Updated: Mar 26, 2019
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One of the benefits wealth gives us is an ability to be financially generous to friends and family members. For many of us, the primary reason why we build wealth and make sacrifices is to provide and share it with others.
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In theory, sharing wealth and making monetary gifts is always easy. It can be if the giving is done responsibly. However, money has the potential to complicate relationships, even among the closest spouses and families. These complications can end up being disruptive or even destructive to the family dynamic.
 
When a person or a couple wants to share wealth, they should do so with clear intentions, a thoughtful plan, and an awareness of the effects it will have on others. We have helped many clients and families over the years share their accumulated wealth. Here are some of the lessons we have learned along the way.
 
When a person or a couple wants to share wealth, they should do so with clear intentions, a thoughtful plan, and an awareness of the effects it will have on others. We have helped many clients and families over the years share their accumulated wealth. Here are some of the lessons we have learned along the way.
 
Spouses should agree on sharing wealth—Marriage is a partnership. Spouses certainly can act independently and make their own individual decisions about money, but it falls upon each spouse to understand how the sharing of their joint wealth would impact the other.
Let’s say there’s a married couple where one spouse is conservative and worries about running out of money, but the other is more generous and wants to share the couple’s wealth with family members. The different approaches to managing wealth are likely representative of deeper values or beliefs each spouse has about money. It’s likely this couple has dealt with these differences throughout their married lives. Now that they’ve accumulated enough wealth to share, they should continue to be open when discussing what they want to do with their money and conscientious of the other spouse’s feelings and beliefs about it.
 
Sharing has its limits—There is something to be said for not always having sufficient financial resources. It can make a person work harder and be more thoughtful about saving on their own. When someone doesn’t have to work or save and instead relies on the generosity of others, there is little incentive for them to be smart or prudent about money.
 
That doesn’t mean you should never give money to help with a specific financial need. However, you could bequeath your financial gifts in a way that doesn’t promote dependency. For example, you could provide a portion of the amount that is needed or offer starting funds to supplement money the recipient saves on their own.
 
Monetary gifts shouldn’t put the future at risk—One of the biggest fears around sharing wealth is that family members may drain a wealthy parent or relative, leaving them without enough money to maintain their own standard of living. There are always extenuating circumstances, but extensive giving should be executed in a thoughtful and well-planned manner.
 
Generosity is its own reward, but it shouldn’t leave a person without enough money to meet their own basic needs. Careful and thoughtful giving, made with a plan in mind, can help ensure that both goals are met—a person can still provide financial support to others, while remaining confident in their own ability to meet their ongoing financial needs.
 
Money can’t solve deeper problems—There’s a tendency for people to use money like a balm, sharing it to soothe pain or anger in times of personal stress. A surviving spouse may give money to children right after the passing of a mother or father, seeking to generate a sense of happiness in a time of grief and sadness. A parent may also use the promise of shared wealth as a peace offering to quarreling siblings.
 
There is no guarantee that gifting money will make people feel better, relieve stress or resolve conflicts. It can be hard for the person giving money to realize this because they are trying to relieve their own pain or sorrow as well. An outside person often can recognize when money is being used to solve a deeper problem and can intervene to help all family members cope in more productive ways.
 
Every situation has its own unique challenges and we invite you to discuss your concerns with us.