Relationships are more important than money. If every member of a family wholeheartedly buys into this philosophy, family disputes over money will be minor or non-existent. When people value material goods over relationships, or see money and gifts as a measure of the value of their relationships, conflict is bound to occur.
Grandparents are likely to have quite different attitudes about money than their children do, and the grandchildren may have yet a different set of attitudes. Here are some of the common differences that may cause conflict between the generations and how they are best solved.
The Grandparents Are Regarded as Being Stingy
Many young families, having some idea of the total worth of their parents, think that their parents are overly tight-fisted with their money. Perhaps the grandparents have a million dollars in assets. That sounds like a lot to young people who are living paycheck to paycheck, but in actuality it may not be enough. The reality is that grandparents who either have reached the end of their working years or who may be approaching retirement cannot afford to squander their assets. With the possibility of living 20, 30 or more years past retirement, assets that seem bounteous to younger people may not be enough to take care of the older generation's needs, including health care and long-term care.
Of course, some grandparents are struggling themselves, due to fixed incomes or disability, and may actually require assistance from their children and grandchildren. Although this is a different scenario, many of the principles delineated in this article will also apply when the circumstances are reversed.
The Grandparents Make Conditional Gifts
If children and grandchildren are in need, grandparents often help them out. Where grandparents may go wrong is in thinking that their assistance entitles them to manage the younger generation's financial affairs. It is okay for grandparents to give money for a specific purpose and to specify that it must be used for that purpose. It's not okay for them to feel that giving financial assistance entitles them to call the shots about the family's expenditures in general. Further financial advice should be given only if it is asked for, although it's all right to make the offer.
The Grandparents Do Not Treat All Family Members Equally
Favoritism by grandparents is always problematical, and it is even more so if money is involved. Still, equity isn't easy to achieve. Some family members may be needier than others, and grandparents may feel impelled to give more to them. The better-off members of the family may feel, with some justification, that they are being penalized for being better providers and/or managers. One solution is for grandparents to keep track of the money that is being spent on family members and adjust inheritances accordingly. The problem is that this may require a constant re-jiggering of the will. Another problem is that it may become an issue which expenditures should be charged against the inheritance and which should not be counted. Recognizing the difficulty of some of these issues, family members should understand that total equality is not possible and accept some inequities.
Families Squabble Over Inheritances
When my father passed away, my siblings and I agreed: "There is nothing in the estate that is worth quarreling over. If I take possession of something that you wanted, let me know and I will give it to you." My father's estate was modest, so it was relatively easy for us to stick to that resolution.
Inheritance issues are less likely to occur if grandparents have let their children know how they plan to handle their estate. Grandparents should never use the possibility of an inheritance as a bargaining tool or the threat of losing an inheritance as a means of coercion. Decisions about estates can be enormously complicated when stepfamilies are involved. In these cases, it is doubly important to seek legal advice to make sure that inheritances end up where they were desired to go.
Grandparents Aren't Generous With Grandchildren
The stereotypical image of grandparents as wildly indulgent isn't true for many grandparents, who may have grown up in a more frugal time. For example, many grandparents help pay for college for their grandchildren, but others may decline, feeling that the grandchild isn't taking college seriously or has chosen an overpriced institution of learning. If, however, the grandparents have promised assistance, they should live up to their commitment.
The Bottom Line
When it comes to finances, grandparents face an especially difficult challenge. Most would like to make life easier for their children and grandchildren, yet they also want to see them standing on their own. They know that relationships are more important than money, yet they also know that financial hardship is no fun. Family disputes that result in loss of contact with grandchildren are sometimes engendered by disagreements over money, so it is prudent for grandparents to approach all such matters carefully and with forethought.