“They have no idea about money.” My daughter has a spending problem and her husband, who has a trust fund until he’s 30, says yes to everything she wants. But what happens when the money runs out? Do they need professional help?


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Question: I just spent six weeks trying to help my daughter and son-in-law buy a house. They have no idea about money and it’s a bad combination: My daughter knows she has a “spending” problem, which she admitted to her husband before they were married. Instead, my new son-in-law says yes to everything he wants and is the beneficiary of a trust that expires on his 30th birthday this year, but a cousin told him there will be more when he turns 35. He has no idea how to handle money and he is estranged from his parents (who could shed light on his future finances) because he married my daughter. Long story short, they fell out of escrow the day before closing due to an error the underwriters couldn’t ignore. Who should my children hire to find out what they have or will have and how to manage it? (Looking for a financial advisor too? This tool can help match you with an advisor who can meet your needs.)

Answer: First of all, these kids are lucky to have you looking out for them and their financial future. There seem to be two issues here: First, the couple has a spending problem and doesn’t seem to know how to budget and manage money, and second, they don’t know what’s in the trust and how it works.

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Let’s start with the first topic. To deal with spending, budgeting and other financial issues, you may want to hire a financial advisor for them. A financial advisor will be able to uncover what is important to your children and develop a plan to determine how to achieve their goals. “Depending on the advisor, services may include understanding their trust documents, determining how to manage their money and calculating their tax liability. Based on the information provided, it will be helpful to find an advisor who is a financial therapist or is willing to work with one,” says Certified Financial Advisor Danielle Miura of Spark Financials. A financial advisor without this definition will be able to create a financial plan, but unlikely to solve the original spending issue. “A financial therapist will be able to uncover financial issues that are preventing them from living the life they desire,” says Miura.

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Certified financial planner Blaine Thiederman of Progress Wealth Management says the person you should hire to help is probably a financial planner who specializes in behavior change and counseling clients to practice better financial behaviors. “I’m sure they recognize that they’re not kids anymore and that money doesn’t grow on trees, but it’s a difficult transition to slowly recognize that as adults, no one is going to save you if you make bad decisions,” says Thiederman. Indeed, it would be extremely helpful to educate your children on how to make smart financial decisions, receive their own incomes, live within their means, and not rely on a trust. “I worked in a trust office and saw a lot of times where guys who knew they had a bailout made all kinds of terrible decisions, so that’s all too common unfortunately,” says certified financial advisor Lauren Lindsay of Beacon Financial Planning.

An advisory-only certified financial planner may also be worth considering, as they charge a fixed hourly fee or fixed project rate for advice, without seeking to manage an investment portfolio or sell investment management products or services.

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A simple step you can take now—with or without professional help—is to help the couple make a budget. Thiederman recommends your daughter put together a budget like the one from gubemoney.com “because it’s a simple system and it works,” says Thiederman. It can also encourage them to take personal finance classes and read financial publications and blogs from established financial experts.

The second issue is what happens to the trust, and a financial planner won’t be able to help him figure out how much your son-in-law should expect from the trust. this is a discussion they should have with your groom’s family. It may have what is called a spendthrift trust – a trust designed so that the beneficiary cannot sell or assign his or her equitable interest in a trust property – which is commonly done by people who want to leave money to someone they feel is not she can handle it, Lindsay says.

“A trust will have a trustee who can be an individual or a corporate trustee, but it is very difficult to get information about a trustee if the trustee is unwilling to share the information and often a trust is set up so that the beneficiaries do not rely in trust for a living,” says Lindsay. It will be helpful for your son-in-law to talk to his family and depending on the state they live in, as a beneficiary, they may be entitled to a copy of the trust document, which may help them better understand the finances behind it

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