Who Are Struggling Financially

How to Help Your Adult Children Who Are Struggling Financially

 

Co-written by: Aimee Butler & Moorea Monaco

 

COVID-19 has impacted jobs across all sectors, and State Unemployment Agencies are reporting an unprecedented backlog of claims. We have been hearing from our clients of a desire to assist their adult children financially. Many of the questions include how and what kind of support to provide and if it makes sense. If you are in this situation, here are some ideas on how to temporarily assist your adult children during a financial emergency.

 

DO

  • Start an emergency cash fund for your child.
    • Make a one-time deposit or smaller, more frequent deposits to a high-yield savings account (like Flourish).
    • Fun idea: Many banks or credit unions offer change deposit programs. They’ll round up your debit card purchases and transfer the extra change to a savings account. Think of it as a “Change Jar.” It adds up quicker than you think!
    • When your child encounters a financial emergency, make one-time distributions or loan them the money. Anything they payback can be put back into the savings account for future needs.
  • Gift them highly appreciated shares of stocks or mutual funds from your Non-Retirement accounts.
    • It could potentially benefit you by helping you avoid the capital gains tax if you sold the shares while they were still in your account.
    • After the shares are gifted to your child, they can choose when to sell the assets, and they will incur any capital gains tax on what is sold. Structuring your giving this way can potentially reduce taxes for the family.
    • Discuss this option with your Merriman Wealth Advisor to make sure it fits into your Financial Plan.
  • Offer small cash loans to cover emergency expenses.
    • Discuss a payment plan that can start once your child’s financial situation improves.
    • If mutually agreed upon, an interest-free loan with a small monthly payment is still more helpful than anything any bank could provide to them.
    • It never hurts to have the agreement in writing and signed by both parties.
  • If you can’t provide an infusion of cash, little gifts can still make a big difference!
    • Give gas or grocery store gift cards when you can.
    • Meal prep large casseroles or frozen meals that can be heated quickly and serve many portions.
    • Offer childcare when you can.
  • Help them review all options in their own financial life.
    • They may be able to take a special distribution from their own IRAs or 401(k)s for hardships due to COVID-19.
    • Introduce them to your Merriman advisor to help guide the review process.

DO NOT

  • Do not co-sign a loan for your child. As much as you want to help them, you could become liable for the loan, and it can negatively impact your credit history.
  • Do not ignore the tax ramifications of using retirement assets such as IRAs or annuities to give cash to your child. These assets can be taxed as ordinary income and have the potential of significantly increasing your income tax liability.
  • Do not stretch your own finances too thin. You need to protect your financial security first. We always recommend discussing large gifts with your Merriman Wealth Advisor, whether they be to charity or a loved one.

 

As parents, it can be extremely difficult to watch our children struggle financially and equally as hard to balance helping and overreaching. When making these types of decisions, we find that an objective third party like our advisors can help you make a decision that works for everyone. We encourage you to reach out if you need guidance with how best to help. We are here for you and your family.

 

Employee Spotlight | Paresh Kamdar

Employee Spotlight | Paresh Kamdar


Aimee: How did you come to Merriman?

Paresh: While working at Charles Schwab as a Private Client Relationship Manager, I was helping clients find RIA firms that were a good fit for their personality. What I found was that the clients I sent to Merriman were happier, they never came back to me for another referral. I went to see Paul Merriman speak several times, and 13 years ago on the Friday after Thanksgiving, Jeff Merriman, Paul Merriman’s son, called and asked me to come to Merriman.

Aimee: Why did you say yes?

Paresh: I primarily came for the investment philosophy and after talking to clients who worked with Merriman, I felt there was a better way to measure client success than just the performance of funds.

Aimee: You are quite the adventurer, what’s the next adventure you are going on?

Paresh: My next vacation is a back-country skiing trip to the Valkyr Lodge in British Columbia with our best friends; it’s my favorite week of the year. We have been taking trips like this for 13 years now. We take a helicopter to access the Lodge and then spend the week connecting with friends, climbing and skiing. We bring in all our food and gear and every night we make dinner together. We are completely “off the grid” (and no WIFI) for the week.  The wood stove in the sauna heats up the water for a hot shower and we do have a satellite phone for weather information or emergencies.

