You and the Law: ‘Handcuffing’ your children for their sake

It is a conclusion parents never want to reach. “Our son is a failure and will never accomplish a thing. Can I protect him from his laziness and financial incompetence so that he doesn’t wind up homeless?”

Earlier this year one of our stories described a family that was “Eerily similar to ours,” an email from “Oscar” began. “A father told you about their two adult sons who will likely remain life-long failures.

“That’s what we are facing with our son, Eddie. After reading your column for years, I feel that I know you, Dennis. Can we please talk, we are worried sick and would appreciate your advice.”

We were on the phone a minute later.

Both in denial of illness

“Ever since he was a child, his behavior has been abnormal. We hoped it was something he would outgrow; instead it slowly worsened. We failed to get him psychiatric care, and have been enablers, pure and simple,” Dr. Oscar explained.

Yes, both he and his wife are health care professionals now facing the consequences of denial and worries that Eddie could wind up homeless or in prison.

“He graduated college with a business major and has spent the past three years living at home, using medically prescribed marijuana he claims helps his migraines. Our generous allowance led to hitting the bars, picking up a DUI with a .25 blood alcohol level, but, at his lawyer’s suggestion, getting into law school — for which we paid, of course.

“He dropped out the first semester, telling us, ‘I am conservative politically, and all the students and teachers stare at me. They hate me for my views. Also, I couldn’t study or sleep as my apartment is near a radio station, and the radio waves keep me up at night.’

“This is, of course, paranoia, and on some level we were aware of it, but who wants to think your son is mentally ill?” his mom stated. “We prevented him from ever facing the consequences of his flawed thinking, and to Eddie, nothing is ever his fault. He is stubborn, so if he ever gets psychiatric care, taking meds will not happen.

“Can we provide him a lifetime income that will keep a roof over his head yet which he can’t blow?”

Flashy cars, trips to Vegas

“There is an ‘Eddie’ in most families and the story doesn’t always have to be tragic. A son or daughter might be a poor musician, but loves music, enjoys performance and won’t ever earn much money at it. Or perhaps it’s a ‘starving artist’ child that mom and dad want to protect years down the road,” Stan the Annuity Man aka Stan Haithcock commented when I ran Eddie’s case by him.

Based in Ponte Vedra Beach, Florida, Haithcock is nationally recognized expert on annuities, and as we discovered, has a valuable tool for Baby Boomers who want to help financially protect their children or other family members.

As Baby Boomers age, the greatest transfer of wealth in our nation’s history is taking place, usually by inheritance, “There is a substantial risk of immature or irresponsible beneficiaries blowing the money on flashy cars and trips to Las Vegas,” Stan points out, adding, “Yet this does not have to occur, as there is a way to put in place what amounts to a pension — a lifetime income — which will pay as long as the person lives.”

A lifetime income stream

He was quick to caution, “This is not a do-it-yourself project that you can download from the internet, as a family trust needs to be established by an attorney. You are putting in place a monthly income stream based on the child’s life expectancy, and you want to prevent the child from cashing it in.”

Stan explained how the trust functions:

“A living trust is the owner of an annuity and the child is referred to as the annuitant. What makes these annuities so valuable to parents is that the annuitant cannot cash it in. So, Eddie has no rights to a thing — that’s the ‘handcuffing.’

“It is a way of being sure the child has an income. This truly is controlling from the grave, when it will start to pay, how much will be paid, building in a cost of living increase if you like, while preventing it from being paid as a lump sum,” he points out.

“It is the ultimate legacy. Your kids will hate and love you at the same time. Every time a check hits their bank account they will think, “Thanks, mom and dad.”

Dennis Beaver practices law in Bakersfield and welcomes comments and questions from readers, which may be faxed to 661-323-7993, or emailed to Lagombeaver1@gmail.com. And be sure to visit dennisbeaver.com.

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