The following is from today's Wall Street Journal in an article written by Veronica Dagher.
In my 40 years of practice enabling is one of the most difficult facets of estate planning to cope with. By the time a parent is ready to begin serious planning the behavior has already been established. What to do when the parent is gone is often a difficult question. Some call it entitlement but it’s really the same thing. The younger generation has great expectations of what they think they will receive form their parents.
In this article the author recognizes the problem and offers some guidance.
Financial enabling is a common trap for parents who want to help their adult children who are in chronic financial trouble, says Brad Klontz, a Lihue, Hawaii, financial psychologist.
Mr. Klontz worked with a 75-year-old woman who had given her 52-year-old son a total of $150,000 over five years for various business ventures, all of which were ill-conceived and failed. She was having trouble saying "no" when the son asked for another $50,000, even though her own financial security was at risk as her savings were dwindling.
"Money for doing nothing creates more doing nothing," says Mr. Klontz.
Laura Scharr-Bykowsky has seen many grandparents rack up large amounts of credit-card debt and give away the last of their savings to fund their grandchildren's tuition or vacations.
They may have a desire to spoil their children or grandchildren, want to get their attention, don't want to renege on a promise they made when they were in a better financial situation or feel guilty for not seeing them more, says Ms. Scharr-Bykowsky, a financial planner in Columbia, S.C.
If enabling has been going on for years, it can be difficult to stop doing it "cold turkey," says Mr. Klontz. For enablers, it can be important to recognize that their efforts to help backfired or have been reinforcing dependence.
Mr. Klontz says it's also important to set up a timeline to withdraw financial support, say, in six months, and perhaps explore other ways to help such as paying for a financial plan, a career counselor or a therapist.
Ms. Scharr-Bykowsky counsels clients to reduce support to their kids and stop altogether when they are gainfully employed. Then, she says, the parents can make gifts periodically, but only if their adult child is being financially responsible.
"The most important word a parent needs to use is 'no' or else they'll have an entitlement problem to deal with," says Ms. Scharr-Bykowsky.
"No" is a very powerful word; the problem is saying it and sticking to it.
In some cases trusts can be used with independent trustees to make critical decisions which can ameliorate the problem to some extent.