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Re: Thoughts on Relative that's bad with money
Old 12-29-2006, 01:55 PM   #21
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Re: Thoughts on Relative that's bad with money

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Originally Posted by Tomcat98
Over the years my parent has tried to help her but I think it has made it worse.
The only person who can solve this problem apparently isn't motivated to do so. She may want to share the pain & suffering but she's the only one responsible for her situation.

Even if you get her into an immediate annuity the lump-sum annuity buyers would be all over her.

Run away fast.
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Re: Thoughts on Relative that's bad with money
Old 12-29-2006, 04:30 PM   #22
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Re: Thoughts on Relative that's bad with money

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Gosh, a lot of people here don't like to help relatives.
The advice that's been given here certainly comes across as uncaring at times. But with all due respect, I don't agree with this interpretation. I believe that people here are warning Tomcat to run away because they HAVE wanted to help their relatives, have done their LEVEL BEST to do so in many cases, and have experienced a painful and negative result.

It's not just a question of WANTING to help, it's a question of whether you CAN help or not.

Logically, you'd like to think that everyone is a responsible adult. But many make decisions as though they are still children.

You'd like to think that they'll welcome help from relatives and friends and be grateful, or at least neutral, about the contribution. But many of them resent the help and blame the kindhearted volunteer for ruining their lives when things don't go well.

You'd like to think that they'd be delighted when their loved ones make good, especially when success was won by dint of hard work and LBYM. But many are jealous and angry. When others do well while they do poorly, they feel "less than" and they lash out in response. Any advice you give only reminds them that they're losers in comparison.

I think this pretty well sums it up:

Quote:
Over the years my parent has tried to help her but I think it has made it worse. ... I am also a little concerned that everyone has their hand out when this occurs.
It's my experience and the experience of many on this board, from what I can tell, that helping people causes them to want and need even more help. Bailing them out leads them to believe that there will always be a soft place to fall, and that they can continue their immature ways. Lack of negative consequences is no favor to them. It is, in fact, a penalty. Providing them with someone to blame (yourself) only delays the time when they step up and take responsibility for their own decisions.

This is absolutely heartbreaking, when you're talking about someone you love. Standing by and watching your Aunt fritter away the only lump sum she'll ever have, without trying to save her from herself, will be difficult and painful. But realizing that you CANNOT help, and can only make it worse if you try, may help you to get through it.

Alternatively, you can realize that you're going to take it in the teeth whatever you do, and get right with her lack of gratitude and blaming behavior before it happens. If you expect nothing out of your effort, but only make it because it's "the right thing to do" in your boook, then perhaps you can minimize your inevitable frustration and hurt.

Given your feelings for this person there is probably no easy way out. Such is the human condition, alas.

I wish the very best of luck to you, whatever you choose to do.



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Re: Thoughts on Relative that's bad with money
Old 12-29-2006, 04:50 PM   #23
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Re: Thoughts on Relative that's bad with money

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Originally Posted by Tomcat98
Good evening,

I have a relative that is horrible with money. Looks like this relative is going to get about $175K after another $175K goes to pay off debts (credit cards) in the next couple of months as part of an inheritance. The person is 64 years old and doesn't have 2 nickels to run together for heat and has never really had anything.

Some of the other family members who are talking to me but not each other are beginning to ask me to help this person set up this money to live off of for the rest of their life once the money is recieved. I have some initial ideas in mind but it seems very thin to me.

Any ideas, thoughts, suggestions?

Tomcat98
Has anyone talked to her at all about how she spends money? $175,000 in credit card debt sounds like a big big problem. Have her children sat down with her and talked to her about this problem? Has anyone suggested counseling? If she realizes she has a problem and says needs help, then you could come in and discuss trusts or annuities.
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Re: Thoughts on Relative that's bad with money
Old 12-29-2006, 05:21 PM   #24
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Re: Thoughts on Relative that's bad with money

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Originally Posted by Caroline
It's my experience and the experience of many on this board, from what I can tell, that helping people causes them to want and need even more help. Bailing them out leads them to believe that there will always be a soft place to fall, and that they can continue their immature ways. Lack of negative consequences is no favor to them. It is, in fact, a penalty. Providing them with someone to blame (yourself) only delays the time when they step up and take responsibility for their own decisions.

This is absolutely heartbreaking, when you're talking about someone you love. Standing by and watching your Aunt fritter away the only lump sum she'll ever have, without trying to save her from herself, will be difficult and painful. But realizing that you CANNOT help, and can only make it worse if you try, may help you to get through it.

