A client of mine, Sandra, often complained about how much money she had to lend (give?) her daughter, Donna.

“It’s one thing after another,” she would say.  “She lost her job and can’t make her mortgage payment. Then she got divorced. Then her car broke down.”

With each successive tragedy, Sandra stepped in and wrote a check.  One after the other. Year after year.

Don’t get me wrong.  Sandra had the money. It didn’t really affect her lifestyle to continue making the gifts.

She called them “loans.”

And she would often have compose promissory notes including a stated interest rate at the lowest “applicable federal rate” that the IRS allows. Even if the borrower doesn’t pay the interest, in related-party loan transactions the IRS expects the lender to impute interest on her tax return.

If the lender doesn’t impute the interest, then there’s a chance that the IRS reclassifies the loan as a gift resulting in the use of the lender’s gift/estate tax exemption.

Over the years, Sandra made loan after loan, bailing Donna out from one financial disaster after another.

Then Sandra died.

In her will, the loans/gifts that she made were to be treated as counting against her daughter’s share. There were four other children, so the estate was to be divided into five shares.

The other children weren’t so understanding of their sister’s situation.  When they computed the outstanding balance of the loans, along with the unpaid interest compounded over the years, and applied that against her one-fifth interest of the estate, she didn’t inherit much.

So there Donna was. Nearly sixty years of age. Jobless. No savings to speak of, and very little inheritance coming her way.

I therefore ask this question: Did Sandra help her out over the years or did she enable her to continue to make poor choices?

It’s difficult for a parent to resist helping a child. I’m a father of three daughters, and I hope that I never find myself in Sandra’s predicament. When we see our children suffering, we want to do something to help. If it’s within our means, why not write the check?

Seeing what I see from behind my desk, I would suggest that sometimes writing that check only makes the situation worse.

And it starts at a place well before our children become adults. When your daughter calls from high school and asks us to bring the essay to her that she forgot from home – should we do it or allow her to suffer the consequences of not turning in her assignment on time? When your son wants to quit the recreational basketball team because he discovers practices are hard and he isn’t having as much fun as he’d hope, do we make him keep his commitment to his team or allow him to find something he considers to be better?

Where should the parent step in to buffer his offspring from life’s disappointments, and where should the parent step away and let the offspring experience the consequences of his or her choices?

I’m not smart enough to tell you the answer to those questions. I suppose that it depends largely on the facts and circumstances of each individual situation. A kid who otherwise is an exemplary soul but who finds herself in a tough situation might and probably should be treated differently than the “serial offender.”

But I do know this. Sandra’s situation is a no-win situation for everyone involved. One of her sons said it best, “We can all be hard on her now,” he said, “but she’s going to show up on our doorsteps now that Mom is gone. What are we going to say then?”

© 2019 Craig R. Hersch. Originally published in the Sanibel Island Sun.