Viking Magazine - July 2012 - 25

Think about how you might
feel if the money is not repaid.
" Ask yourself: 'If the money
is not repaid, can I view this
as a gift or will I have negative
feelings?' " says Neiser. Mixing
money and family can lead to
strong emotions and sometimes
lingering resentment.
When a child approaches you,
don't berate-be supportive, says
Lynn Ballou, managing partner
of Ballou Plum Wealth Advisors
in Lafayette, Calif. " They
are probably very vulnerable
and embarrassed about their
situation, " she says. " If they are
in fi nancial straits due to the
economic downturn, this is the
time to step up to the plate and
let the family values you have
instilled and nurtured for many
years guide the way. " Children,
even as adults, want parents to
be proud of them and they may
feel guilty, Ballou says. Avoid
suggesting immediate fi xes.
Instead, ask lots of
probing, loving,
intelligent questions
to fi nd out
how they got to
this point, and
ask them how
they think it can
be solved.
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Helping out an adult child
can be a teachable moment,
Neiser says. Before you give
a loan, you might make some
conditions, such as asking
to see their credit score and
discussing long-term goals. Or
suggest outside help, such as a
money management workshop,
a few hours with your fi nancial
planner, or if needed, a marriage
counselor.
" What you don't want to do
is become the endless ATM, "
Ballou says. " You don't want
to just give them a debit card
with no limit and have them
keep coming to you. Ask
grown-up questions and give
grown-up choices. "
Doing more than you can
afford can create fi nancial instability
in your own life that, in
the run long run, hurts everyone.
Adult children may not know
your fi nancial constraints, and
there are other ways you could
help, such as offering a free
place to stay-temporarily-
with an end date agreed on in
advance, adds Ballou.
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If you decide on a gift, check
out the tax implications. The
IRS allows an annual taxfree
gift of $13,000 to
an individual. If a
loan is not repaid, it
may be considered
a gift by the IRS,
cautions Neiser.
With a loan to
a family member,
put the terms into
writing, suggests
Neiser. " It sends the
signal that you are serious, " he
says. It forces the adult child to
think about it and gives them an
example of how loans work for
future reference.
In families, it's often diffi cult
to keep money issues private,
Ballou says. If lending or giving
to one child is an issue to another,
consider acknowledging
it in your will. You can have
the gift deducted from their
share of your estate when
you pass away. " This will
help with the 'fairness factor,'
which is important to take
into account in these situations, "
she says.
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Viking Magazine - July 2012

Table of Contents for the Digital Edition of Viking Magazine - July 2012
