When parents give away their money too early
Posted on February 18th, 2013 under Wealth of Advice
By Francisco J. Colayco
With the permission of our family friend, Ms. Letty Jacinto-Lopez, a renowned columnist of another newspaper, I would like to use her article and practically quote it. It is very relevant to one of the principles that I always teach. You must provide for your own retirement so that you will not expect your children to take care of you in your old age. In fact, as much as possible, you should program your personal financial plan so that when you die, you do not have anything because you spent it all or gave it away while you were alive. In the case of Ms. Letty’s story, her friends over-did the part about giving away all their money too early.
“At their 54th anniversary, my friends made a decision to distribute their combined assets among their living heirs. Their rationale, “Para walang gulo.” (To avoid trouble.) They added one proviso. “While still alive, income from these properties will be used to maintain our present lifestyle inclusive of medical expenses, occasional trips and personal shopping.”
“That’s ok with us replied their heirs. We will just be happy to spend what is available after your expenses..
The first year passed without a hitch, but soon the problem surfaced. Each child used all kinds of tactics to keep the money from his parents. It reached a point where the poor retirees had to beg for sustenance, robbing them of the dignity they worked hard to uphold.
What went wrong?
“Bad decision,” said a cautious friend who warned the couple of this scenario. “Children are so unreliable when it comes to inherited money.”
Money received, which was not expected and not a direct result of something they worked for is not given the same value as money earned with their own sweat and tears. They lose their sense of propriety; gratitude is tainted by greed and decency gone. This is compounded by in-laws who can tilt or convince their respective spouses to throw out good sense and filial affection like soiled rugs, “Honey, they’re going to die anyway, so why waste good money on them?”
As you can see, Ms. Letty’s friends thought they were following the principle of spending their money while they are alive. But if you are not in control of your money, then for all intents and purposes, it is no longer your money for your retirement.
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