Ask Paul: My son blew $150k sponsoring racecar drivers

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Dear Paul,

I am 69 and about 15 months ago I sold $300,000 of shares and gave $150,000 each to my daughter and son, who are in their mid-30s. I am in good health and comfortably well off.

My daughter used her share to purchase a new home and my son decided that he wanted to sponsor race car drivers and gave most of it away within a month.

ask paul clitheroe my son wasted 150000 sponsoring race car drivers inheritance

My son is single and lives on his own in a rented unit and I encouraged him to invest a small amount of it in shares and put the rest towards a deposit on a small home or unit but, sadly, he didn't.

The idea of giving them each a reasonable amount of cash while I am still alive was to see them enjoy it and set themselves up somewhat.

Unfortunately, my son now lives from week to week and constantly asks me and my daughter for money to get by. He earns a meagre salary of around $55,000 a year and has always been a bad money manager.

Is there a way to drip-feed my son's share of his inheritance when I die so that it may last him for many years?

I don't want to cause ill feelings between my kids if one gets a lump sum and the other is spoon-fed! Of course, I will be discussing this issue with my solicitor, but I would also be interested in getting some advice from you. - Craig

Children! I often wonder what it is that causes kids from the same family to have such different levels of financial literacy. Exactly what your son was thinking when he sponsored race car drivers is quite beyond me and I am sure you as well, Craig.

I agree completely about chatting with your solicitor, but I am happy to add a few ideas. Unfortunately, changing people's money behaviour is not easy. But the evidence here is that your son will not handle an inheritance well.

I agree with the wisdom in treating kids equally, but your son has failed the commonsense test.

One option would be to direct your estate to two testamentary trusts that allow access, as an example, in three tranches five years apart. If he loses the first, the hope is he does not lose the second and then the third!

This, of course, depends on your asset base, but it may be possible to buy an investment property to which your son gets lifetime occupancy or it reverts to him at a certain age.

Equality is a great thing, but my concern is if your son loses all of his inheritance he will lean on his sister forever. Unless he proves his ability to handle money, it seems to me you need to protect both your children. If this involves an equal split, but different access, so be it.

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Paul Clitheroe AM is founder and editorial adviser of Money magazine. He is one of Australia's leading financial voices, responsible for bringing financial insight to Australians through personal finance books, the Money TV show, and this publication, which he established in 1999. Paul is the chair of the Australian Government Financial Literacy Board and is chairman of InvestSMART Financial Services. He is the chair of Financial Literacy at Macquarie University where he is also a Professor with the School of Business and Economics. Click here to ask Paul your money question. Unfortunately Paul cannot respond to questions posted in the comments section. Please view our disclaimer here.
Comments
Val Helen
April 8, 2022 3.13pm

I feel like there will be a lot of comments on this one...Craig, you seem to have nice kids - doesn't look like you are needing to help any of them with any legal issues or troubles with the law... While your daughter seems right on point financially, your son will need help in the future especially if health issues come into play. I think a solicitor is the only option here to protect any semblance of an inheritance. Oh and maybe he should not watch too many Fast and Furious movies...

Ivon Hughes
April 12, 2022 12.50pm

Father should buy a non-cashable life annuity for the son.Fast and unbreakable.

Barry Morris
April 24, 2022 1.50pm

Hi Paul I'm an 83 year old single male pensioner currently invested $100000 in the bank next to nothing interest can you advise better ways to invest thank you

Money magazine
Verified
April 26, 2022 11.38am

Hi Barry,

Thank you for your comment.

Unfortunately, Paul Clitheroe is unable to respond to questions posted here. Please submit your question via this link: https://www.moneymag.com.au/co...

- Money team

David Smith
April 26, 2022 7.51am

Craig, unfortunatly your story's not uncommon. best to seek the services of an estate planning specialist solicitor (Solicitor who only deals in Estates), solicitors or work in a number of areas (in my experience) are just not across many of the complex Estate issues like yours and how they are dealt with in the courts.

Discuss with the solicitor things like any money you provide to you children now, treated as a loan (

There are ways you can provide for your children while also protecting them against them selves. Good luck.

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