Gambling addiction is a growing problem. How to protect family assets.

An estimated 2.5 million U.S. adults meet the criteria for a severe gambling problem in a given year, according to the National Council on Problem Gambling. Another estimated 5 million to 8 million have mild or moderate gambling problems.

This trend is playing out among teens, college students, and even postcollege young adults participating in online sports betting, casino gambling, and the new prediction markets. Notably, Americans wager roughly $150 billion a year on sports, and 48% of American men under 50 have an account on a digital sportsbook at sites like DraftKings, FanDuel, ESPNBet, and BetMGM, according to a Siena College survey.

It’s important for families of children who are battling gambling issues to erect appropriate guardrails. “As parents or grandparents, you want to leave your money behind with love, but not as lighter fluid," says Chad Holmes, the 36-year-old founder of Formula Wealth in Fairhope, Ala. “We don’t want to give these individuals the keys to their undoing."

Here are several ways advisors can help families whose children are battling a gambling addiction:

Ready to act? When clients first broach the subject of a child with a gambling problem, some advisors might be tempted to make sweeping recommendations on how to shore up the family assets. This can include not giving their child cash, removing them from joint accounts, locking up family jewelry, and securing their place of business.

While these recommendations are sound, the advice probably won’t resonate unless the client is willing to take these steps, says Preston D. Cherry, the 46-year-old founder and wealth advisor at Concurrent Wealth Management in Houston. And, if they aren’t ready, the advisor will create tension, which can hinder collaboration.

When a gambling addiction comes up in conversation with families, Cherry’s first step is to get a sense of the parents’ willingness to take protective steps. He starts by asking them about their long-term agenda for their adult child’s financial independence. He also asks whether they are content with their overall investment—emotionally and financially—in their child’s development to date.

These are two critical questions because they lead to a discussion about how parents may be doing more harm than good if they are giving money to a child with a gambling problem to help pay bills or meet other obligations, for example. Many parents might not realize they are financially enabling their child’s gambling; sometimes they’re looking for permission to stop, Cherry says. Clients are more apt to appreciate an open dialogue versus a lecture, and pushing solutions they aren’t ready to hear doesn’t help the family long-term, he says.

Protecting funds. Once advisors have determined that clients are interested in protecting their assets, they can suggest potential next steps. This often includes working with an attorney to help ensure family money can’t be spent willy-nilly.

A spendthrift trust, for example, allows beneficiaries to receive certain assets only if they meet specific conditions—helping to safeguard their inheritance. Attorneys can help ensure the trust language meets the family’s needs. It’s also worth naming an independent corporate trustee so siblings or other family members don’t have to be the gatekeeper for the addicted individual.

Martin Baker, the 48-year-old director of financial planning at Canby Financial Advisors in Framingham, Mass., worked with parents whose sons were listed as each other’s contingent trustee. But one of the sons had a gambling problem, and the family decided to name a corporate trustee to avoid potential issues.

Beneficiary planning. Holmes also recommends that parents remove a child who has a gambling problem from their accounts, including credit cards and other lines of credit. Sometimes parents, especially older ones, add a child as a joint owner to their bank account, but Holmes generally advises against the practice.

“It can definitely get messy if that child is exposed to lawsuits or debt issues," Holmes says. It’s also advisable in such cases to make sure the parents’ accounts, including life insurance, IRAs, and 401(k)s, don’t pass directly to the child, he adds.

Stepping back. Sometimes, against advice, parents continue to support their children financially. Baker’s clients, for example, continued to pay for their son’s food and clothes, leaving him with more discretionary money to gamble with. They even considered buying him a home so he could be close by.

Parents aren’t always willing to stop giving their child money, especially if the assets are plentiful, and sometimes even if they’re not. This can put parents in a tight financial spot. Advisors have to walk a fine line in these situations because it’s ultimately the parents’ decision what to do with their money.

“You’re a parent first, and it’s counterintuitive to not care for your children," Baker says. “All I can do is provide them with all the information, but ultimately it’s still up to them how they want to allocate their assets and spend their resources."

Just wait. Financial advisors may not have come across this issue with clients yet, but a gambling addiction is something they’re likely to confront eventually. “The idea of gambling is not a new risk, but it’s an evolving risk," says Julie Penwell, a 27-year-old assistant vice president and financial at Wealthspire Advisors in Seattle. “It’s one of the risks we see today that may be a little more prevalent than if we were having this conversation 10 years ago."