What If Your Kid Is Richer Than You Are?

Goodness knows, raising children is costly. Every once in a while you might look for a quick source of cash more than what you might locate under the couch cushions. Every once in a while you might recall that your child has a nice nest egg, just waiting to be tapped.

It’s not unusual for parents to feel their child is richer than they are. Maybe the child has a bank account stuffed with an inheritance left by a favorite, dearly-departed aunt. Maybe the child has a stock portfolio started when the he was a baby and now worth a bit more than a new car. Maybe you started a college savings plan for your child and the money is there, calling to you. Maybe your child has her own bank account, filled with her earnings from a part-time job.

Because minors cannot enter into contracts on their own, you likely have access to all of these accounts. The accounts may be in your name but even if they aren’t, you, as the child’s parent, are likely to be the owner-of-record. When that money calls to you, you have the means to answer the call.

It’s very easy to imagine that this money is partly your own.  You need it now to tide the family over, the child is part of the family, so if you take his money you’re helping the child too. Your kid is a minor, so she really can’t have that money herself, so it really is yours, right? This is what you tell yourself anyway. And, of course, you’ll pay it back before he needs it. Sure you will.

Here’s the deal. You may have a legal right to access your child’s money. I am not an attorney and every state has slightly different laws, so I am in no position to tell you for sure, but it’s possible that if you stole money from your child’s account you’d get away with it, no problem.

But it would indeed be stealing. Morally, ethically, you know that taking money out of your child’s account – even just borrowing it for a while – is not right. Your child is an independent person, even if she’s underage. Her money is hers.

You know this. You have no intention of accessing your child’s money without her permission. But what if you ask her for it? What if she says, “yes,” you can have it?

Keep in mind that even in this case there are ethical problems. Your child is not free to make decisions on her own, from a legal point of view. And he may feel pressured to go along with your request because he is dependent on you and needs your goodwill. In an unequal social situation, the less powerful person must be protected. Just asking for the money puts your child in a funny position, where he might assume it is dangerous to refuse.

So the answer is no, no, no. Do not tap into your child’s money. Don’t do it. Put the possibility out of your mind. And now is the time to protect your child from predation by other relatives.

Make certain that your child’s accounts are held by two different adults, preferably one who is not a member of the family and who can be counted on to stand up to anyone who requests sign-off on release of the funds. If only you or only your child’s other parent is the co-signer or signatory on the account, then the account is vulnerable to raiding without anyone else knowing. The time to add another name to the account is now, before there is any hint of temptation to tap into it.

Finally, make certain your child knows the money is hers, not someone else’s, and she has responsibility to protect it until she reaches legal age. She should not tap into it herself but should hold it until she reaches 18. Restraint on all sides protects everyone from an ethical lapse.

One of the most damaging acts family members can commit is to steal from each other. Selfishness, double-dealing, and greed tear families apart. This is hard enough when the bad actors are one’s adult siblings or cousins. It’s even harder to accept when the bad actors are one’s own parents.

No child should look back on his childhood and realize he was robbed.