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March 1, 2020, 4:21 p.m. EST

‘I’m worried that my daughter would blow through her inheritance.’ My family has a trust fund worth $6 million. Should I keep this money a secret from my kids?

‘My children had a lot of difficulty growing up and their father enabled a lot of behavior by giving them money well into their adulthood’

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By Quentin Fottrell, MarketWatch

Dear Moneyist, 

My parents, who are now deceased, had a living trust with a provision for creation of a new trust that would allow my brother and I to share the income from that trust during our lifetimes.

When we both die, the principal from that trust is to be distributed in equal parts to the three grandchildren (I had two children, my brother had one).

The Moneyist: My father left everything to my son. When I called the attorney about the will, my son got very upset. I now need financial help. Should I ask him for money?

Over the years, the principal in that trust has grown to over $6 million. As my brother and I are still in reasonably good health, I anticipate another 10 to 15 years before either of my children will see any of that money.

I have kept all of this information secret from my children (now ages 30 and 33). My children had a lot of difficulty growing up and their father (we are divorced) enabled a lot of behavior by giving them money well into their adulthood. Their father died about 1.5 years ago, so that money is no longer flowing.

The Moneyist: ‘My father has lived a life of crime and drugs. He threw away every opportunity we gave him.’ Now that he’s on disability, doesn’t he owe his kids something?

How and when should I tell my children about their ultimate inheritance? My son is working and could absorb the idea that his share of $2 million isn’t as much money as it sounds like. He would likely use income derived from it as a supplement, rather than a replacement for working income.

But my daughter has not arrived at hat point in her life yet, and I’m worried that my daughter would blow through her inheritance with little to show for it and a much worse life afterwards.

What should I do?

Cautious Mother

Dear Cautious,

Who gives advice columnists advice?

The answer to that question is directly related to my answer to your dilemma. I could give you my suggestion right now, but that is not often enough and this column would be over before it began. So please indulge me. Financial, legal and familial choices are fueled by emotion, ego and experience. I’d like to say that I could always trust myself, but that would be a lie.

Still, who wants advice from a braggadocio who tells everyone what to do, and stands on the highest mountain or sits in the studio of the highest-rated cable channel to do that? Who would trust someone who always claims to be right and never puts a foot wrong? As Johnny Lydon sang, “I could be wrong, I could be right.” I’m not sure there is a right/wrong answer here.

Also see: ‘My daughter has been chiding me for frivolously spending her inheritance. Now she won’t speak to me’

A few years ago, I asked a friend who spent years in special ops in the U.S. military in war zones overseas the secret to figuring out complex mysteries and moral dilemmas, and how he knew who to trust. After all, he was highly trained and scoped out dangerous territories in foreign lands with unexpected dangers lurking around every corner. His answer: “I trust my gut.”

The Moneyist: My husband watches TV all day while I cook and clean. He has a monthly income of $8K and a P.O. box to hide his finances. I found his will — and it left me reeling

That — finally! — is what I advise you to do now. If your children are on an upward trajectory, and they have learned to stand on their own two feet and they are focused on putting good into the world, being productive members of society, while supporting themselves and/or their families, marvel at their achievements from a respectful distance. Help them with their financial planning.

You may be able to structure their respective trusts in a way that gives them enough freedom to make their own decisions, while providing them with the funds if/when they need them, and making sure there’s enough there for their own children’s education. But perhaps intervene to assist with a deposit on a house, or further education.

David Cechanowicz, a financial planner in Albuquerque, N.M., says, “Sometimes, a grandparent will give their income-beneficiary child the right to make distributions from his or her share of their trust while living to their children. If that provision exists, then perhaps you could make some small distributions to the kids to start them on a journey of learning how to handle money.”

You could release money in installments when your children are 35, 40, 45 and 50 years of age, provide them with an income that gradually increases over time, set up joint investment accounts, and/or use a portion of them money to teach them about saving, such as maximizing their 401(k). Or you could structure it as I suggested above. It obviously depends on the rules of the trust.

The Moneyist: ‘What did he do with all the money?’ My dying husband cashed his $700K life insurance and emptied his bank accounts

Sometimes, the hardest thing to do is to do nothing at all. If your stock portfolio hit a bump, like the markets have done this week, you would be wise not to act without consulting your broker. If your Patek Philippe watch made from sapphires and alligator leather was working like a charm, you wouldn’t start shaking it, and wishing it would run faster.

Did your children have problems choosing a career and/or a failure to launch? Or did they sit at home all day smoking marijuana or, worse, have more serious issues with alcohol or harder drugs? Or...? So I suggest you do what any parents, with or without millions of dollars in a trust fund. Stay engaged in their lives, see opportunities to help, and keep an eye on their progress.

“The larger moral of this story is that there are most probably no changes that can be made to the trust,” Cechanowicz says. “There might be a provision that the trustee could make optional and meritorious distributions to the grandchildren, but then you would need to consult with an attorney to read the original document and see if there were such provisions to fund the lives of your children.”

Review the state of play annually. Trust must be earned, but it also requires a leap of faith.

Do you have questions about inheritance, tipping, weddings, family feuds, friends or any tricky issues relating to manners and money? Send them to MarketWatch’s Moneyist and please include the state where you live (no full names will be used).

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Hello there, MarketWatchers. Check out the Moneyist private Facebook group where we look for answers to life’s thorniest money issues. Readers write in to me with all sorts of dilemmas: inheritance, wills, divorce, tipping, gifting. I often talk to lawyers, accountants, financial advisers and other experts, in addition to offering my own thoughts. I receive more letters than I could ever answer, so I’ll be bringing all of that guidance — including some you might not see in these columns — to this group. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.

Quentin Fottrell is MarketWatch's personal-finance editor and The Moneyist columnist for MarketWatch. You can follow him on Twitter @quantanamo.

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