Personal Finance

We're in our 40s with $7 million in assets and we don't want to spoil our child as a trust fund baby - what should we do?

Maurie Backman

Published: February 5, 2025 10:19 am

Accumulating $7 million by the time you reach your 40s is a truly amazing accomplishment — and one you should be proud of. And if you have a child, it’s natural to want to share some of that wealth with them.

But there’s a difference between helping your child out financially and spoiling them with a trust fund. In this Reddit post, we have a set of parents who really don’t want to do the latter. But they do want to help their child out in life. And why shouldn’t they when they clearly have the means?

It’s great that these parents both want to help their child and also recognize the importance of not raising them to be spoiled or lazy. And with careful rule-setting, they can get the best of both worlds.

A good compromise

If you have plenty of money, then it’s natural to want to give your child the best start in life. And that could look like a number of different things.

It could mean paying for college so they don’t have to take out loans and wind up saddled with debt like so many 20-somethings. It could mean giving them a down payment on a home so they can start building equity in a place of their own sooner, and avoid throwing money away on rent.

But if you’re in a situation where you have money to give out and you don’t want your child to feel entitled to handouts as they get older, you’ll need to set ground rules. And a big part of that could mean having open conversations once your child is old and mature enough. Depending on your child, those talks could happen at some point when they’re in high school, especially as college-related decisions get closer.

You may, for example, want to tell your child that while you’ll gladly fund their education and perhaps even give them some “starting out in life money” on top of that, you expect them to study hard at school and work their way up toward a career of their own. Make it clear that while you’ll be there to offer support, your intent isn’t to fund their lifestyle while they sit back and coast.

You may also want to talk specific numbers so your child has an idea of what to expect. Say you want to cover college and are willing to then give them a $250,000 trust fund on top of that to get started in life. You may want to explain how quickly that money could run out and identify smart ways to use it — for example, buying a home, purchasing a reliable (but not overly fancy) vehicle to get to work, or investing in an advanced degree.

A financial advisor can help

Giving a child of yours a share of your wealth is an amazing gift. But so is setting them up with a financial advisor from a young age so they can get some guidance on managing that money.

Chances are, if you’re in your 40s with $7 million, you know a thing or two about managing and investing money. But sometimes, kids take advice better from professionals than the people who raised them.

So it’s a good idea to find your child someone to work with early on to get on the right path. If you do that and help them adopt the right mindset, you may find that your child grows into an adult you can truly be proud of.