How would you handle the money?

Beer Baron said:

I would only offer advice to anyone if it is requested.

It was requested by the mother.

Tom Suddard said:

In college, I had a professor suggest, in situations like this, tying the trust fund payments to their taxable income. Something like "The recipient can withdraw up to 75% of the value stated on their prior year W-2." That way, they get nothing if they don't get a job, and they get everything if they earn a real living. But again, I'm not a lawyer and it's probably best to stay out of it. 

This is brilliant. A reasonable person(I know, I know, I know...) can in no way say the mom is holding money if they'll receive it from working. It's like doubling your hourly pay.

Hard situation to be in. I know functionally some people are okay with the hard line cutoff of all assistance and could make it but it doesn't sound like this kid is that kind of person. Definitely plan out an exit strategy for mom with goals, and deadlines.

So, the bare minimum. The boy needs to be paying rent of some sort. Mom needs to enforce this. The boy needs to be planning for the future. He needs an exit stratagy beyond playing on the computer forever. Mom needs to enforce this as well. You can't make that happen. 

My rules for living at home are:

Full-time school, rent-free. I pay your bills. If you want extra cash beyond some gas money, get a job.

Part-time school with a job, no rent but you pay your own bills(cell, car insurance, etc.) I cover your medical insurance and the cost of school as long as you are in school and passing. 

Full-time work with an exit plan to get out of my house within a few years. Rent is charged as well as you pay your own bills, including medical insurance. You can eat here and sleep here but you will still follow my rules and I will be in your business. 

I have a 23 yo son living at home. He didn't want college so he went out and got a job at a local hospital in their maintenance dept. He pays $400 a month in rent and covers his own car, phone, medical insurance, and such. He is not allowed to piss away the rest of his funds on hookers and blow. Savings and planning for the future are required and I want to see balances grow at a high rate. Basically, if you aren't paying for housing you need to be putting that in the bank. He is currently maxing out his 401k to get all of the 21% match his employer offers. Last I looked he had about $50k in it so he will be better set for retirement than I am. He also has about $15k in savings and is looking to get married before long. As long as he doesn't mind me being in his business and carrying his own weight with chores and funds, I'll let him slide for a couple of more years. At 25-26, I will start making him uncomfortable until he decides to move out on his own. 

Unless Mom is on board with this, you will be fighting a losing battle. She needs to come to the realization that she is not her son's friend. She is his mother. He doesn't have to like her and it would be better for the boy if he didn't. As long as he is comfortable he will not change. She needs to make him uncomfortable for his own sake. 

Good stuff here. I'm listening. 

I've seen this play out already. My POS uncle got a fat check after my grandma died. He tried to CASH it at the local grocery store. Instead he endorsed it and had his buddy deposit it in a bank account. He and his buddy ate pizza and berkeleyed off for about six months until all the utilities got cut off to the house. Then the house got foreclosed on because he  didn't pay the ludicrously low mortgage my grandma had arranged for him when she died. In less than a year the money was gone, both grandma's cars were destroyed, and the house was sold at auction. Zero to show for it in the end. So don't be shocked if the same happens here.

What would I do? The same thing I did with the insurance money I got from my own nasty wrecks.: high yield savings account and forget about it.

But since it sounds like the money need to be hard to get, a trust would be my next idea. Ideally something that can generate monthly interest income without touching the principle. I used part of my principle to buy a car years ago and while I don't totally regret it (we needed a family car) I still sometimes feel like I pissed the money away. Having grocery money from the trust each month just gives a little breathing room without making it easy to just slack off. Good luck!

I would only change things going forward, not try to enact anything retroactively.

She allowed him to live rent free. She paid for his car. That's on her. If she wanted him to pay, they needed an agreement already in place to cover that.

This *is* a great opportunity to change the dynamic going forward.

If she wants him to start acting like an adult, she needs to start treating him like an adult. That means not screwing with his money. If she takes takes it and put sticks it in her account or in a trust that she controls... that is treating him like a child.

Come up with an agreement like you would for a tenant renting a room. Put it IN WRITING. Doesn't have to be a fancy legal contract, but it needs to be explicit and in writing. What he gets, what it costs, when it's due, and what WILL happen if he does not pay. This keeps EVERYONE honest. It keeps her from letting things slide. It is also an opportunity to teach him how to negotiate with a peer.

In reply to Beer Baron :

That's fair. Totally agree on the past rent. No such thing. That's on her. 
 

The car was never technically his, so I think it is reasonable for her to be paid back the value of the loss of the car.

Similarly, she paid his medical expenses, so there is no reason that shouldn't be reimbursed. 
 

In reply to Beer Baron :

And yes. THIS is a great opportunity to change the dynamic moving forward. Agree 1000%.  That's partly why I am asking now. 

In reply to Beer Baron :

I'm still digesting your comment about controlling his money. 
 

You're right, but there are more nuances to it. 

I don't think he is acting like a child.
 

I put exploitative at the top of the descriptive word list.  I think he is acting like a grown man who knows damned well he's got a sweet  deal and is manipulating it to keep it that way. 

Rules need to be adjusted as children age. At 20, it's time to adjust the rules to encourage the behavior she wants. She shouldn't worry about changing things. The past is just that, past. 

The conversation can go like this.

Well, Jonny, you are almost 21. The world thinks you are an adult and capable of taking care of yourself. I agree with them so moving forward you will be responsible for paying for these things. Cell phone, car insurance, 50% of the internet bill, and 25% of the grocery bill. This adds up to $X.XX and is due on the 1st of the month. 

Another piece of the puzzle...

She paid for the car that was destroyed, but has also paid for the one he is driving now. 
 

