For High-Net-Worth families, the question of how to support an adult child facing financial struggles or the consequences of “poor life choices”—while remaining equitable to self-sufficient siblings and avoiding a cycle of enablement—is a deeply challenging and emotionally laden one. It’s a conversation that touches not just on financial strategy, but on family values, individual responsibility, and the very legacy a grantor hopes to build. The anxiety underpinning this question is profound: How do we extend a hand to one child without inadvertently penalising another, or worse, fostering dependency?

A common initial piece of advice often surfaces in these discussions: “You can use a spendthrift trust for the child needing more support. That way, the assets are protected while still providing for them.” This is an understandable and often practical starting point. A spendthrift trust can indeed offer a valuable mechanism to safeguard assets from creditors or a beneficiary’s own potential mismanagement, ensuring that funds intended for support are preserved and distributed over time. The spendthrift’s dependents may then be beneficiaries of a separate trust to cover their costs. It provides a degree of financial scaffolding, a controlled environment for disbursing resources. For many, this offers immediate reassurance that the wealth itself won’t be squandered.

However, for families navigating the intricate web of multi-generational wealth and complex personal dynamics, this initial step, while useful, often opens the door to deeper considerations. While such tools offer a degree of financial protection and controlled distribution, the heart of the challenge frequently lies in the layers beneath the financial instruments themselves – in the family system, individual psychological drivers, and the powerful influence of wealth on both. To build upon this foundational advice, it’s valuable to explore the nuances that a simple trust structure alone may not fully address.

Unpacking Family Systems and Individual Needs

The decision to provide differential support inevitably ripples through the entire family system. Financial socialisation describes how children learn about money not just through instruction, but by observation of how others acquire and use wealth within the family (small shout-out for the positive effects on philanthropy here!). When one child receives a different level of support, it has an element of communication to it: it sends messages – intended or unintended – to all members. Siblings are often keenly aware of what each has received and contributed, leading to an orientation towards equity, where a child’s and even a parent’s perceived obligations are assessed relative to those of their siblings. This means that a solution aimed at one child is never truly in isolation; it impacts the equilibrium of the entire family.

Consider the child who is struggling. While “poor life choices” might be the visible symptom, deeper factors are often at play. Socioeconomic disadvantage, even if not the primary driver in HNW families, brings stressors that can impact mental health and cognitive functioning, undermining a person’s ability to make sound decisions or be emotionally resilient. Similarly, expectations (if clearly voiced or not, or only perceived) lead to self-imposed stresses. Perhaps the struggle isn’t just about a lack of financial prudence, but a lack of specific skills, undiagnosed learning differences, mental health challenges, or navigating a world where their particular talents haven’t yet found their match. Simply providing funds, even in a controlled manner, may not address these underlying issues. As research into financial socialisation suggests, family values, norms, and attitudes are essential components of financial capacity-based learning. A spendthrift trust manages assets, but does it inherently build these deeper capacities? Does it just enforce dependency?

Furthermore, grantor anxieties and motivations are complex. Transfers are rarely simple “gifts”; they can carry unspoken expectations of conditionality, control, or reciprocity. A grantor might feel a pull towards familial altruism, wanting to alleviate a child’s distress. Yet, there might also be an underlying desire to see certain behaviours change or a fear that support will be misinterpreted as a reward for choices they don’t agree with. Younger adults, in turn, may negotiate different constructs for receiving support to avoid feeling overly indebted or stripped of their autonomy. The desire to avoid owing parents anything can be a powerful motivator for the younger generation. A spendthrift trust, while protective, can sometimes feel like a declaration of a lack of faith, potentially exacerbating feelings of shame or inadequacy if not framed with immense care and broader supportive measures.

The Sibling Perceptions of Fairness

The impact on self-sufficient siblings is perhaps one of the most delicate aspects. While a spendthrift trust aims to provide for the struggling child without directly drawing from what might be earmarked for others, the perception of fairness is paramount. “Fairness,” in the context of intergenerational transfers, is rarely about simple equality (see also my earlier post on this, Closer Look 1). Is fairness about providing equal opportunity? Is it about meeting demonstrated need (altruism)? Is it about rewarding responsible behaviour (meritocracy)? Or is it about a long-term view of reciprocity and contribution to the family (socioemotional wealth)?