Aimee: What is your favorite activity on a day off?

Paresh: That is seasonally dependent, but I like skiing, backpacking, climbing, and mountain biking with friends.

Aimee: Tell me about your family.

Paresh: My wife, Sibylle is a veterinarian. We have a dog, Bodie and he is a great little guy. We go camping with him a lot.  We’re also fortunate to have my folks, my brother, his wife, and their boys here in town.  We get to spend a lot of time together.

Aimee: Does your dog, Bodie, love to go camping?

Paresh: It’s probably more for our amusement. I think for him, his morning walk is the best.

Aimee: What’s your favorite food?

Paresh: It’s Pho season now! I am a lover of Vietnamese soup, ramen and tacos!

Aimee: What’s your favorite quote?

Paresh: Part of Attitude by Chuck Swindoll. “The longer I live, the more I realize the impact of attitude on life… Attitude is more important than education, than money, than circumstances, than failures, than successes, than what other people say or do…We cannot change our past… we cannot change the fact that people will act a certain way. We cannot change the inevitable. The only thing you can do is play on the one string we have, and that is our attitude. I am convinced that life is 10% what happens to me and 90% how I react to it.”

Why Advisors Need Advisors

Why Advisors Need Advisors

Have you ever heard the proverb about the cobbler’s children? It essentially states that the cobbler’s children, although surrounded by well-made shoes, have the most worn out shoes. Or that doctors are the worst patients? The same can be said for wealth advisors. We’re not immune to the common mistakes that exist in the financial world, and even we can benefit from the financial guidance we provide for others.

As a new advisor, I had an epiphany. Yes, an epiphany, as corny as that sounds. I realized that although I could adequately pick investments, decide on a savings plan and develop a strategy for myself, I wasn’t following through with it. While at a client meeting, my coworker explained it best by saying, “We help hold you accountable to your goals.” Duh! That was the thing I was not giving myself. I could make the best laid plan, but I wasn’t following through and doing the actions I needed to do to be successful. I had the knowledge, but needed accountability. The very next day I hired my first advisor. (more…)

Employee Spotlight | Geoff Curran

Employee Spotlight | Geoff Curran

Aimee: How did you come to Merriman?

Geoff: I was working at TD Ameritrade and Merriman was on our advisor referral platform. I was introduced to the firm by Michael Van Sant, and at one point took a tour of the office. On that tour, I started to feel like this was where I was supposed to work. My colleagues from TD Ameritrade even returned from the visit and remarked it was where I belonged, after they visited the office. I started working at Merriman less than six months later!

Aimee: What do you do at Merriman?

Geoff: I am a wealth advisor, have never been anything else here.

Aimee: What do you love about working here?

Geoff: I love the people. Financial advising is a team sport, and it’s not fun to do alone. I have a lot of fun meeting with clients and having the team to recap the meetings with. Debriefing with the team on how we are doing in helping clients is great.

Aimee: What is a fun fact about you?

Geoff: I was born with club feet and couldn’t really walk until kindergarten, but in high school I ran track and played soccer and basketball. Also, I have a favorite dance move called “The Stomp”. I stomp my right foot to the music, people around me need to watch out for their feet and toes!

Aimee: How do you spend your free time?

Geoff: Everyday my wife, Christina, and I walk our dog, Archie, rain or shine. Otherwise, we enjoy being homebodies or adventuring around Gig Harbor, Washington. I read thriller novels and like to finish the whole series. I just finished a 17-book series. I am also on the investment committees for the Tacoma Employees Retirement System Pension and Greater Tacoma Community Foundation. It is really rewarding to provide advice to institutions and be a part of the action.

Aimee: What’s next?

Geoff: We are expecting our first child in late April (any day now!).  I hope to one day take the LSAT and enroll in a hybrid/virtual law program so that I can provide our clients with legal advice too!