As far as "facilitating adulting", I think both vehicles should be paid for out of the proceeds of the settlement. If he doesn't want the current car, he doesn't have to buy it. He can buy whatever he wants, and she can sell that car.

I would suggest two books for the mom. "Boundaries " and "Necessary Ending" by Dr. Henry Cloud. 
 

These folks need to set some boundaries in their relationship, and they need to end the current unhealthy paradigm.  The money is side issue.

In reply to tester (Forum Supporter) :

Thank you for that. 
 

I've read "Boundaries", but not "Necessary Ending"

There is another dynamic here too. 

Long term, do you want to be with someone (as friend, FWB, domestic partner, etc) who allows themselves to be continuously taken advantage of by their children? You can certainly offer advice, and it's probably wise to do so, but depending on what action is taken with that advice - I might tread lightly after. 

I'm almost 40 and I'm finally starting to learn how people's decisions in the past can also sorta predict their future. Some people learn from mistakes and it's pretty clear they've done so, others its very clear that they never understood the lesson. 

In reply to pheller :

Good point

Tom Suddard said:

Sounds like a legal adult (him) will get the settlement, so what you or his mother thinks probably doesn't matter.

This. I'm no lawyer, but willingly volunteering to help a normal legal adult manage their finances in any manner other than as they wish, is setting yourself up for not only heartbreak... But possibly a future lawsuit as well.

I don't think you're allowed to put another legal adult's money into a trust fund that you have set the controls and stipulations without their knowledge and consent, no matter how well intentioned that might be. I doubt this is something he will consent to, but I suppose it would be worth a try.

Similarly, I also do not think that she can take any money out for back rent or anything unless she can document a rental agreement that he owes her on. You don't get to change your mind about letting them live rent and obligation free in retrospect, only moving forward. Again, she can ask, but he has zero obligation to agree.

Assuming the car was in her name, and on her insurance, she should have been (or be getting) paid out for it directly. All other operating expenses were willingly volunteered by her.

One option would be to leave things at the status quo, so that he continues to (not) do whatever he wants as she continues to enable him. Unless she is willing to get uncomfortable and make some real change in herself for the betterment of them both, this is the most likely initial outcome.

Another option is to let her guilt and resentment about both of their failings cause her to cut him off cold turkey. This is also a likely eventual outcome of the first option.

If I were telling her what *I* would do if it were me and my kid(s)? It all starts with an (uncomfortable) conversation about admitting my fault in not preparing them for adulthood and committing to changing that, effective immediately. That I will teach them, step by step, how to responsibly handle their own personal finances. That this will include guidance on making their own decisions to make their settlement (and other income) work to their best benefit.  That this would include teaching them about rent, bills, groceries, etc by that becoming a responsibility of theirs regardless of whether they continue living in my home or their on own. That this will include financial planning, and showing them how quickly things will run out if they squander it. That while I will always be willing to provide education and guidance, this will be the end of my unconditional financial support regardless of what happens with the rest of this windfall. And that this will all only work if they commit to being a part of this process as well. So if they do not agree to this commitment, it is them choosing to cut themselves off and go it alone, but that the offer will always still be there for when they are ready.

Change is hard. Doubly so when two people both need to change. The only way it will work is if both agree to change together. One can attempt to make the change alone, but it'll be twice as hard and only get them half as far.

In reply to Driven5 :

That's very much the lines I was thinking along. 
 

You bring up an interesting point about the car. The car was titled in her name, and on her insurance (but only basic coverage). Any settlement will be from the trucking company's insurance (and may involve a lawsuit). But the son was driving. 
 

So, I'm not actually sure who the payout would be to. She had a loss of about $6K worth of vehicle, but he had medical expenses and perhaps punitive (truck driver was negligent, ran a red light, and was charged).  Seems to me they both deserve compensation. 

In reply to Beer Baron :

I'm thinking further about your comment about her controlling his money...

You're right. That's not treating him like an adult. But maybe she should actually take it one step further back...

He hasn't done a single thing to RECEIVE the money. He hasn't talked to insurance companies, or lawyers, or the trucking company. The closest he has coming to doing ANYTHING AT ALL is to keep asking "Am I gonna get any money from my accident?"  Then mom does the work. 

Perhaps the right answer to his question is "No. You will not receive anything at all if you don't man up and follow through and do something about it".
 

That is probably what it would look like if she treated him like an adult. 

In reply to SV reX :

This is from the person my previous job which you know well...

Previous injury, no motivation, dead end small town, the promise of future funds all equal up to a story I heard many times...

Opioid addiction -> Heroin

Youre getting good advice here so far but please have your eyes open for this slippery slope the son could get caught up in.

Yes, what I wrote may seem harsh but this new world sucks and no one and no economic status is immune.

Love ya man!

In reply to SV reX :

Any car money should go to her if the car was in her name. 

If all the paperwork for the accident was filed by her and in her name, it could be that all funds will go to her. 

Who paid the son's medical bill?

In reply to SV reX :

I could be wrong, but if the driver did not own the car, I would expect the compensations to be made out to each separately and directly. If her handling this for him has merged them, they should at least be able to provide a line item total for what belongs to her and what belongs to him.

Treating your child as an adult means teaching them how to be one. That is not "man up and do something about your money if you want it"... It's "I am here to help you learn how to get your money if you want it."

In reply to Toyman! :

Not sure it's been paid yet. If it has, then either she paid it, or she paid it from his account (some military benefits). 
 

He's never paid a bill. 

In reply to Driven5 :

Yes, that's true. I didn't mean to be suggesting she would cut him off. Only that she shouldn't do it FOR him, even if the consequences are no settlement at all. 

The insurance company will make the check out to him.  If I was in your place I would stay away from it, no good will come from getting involved.