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When Someone Leaves You Money, Can You Ignore the Strings Attached to It?

Three years ago, Reddit user Quackkhead received a $1,500 wedding gift from his father. The gift came in the form of stock in a small, fledgling company called American Performance Technologies, presenting Quackkhead with a dilemma: He could either sell the penny stock, which was almost certain to collapse (and later did), and risk upsetting his father, or he could hold onto it, and watch $1,500 evaporate into the financial ether.

Ultimately, Quackkhead chose family over finances — despite the outcry from fellow Reddit users, who said his father was the victim of a classic “pump-and-dump” scheme and urged him to divest himself of the stock immediately.

The scenario illustrates how fickle our relationship with money often is, especially when it’s at odds with our personal relationships. And nothing is more personal (and fraught) than receiving a sizable financial gift from a loved one and feeling obligated to use it in a specific way.

Say you inherit an unexpected windfall from a recently deceased relative, but with the expectation that you’ll keep the item as is, not liquidate it. Or a family heirloom that doesn’t carry much significance for you but could be converted into some much-needed cash. The most common instance might be at weddings, where there’s a tacit understanding that the couple will use the money they receive to buy and furnish their first home together.

Whatever the case, it’s an uncomfortable scenario for the recipient — so much so that not even financial experts have a hard-and-fast rule on how to maneuver it. “It would be nice to honor the person’s wishes if it makes sense,” says Cary Carbonaro, a financial adviser at United Capital of New York & New Jersey, and author of The Money Queen’s Guide: For Women Who Want to Build Wealth and Banish Fear. “That said, the money is yours and you can do what you want with it (unless they make you sign a binding contract). But if you do defy their wishes, don’t expect to get anything else in the future.”

The calculus changes when you’re dealing with the wishes of the dead versus the living, Carbonaro says. The former isn’t around to question why you reneged on the agreement (because, you know, they’re dead).

That said, the same general rule applies: If you agreed to the terms of the gift, you should honor them.

“When a family member communicates his/her expectations/needs to you before they die, in general, it’s best to respect their needs or wishes,” says Terri Orbuch, sociology professor at Oakland University and an expert on the intersection of finances and relationships. “This happens all the time in relationships — we express our needs to a partner or family member (this is what I need or want), and we would like them to respect and listen to us.”

There are times, however, when the limits on a gift aren’t expressed upfront, in which case Robert Weagley, emeritus chair of the personal financial planning department at the University of Missouri, recommends that the recipient go back to their benefactor and try to explain why they’d like to sell the family jewelry, or spend the money differently than intended. “The smart child would say, ‘Mom/Dad, can we have a candid conversation about what my real needs are?’ And explain to them how they’d like to use the money. Because I think most parents would understand,” Weagley says.

A more interesting question is whether it’s acceptable to try to impose these kinds of restrictions at all. As Weagley notes, sometimes a person’s parents have more personal finance knowledge and try to impose limits on a monetary gift as a way to ensure the money is spent wisely.

But other times, the person giving a gift has no idea as to the recipient’s financial situation, and in those cases, a restriction can be presumptuous at best, and controlling, burdensome and rude, at worst.

Says Weagley, “You can’t really have strings attached, or it’s not really a gift, is it?”