If you own a business you’ve probably heard about seller’s remorse. That’s when a business owner sells their business and very soon afterwards is sorry they ever did the deal. This is a real issue in the world of business planning.
There’s another type of remorse I often run across. It’s called grantor’s remorse. That’s when someone irrevocably gives something away to a family member and then comes to be sorry that they gave the gift.
Understand what irrevocable means.
You are aware irrevocable means you can’t take it back. If you’re worried that you will be unhappy with the gift, why not make smaller gifts on an annual basis?
If you decide to make an irrevocable gift ask yourself how you’re going to feel if you don’t get the reaction or behavior you want. If you have a question about how you’re going to feel, ask why and get to the bottom of your feelings before making a gift that you can’t take back.
Do you have a child you’re worried about?
If you have a child you’re worried about don’t make an unrestricted gift. I’ve seen gifts made to children who either aren’t able or aren’t ready to handle the assets they’ve been given. Before giving something away make sure the person who’s receiving the gift can handle the gift in what you consider an appropriate manner.
Families have children they’re worried about. It might be a drug or alcohol problem. It might be they’re not sure about their child’s spouse. In all cases giving assets (usually money) to children you’re worried about won’t get you a result you’re happy with.
Make sure you consider whether you’re enabling your family.
When I bring up the term enabling almost everyone has a negative reaction. There are times we want to enable positive behavior. It’s the negative behavior that we want to avoid.
If your child is already showing behavior you don’t like or don’t approve of don’t enable them by giving them money. If you don’t like what they’re doing stop making it easy for them to continue doing so. This is where you get to practice the magic word no.
Make sure you can afford the gift.
You’ve probably heard about a family that’s given away assets, had an economic downturn, and then wanted the gift back. This is a really tough one. I don’t think you really want to go to your child and tell them you need the gift back.
You don’t want to put your child in the position of having to give you something back. It rarely makes for a good family dynamics. Make sure the gift you’re about to give is one you really can afford.
Don’t make the gift contingent on behavior.
You might be thinking, didn’t you just say above I shouldn’t be enabling poor behavior? Yes, I did say that. It’s not that type of behavior that I’m talking about. I’m talking about making a gift contingent on what you want your child to do.
For example, a gift shouldn’t be contingent on whether you child goes to Dartmouth or a state university. A gift shouldn’t be contingent on whether your child stays in the city you live. A gift shouldn’t be contingent on behavior that is a personal choice that’s not personally destructive. You get the idea; your gift just shouldn’t try to control behavior. The recipient will really resent you and the way you’re trying to control them.
It’s really very simple. You don’t want to be sorry after you make a gift. Think long and hard about what might cause donor’s remorse and then just don’t do it.
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