HNW families are more likely to provide substantial financial support, particularly educational investments and direct cash transfers. This in itself can create a baseline expectation. When one child then requires significantly more, it can trigger questions. Research indicates that continued housing support and ongoing monetary assistance, while providing a safety net, may also delay full financial independence and sometimes coincide with strained affective relationships. While not always the case, responsible siblings might wonder if the additional support for their struggling sibling is hindering that child’s path to independence, a path they themselves have successfully navigated.

Open communication, while often challenging, becomes crucial. Explaining the rationale behind the support structure for the struggling sibling, aligning it with clearly articulated family values and the grantors’ definition of fairness, can help manage these complex dynamics. This isn’t about justifying one child over another, but about transparently addressing the why behind the how.

Building a More Holistic Approach

A spendthrift trust can be an effective component of a larger strategy, but its true strength is unlocked when integrated into a more holistic plan. This means moving the advisory conversation beyond the technicalities of trust administration to the human elements of wealth.

  1. Defining ‘Fairness’ and Family Values Explicitly: Before structures are finalised, a deep dive into what fairness means to this specific family is essential. Is the goal to equalise outcomes, or to provide a foundation from which each child can build, recognising their paths may differ? Articulating family values around responsibility, contribution, and mutual support provides a compass for these decisions. This clarity helps in framing the purpose of any support, including that provided through a trust.
  2. Developing Responsibility and Capability: The aim should be to promote responsibility and ability, not dependency. This involves shifting the focus from merely distributing assets to building the struggling child’s “human capital” – their skills, education, mental and emotional well-being. Support, even through a trust, can be structured with conditionality, not as a punitive measure, but as an encouragement towards positive steps. In practice, we see this in some trust instruments where distributions are linked to engagement in education, vocational training, therapy, or maintaining employment or a certain family status. The issue is, though, that there needs to be a lot of flexibility built into the measuring stick, allowing for a dynamic adaptation to future events. 
  3. Integrating Psychological and Coaching Support: Recognise that the challenges faced by the struggling child may extend beyond financial acumen. Advisors can play a crucial role in helping families identify when therapeutic or coaching interventions are necessary. This might include family therapy to address communication breakdowns or sibling tensions, individual counselling for the struggling child to address underlying psychological drivers or feelings of indebtedness, or even skills-based coaching to develop practical capabilities.
  4. Clear Communication and Governance: A spendthrift trust provides a governance structure for assets. This should be complemented by clear family communication protocols. If appropriate and desired, involving adult children in discussions about the family’s wealth philosophy and the principles guiding distribution can foster understanding, even if full agreement isn’t always possible. For the child receiving support through a trust, clear communication about its purpose, how it operates, and any expectations tied to it is vital to reduce feelings of being controlled and to promote a sense of partnership in their own progress.
  5. Non-Financial Support and Mentorship: Financial transfers are but one form of support. The guidance, encouragement, and mentorship from parents and trusted family advisors can be equally, if not more, valuable. This is about investing time and wisdom, not just money. Financial socialisation theory underscores the importance of family relationships in developing financial literacy and capability. Mentorships can be designed to help the child discover new skills.

The Journey Towards a Balanced Legacy

The question is not just about asset allocation; it’s about nurturing a family legacy that balances compassion with responsibility, and individual support with collective harmony. A spendthrift trust can indeed be a valuable instrument in this complex orchestration, offering protection and a controlled means of support. However, its utility is magnified when it’s viewed not as a standalone solution, but as one tool within a broader, more thoughtfully constructed framework.

This deeper approach requires acknowledging the intricate family system, understanding the individual psychological currents at play, and managing the impact on all family members with empathy and transparency. It involves fostering capability, not just providing for needs. It’s about structuring support in a way that aligns with clearly defined family values and promotes growth. By moving beyond the initial, often tool-based advice, towards a more holistic, diagnostic, and relational strategy, HNW families can navigate this challenging terrain with greater wisdom, ultimately aiming for solutions that are not only financially sound but also emotionally intelligent and enduring for generations to come and give future generations a framework to deal with their struggles they will have to govern on. This journey often benefits from collaboration with advisors who specialise in these deep family wealth dynamics, helping to build not just financial structures, but stronger, more resilient families.