When a Client's Child Gets Married, It's Time to Talk

“As parents you just want to really decide in advance what contributions you're comfortable with and … to make sure that we're avoiding any surprises down the line,” she said recently.

Gifts Without Strings

“Generally if it has to do with weddings and some of those sorts of things, I encourage clients to think about what gift, essentially, they could give, and giving that without strings attached,” Maez added. “Because I think where parents can get into trouble a little bit is … providing this amount and then sort of wanting to dictate certain aspects of how those dollars get used.”

It makes for better relations and a better launch for adult children if they make their own decisions, she explained. The parents might decide to provide a gift of whatever amount they’re comfortable with, and then allow the newly or soon-to-be married couple to decide how to use it.

The younger couple might decide on a more modest wedding and use some of the gift to make a down payment on a house, she said. The most important thing, said Maez, is making it more of a gift rather than something where it's interpreted that the giver decides how it’s going to be spent.

Self-Preservation

Another important point for parents of the bride or groom is their own financial well-being, said Maez.

“Where I see things going wrong a little bit is where parents will give these gifts without consideration of their own financial health long term,” she said. It’s important that “parents make sure that their own financial house is in order, because I think the biggest gift they can give to their children or their adult children is making sure that they're not going to need to help support their parents long term.”

Sometimes, parents fund a child’s college education or gifts for weddings and down payments on houses, “and all of that will cause the parents themselves to put themselves in a compromised position long term. And I think that's very dangerous territory,” she said.

“We just want to make sure that they're giving a gift that is prudent and that is something that they can actually afford to do” rather than just planning to figure it out later, “which is a lot of times how it actually ends up,” the wealth advisor said.

In an Ameriprise study earlier this year, Parents & Finances, 60% of parents expressed concern that the spending tradeoffs they make daily will affect their financial future. Over 40% reported that their biggest financial stress was pressure they felt to give their children “the best” now and in the future.

And many guilt-plagued moms and dads aiming to be the perfect parents said they had spent on something that went beyond their original budget.

Discussing Plans

Parents also should communicate clearly with their grown children about their plans, and make sure they understand that a one-time gift surrounding the wedding isn’t going to recur on a regular basis, according to Maez.

“I think it's very dangerous to set the expectation that there may be more beyond that," she said. "It's better for it to be a one time … one and done, and then we will see how things go.”

Advisors might also encourage clients to talk with engaged or newly married children about the young couple’s estate planning, depending on the family’s wealth level. It’s important to make sure that the couple puts in place estate plans and powers of attorney, and also to have a “generational discussion” about the parents’ situation, Maez said.

This could cover what the family’s game plan is if the parents experience a health event, and who is going to play what role, she said.

“A lot of times that is best served to be within the actual bloodline,” with the new spouse observing the family conversation but not exercising much influence, Maez suggested.

Having clear boundaries around who's playing what role and who's going to be able to influence things long term is probably the cleanest way to handle the situation, she added.

Advisors can help facilitate the conversations and ask the questions “to help everyone think about things the right way,” Maez said.

That could be encouraging a family meeting for estate planning with a CPA, an estate planning attorney, the parents and the children, she noted.

Or it could be making sure that the advisor is available and perhaps the parents even pay for a financial planning engagement for the new couple.

She recommended that the newlywed couple develop a solid game plan and have a thoughtful dialogue around what they truly want out of life, including their thoughts about children, retirement and owning property.

One of the best gifts that parents can give is to help them, preferably with an advisor, lay out those plans for themselves and make decisions, such as whether to merge bank accounts, handle cash flow and decide about 401(k) contributions, she said.

“It comes alive if you can get it documented for people and then it's something that they're working toward and it really helps to set the right tone, likely for the rest of their life,” Maez said.

(The Ameriprise study found that nearly half of parents surveyed hadn’t created wills, a third hadn’t yet identified legal guardians for their children and about 20% hadn’t updated beneficiaries on their financial accounts.)

Inheritance Signaling

Another major danger zone comes when wealthy parents set an expectation for children and their spouses that a sizable chunk of money will come their way at some point. That can cause detrimental behavior in the children, such as neglecting to “launch” or not developing a strong work ethic, according to Maez, who suggested that parents be careful in what they communicate about inheritance.

Counting on a big inheritance can also cause problems in a child’s marriage, she said.

“The best sort of outcomes that I've seen is where parents maybe communicate some of the information … like the roles that their children will play, what's going to be expected of them, making sure that the children’s estate planning is in order, all of those sorts of things, but maybe not setting the tone that there's a lot of access resources that are going to come to them, whether there are or aren't.”

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