Alternatively, you can realize that you're going to take it in the teeth whatever you do, and get right with her lack of gratitude and blaming behavior before it happens. If you expect nothing out of your effort, but only make it because it's "the right thing to do" in your boook, then perhaps you can minimize your inevitable frustration and hurt.
I guess I am in the "right thing to do camp" as far as helping her and I know it will be frustrating.

This will actually be the 2nd lump sum as when they get the first installment her share goes to the tax man and the bank to pay off part of the $175K. My guess is this will really hit her hard when she sees her sister take her share 1031 exchange and buy another rental house while she gets "goose egg."

The second lump sum will come in a couple of months and this is when she will get the additional $175K after she pays off the rest of her debt.

Tomcat98
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Re: Thoughts on Relative that's bad with money
Old 12-29-2006, 05:23 PM   #25
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Re: Thoughts on Relative that's bad with money

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Originally Posted by Martha
Has anyone talked to her at all about how she spends money? $175,000 in credit card debt sounds like a big big problem. Have her children sat down with her and talked to her about this problem? Has anyone suggested counseling? If she realizes she has a problem and says needs help, then you could come in and discuss trusts or annuities.
Well her kids and sister have tried. I think she even tried counseling once. She has this pitty and I just can't learn this attitude. Trust and annuities will be a real stretch.

Her kids hate credit and debt. They are good with money but could do much better if they used these tools for more gain.

Tomcat98
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Re: Thoughts on Relative that's bad with money
Old 12-29-2006, 06:20 PM   #26
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Re: Thoughts on Relative that's bad with money

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Originally Posted by Tomcat98
I guess I am in the "right thing to do camp" as far as helping her and I know it will be frustrating.
FWIW, I've been in similar shoes. All the other relatives did the RUN AWAY thing, so I decided to pick up the slack.

It doesn't always end badly. At least it hasn't yet. The spendthrift relative is happy with the stable income stream and security of principal. The other relatives are happy that somebody stepped up to the plate. And I'm happy that I don't have to watch a fiscal implosion.
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Re: Thoughts on Relative that's bad with money
Old 12-29-2006, 07:05 PM   #27
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Re: Thoughts on Relative that's bad with money

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Originally Posted by wab
FWIW, I've been in similar shoes. All the other relatives did the RUN AWAY thing, so I decided to pick up the slack.

It doesn't always end badly. At least it hasn't yet. The spendthrift relative is happy with the stable income stream and security of principal. The other relatives are happy that somebody stepped up to the plate. And I'm happy that I don't have to watch a fiscal implosion.
How did you do it?

Tomcat98
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Re: Thoughts on Relative that's bad with money
Old 12-29-2006, 07:31 PM   #28
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Re: Thoughts on Relative that's bad with money

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Originally Posted by Tomcat98
How did you do it?
This was a fairly long process, and it took years to work all the bugs out.

1) Discussions about saving and spending. Didn't help.

2) Strongly encouraged them to place a chunk out of arm's reach for use only in case of emergency. The "emergency" came rather quickly, so that stash was depleted.

3) Spoon-fed them income on demand. Quickly became too time-consuming for me to vet the requests.

4) Gave them a credit card with a low limit. Paid the monthly bill from their funds (in my account). Still working, but requires an occasional lecture that goes something like "what the hell were you thinking?" and a few minutes of my time to reverse the charges.

Now, these steps were before they were in line for a significant inheritance. Since this person had medicaid benefits, they were at risk of losing those benefits if they had a significant change in income or assets. I was astounded at how rich those benefits were (free long-term care!), so I had to scramble *before* they recieved the inheritance.

I won't bore you with those details, since it sounds like it's too late to protect your relative from inherited assets (e.g., for purposes of medicaid benefits), but that was a non-trivial exercise.

As others have stated, an annuity or trust seems to make sense for your situation. Both will require willingness and cooperation from the relative, unless they are truly incapable of making their own decisions.
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Re: Thoughts on Relative that's bad with money
Old 12-29-2006, 07:54 PM   #29
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Re: Thoughts on Relative that's bad with money

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Originally Posted by wab

As others have stated, an annuity or trust seems to make sense for your situation. Both will require willingness and cooperation from the relative, unless they are truly incapable of making their own decisions.
This is how I am leaning also. Thanks for sharing.

Tomcat98
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Re: Thoughts on Relative that's bad with money
Old 12-31-2006, 01:07 PM   #30
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Re: Thoughts on Relative that's bad with money

An annuity does sound like a good way to go. This discussion has been useful to me because I gave a relative some money for retirement savings and it's becoming increasingly clear that the relative is going to find a way to blow it way before retirement. I'm going to consider suggesting they just put it into an annuity.
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