A gift with strings attached - what would you do?

What would you do if your child or children were offered a substantial sum of money -- with strings attached?

Yesterday, while my son fell asleep on my leg, I thumbed through Money magazine, and read the section from their money ethics advisers. They present real scenarios and questions from readers and then respond from an ethical standpoint.

One scenario in particular caught my eye. The writer states that his father died, leaving $2 million in trust for his two children's four grandchildren. The trust stipulates that each child receive a quarter of the trust at age 25, provided the child earned a college degree and never attended a private school or college.

The writer continues that his oldest child has a good shot at being admitted to an Ivy League school, and at least a couple of the other children have that potential, too.

The deceased's two adult children are the trustees and would like to give their children the money at age 25, regardless of where they go to college. So, they ask Money's ethics advisers what they think.

My head spun with this question. Obviously the man had a thing for public institutions and wanted to reward his grandchildren for attending them. But what if they got great scholarships to private schools? By accepting them, they'd be out their inheritance. Of course there's no arguing with the man - it's his money and he can do with it what he wants (plus, he's dead!). I'm a fan of public colleges myself -- I'm a product of two of them. But if my parents hadn't told me to choose "any state school I wanted," maybe I'd have looked around a little. There was no half a million waiting for me at 25, either way!

What would you do in this situation? (I'll share the Money ethics advisers' response after I hear from y'all, if you're interested...)

Comments

[Sarcasmo]

Tough call. I supposen they ould always challenge it in courst, but that just ends up making lawyers rich. So perhaps the children could get their 4 yr. degree at a public college, collect the funds at 25 and then go to an IVY League grad school?

[nat]

I'm with Sarcasmo, but the grad school doesn't have to be Ivy League, just some private school of choice. Ivy League isn't always the best pick for EVERY major!

[Bluegrass Mama]

It was an odd condition to put on the trust, but I think they need to honor it. Choose the Ivy League if they like, but forego the money if they do. BTW, what happens to the money in this case?

[Anita]

I agree with Bluegrass Mama. Ethically, the terms of the trust should be honored.

Each child needs to do an economic analysis to decide the best decision for them. In some cases, attending an Ivy league college could be worth a lot more to them than $500,000, and in other cases, it won't matter a lick. For example, with medicine, your graduate school matters more than undergrad and frankly, if you get the proper certifications I don't think your degree impacts your earning power much. But if business is your thing, graduating from a school like Harvard opens up a huge network of contacts that can be immensely valuable.

Dying to hear what the advisor said.

[Jody]

I say go to a state school and get the money. Private institutions are not always better- they just cost more.

[Marie]

The magazine doesn't mention what will happen to it if they forego the money. As you all figured, Money's ethics writers say that to subvert the father's will would be dishonorable, particularly since the two adult children were being counted on as trustees. And if they're intent on doing as they please with the money, despite the will, they should resign as trustees. What would they be teaching their children if they go forward? If they're faced with such a hurdle, see if you can't sneak around it. Big head-shaking from the ethics team!

They don't propose how the grandchildren should proceed. But if I were 17 years old and thinking about colleges, and if I knew half a mill was waiting for me, I might be motivated to choose the best public school I could find! Though I see your point, Anita, about analyzing the situation as you mentioned. If I were them as teens, I'd need some truly objective advice in the analysis department.

[Uisce]

I went to our state U and I'm hoping my kids go there, too. maybe I'm just an anti-snobby snob but oh well! and hey, maybe their grandparents will give them some money! :)