Intergenerational Generosity – The Wise Route

Surprisingly, there are quite a number of cases where wealthy parents make a regular monetary contribution for the benefit of their married child’s family. It might be a mortgage payment or a regular monthly gift and is often done as an estate planning measure by the wealthy parents. But when the married child gets divorced, this generosity may stop. The problem is that the married child’s family may have become dependent on this generosity in order to meet its obligations.

What do the courts do? Almost universally, they do not allow the family of the married child to suffer from the withdrawal of these funds. The way they do this is to impose on the child of the wealthy parents the obligation to continue to provide for his or her spouse and children, in the same manner they had become accustomed to during the marriage.

According to attorney Alton L. Abramowitz, in an article he posted in the New York Law Journal, the courts are saying to the child of such wealthy parents, “Your family subsidized this lifestyle before this divorce; there is no reason for them to cease doing so; and, if they do or if they have done so, the court is nevertheless going to direct you to continue to provide this lifestyle to your non-monied spouse and children. And, by implication, if you don’t support your family there are consequences that will be paid, be it by contempt of court, sanctions, unequal division of assets in favor of the non-monied spouse, etc.”

If you happen to be the “wealthy parent,” keep in mind that the lifestyle you are helping to create may have to be maintained by your child, even if your contribution stops. Rather than giving the money directly to your child’s family, perhaps a better idea would be to contribute to a college savings plan for your grandchildren, provide the family with a nice vacation, or help them with a down payment on a house. Just avoid sending a regular monthly check. This way you can help your child’s family without creating a legal obligation that you might someday regret.