My sister is going through a divorce. Her husband was making a lot of money, but they were both financially irresponsible and racked up hundreds of thousands of dollars in debt, most notably due to at least $ 150,000 at the Internal Revenue Service in back taxes for a company. They also bought a vacation home, but had to sell it recently due to the divorce.
My sister told my parents that she and her children were crying about having to sell the vacation home. My 85 year old dad took out a $ 100,000 home equity loan to put him down on a new vacation home. All of this was done without being told. (My parents bought the new house in their name so it wouldn’t be challenged in the divorce.)
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All this before the divorce is final; she has no idea how much support she will receive. In addition, she has a child in college and two more who are expected to start in the next two to five years. She recently started working full time, but even with a good salary and possible child support, she will still have to pay a large mortgage on her primary residence, plus the mortgage on the new vacation home.
My parents gave me $ 40,000 as a down payment for a small apartment almost 20 years ago. I didn’t ask for it and it certainly didn’t require taking out a six-figure home equity loan in their old age.
She has never been financially responsible, always living well beyond her means. My parents were also extremely generous to her children, paying for everything my sister asked them, including computers and international travel.
In fairness, my parents gave me $ 40,000 as a down payment for a small apartment almost 20 years ago. I didn’t ask, but they insisted they had the funds, and it certainly didn’t require taking out a six-figure home equity loan in their old age. Funds were extremely tight growing up, but in retirement they have managed to live comfortably so far. However, the big home equity loan in their old age will significantly tighten their finances, which I am also feeling.
I was very upset that my sister placed such a financial burden on my aging parents, as well as the fact that there is now a $ 100,000 home equity loan on the house, which is probably most of our money. heritage. I realize that my parents can do whatever they want with their money, but I am upset that it was done behind my back and by the inequality of the situation. I expressed my extreme displeasure at the burden this places on them, as well as the fact that they always gave more to my sister and her family, even though they were completely irresponsible financially, even with a very high salary. My parents said they wanted to do this and that I was mean.
Am I right to be angry about this?
Feeling despised in New Jersey
Your parents gave you and your sister financial gifts. She received $ 100,000, which is way more than what you had when you started out. That is true. She has two children, a husband about to go out, and of course she surprised your parents at a generous – perhaps even vulnerable – time. They didn’t want to see their daughter in pain. So they gave him a down payment for a vacation home and put the deed in their name. Your sister feels better and more secure. It seems to me that you have pretty smart parents.
There is also the question of who has the most money. Your parents gave you the $ 40,000 in 1990. You didn’t say no, and if your sister was unhappy with the gift at the time, she probably didn’t tell you about it. If she did, you didn’t mention it. If she hadn’t, she might have thought you needed it at this point in your life. She might have asked herself, “Is life fair? You know what? Life is not fair. And then she would go back to her studies or a date with the man she would marry, or whatever she was doing at the time.
Your parents could have done a lot with the $ 40,000 they gave you in 1990, which would be worth about $ 75,000 in 2016 dollars. Your parents could even have bought a second home for their retirement.
Your parents could have done a lot with that $ 40,000 in 1990, which would be worth about $ 75,000 in 2016 dollars. Your parents could have bought a second home for their retirement. The median home price was $ 118,400 in 1990, so $ 40,000 would have been a good start. Today, the median price is $ 306,700. That $ 40,000 would probably not be enough for a down payment today. The S&P 500 is currently hovering at 2,164, up over 600% from 306 in 1990. They could have invested that $ 40,000 in stocks.
Sibling rivalry and petty jealousy can masquerade as genuine concern, for example, our parents’ ability to retire or lead to thoughts such as “Haven’t they had to put up with enough?” ? Both of these concerns may have a basis in reality, but I am wary of siding with one sister over the other when both have received their fair share of their parents’ money. I saw it before with a sister who felt that her single sister received preferential treatment from her mother. Of course, $ 100,000 is a considerable amount of money. But your parents may decide to keep the house in their name and leave it to you both after they leave.
If you think your sister should turn down her gift and are so concerned about your parents’ financial well-being, maybe you should consider returning that $ 40,000 as well.
(This column was republished on June 18, 2017.)
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