Much has been written about the horrible means by which scammers are relieving senior citizens of their assets by playing on the senior citizen’s fears and/or confusion. The senior receives a phone call or an email from someone pretending to be a friend in need, a collections agent, an IRS agent, or a prince from some far-off country — then the senior gives that person money, access, or both. While these stories are terrible, they are rare compared to the far-more-common financial pressures that can come from one’s own family or inner circle. A client recently summed up these family pressures perfectly when he said that children’s dependence on their parents “can become pathological when the adult child develops a sense of entitlement, they feel they are owed a lifestyle just like their parents, and the parents do not have the skills to process this effectively with their adult children.”

At the extreme end of the spectrum is the adult child who abuses their senior-citizen-parent and/or steals from them. This sort of financial abuse usually involves a trusted person exerting influence over an individual who is vulnerable due to his or her physical or mental condition. Sometimes the trusted person steals things outright, but the abuse is more often centered on improperly influencing the senior to change the provisions of his or her Last Will, to add an individual to a bank account, to alter beneficiary designations on retirement accounts, or to make outright gifts to the “trusted” person. This sort of abuse is taken seriously by law enforcement and the state of Oregon has offices around the state that can help you if your family is facing one of these situations. The list of offices is here: https://www.oregon.gov/DHS/Offices/Pages/Seniors-Disabilities.aspx

Families can also encounter another sort of financial exploitation, which may not be categorized as elder abuse, but still poses a significant challenge, financially and emotionally. There is an enormous gray area where money, family, and expectations intersect. This is not an area filled with blatant arm-twisting; rather, it is the place where years of unclear lines, expectations, and communication (or lack thereof) leave a grown child or children dependent on the parent, often to the detriment of the parent or other family members. Many of these children live in their parents’ homes and consider their parents’ lifestyle to be their own lifestyle. This dependence usually evolves over a long period of time and these children will often tell you they have not found “just the right” job yet (and there is almost always a proposed end to the dependence just over the horizon).

This situation can be brutal for parents. On the one hand, their well-intentioned child may really be in a short-term bind that just a few more months of “allowance” will cover. On the other hand, every long-term bind is preceded by a short, then an intermediate-term bind — and the effect that continuing support in this manner can have on the parents’ finances and mental health can be devastating. Finally, and perhaps most importantly, there is no rule that says a child’s lifestyle is supposed to line up with their parents’ lifestyle. This lesson can be a very difficult one for an adult child to learn.

What should you do if you and your family find yourself in this situation? Look to outside professionals. Accountants, financial planners, attorneys, and appraisers can help you quantify the details of your family’s situation — and they can serve as the bad guy or referee where appropriate.

As an example, in a 2015 case, an accountant reached out to me because he was alarmed by the increased taxable withdrawals showing up on a client’s income tax return. These withdrawals were taken in order to fund rising support payments for adult children. The accountant and I explained the tax ramifications to the client, noting that with each successive withdrawal, they climbed the income tax rate ladder a bit higher. We were able to put some structure in place to the support/gifting each year so that, at the very least, funds were being managed tax efficiently and we could start a larger conversation about the impact these gifts were having on the client’s bottom line.

I also once worked with a family who was convinced their $2 million home would provide adequate resources for mom through her 90s, and felt free to burn through the family’s more liquid assets. Then an appraiser told them it might sell for as much as $1.5 million, but only if they put $300,000 of repairs into the house before listing the property. Having an independent third party weigh in on the “plan” they had in their heads for the better part of 20 years brought the family back to the table for some difficult but critical conversations about budgeting.

In each of these cases, I built financial models to illustrate the impact of support payments, then held a series of meetings with the clients and their adult children (sometimes) to outline the impact of the spending. We worked on finding middle ground on the budget where appropriate, and I then provided the families with a written plan followed by periodic updates. In one of these cases, my work resulted in a positive change to the family’s budget and overall financial well-being. In the other case, I no longer work with the client because they grew tired of my dire intermediate-term projections and all of the budgeting conversations. (There is a message in here about not shooting the messenger, but that is beyond the scope of this article.)

Financial projections have a way of showing us how our reality lines up with our expectations. They can often serve as the basis for making informed decisions, and as a starting point for dialogue about subjects that were otherwise log-jammed or continually put off for another day. If you are supporting adult children (or you are an adult child worried about the impact you are having on your parents’ finances), consider hiring a professional advisor to help you gather information and build a plan, with the ultimate goal of ensuring that parents’ eyes are open to the overall impact of any support they are providing to their children.