Thoughts on Relative that's bad with money

[JDARNELL]

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

 

[REWahoo]

... 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

Have you considered introducing him/her to some high-risk hobby to reduce life expectancy?

Yeah, I know...another thin idea...

 

[rs0460a]

set up this money to live off of for the rest of their life once the money is recieved.

1. Have him buy an immediate annuity (guaranteed income for the rest of his life).
2. Run away from this "train wreck" that is going to happen very quickly.

Good luck ...

- Ron

 

[martyb]

I agree 100% with Ron'Da!

 

[wabmester]

Create an income trust. This will protect the principle and give him a steady predictable income. Basically an annuity without the insurance aspect or commissions.

Or, if he's willing to give you control over the money, then you can give him a low-limit credit card. You pay off the balance and he gets a flexible income with a monthly cap.

 

[Cut-Throat]

I agree 100% with Ron'Da!

I agree 100% with running away. - Do it now! - otherwise you will get blamed when 'the plan' does not work!

 

[JDARNELL]

Yes it is not a good situation as our family is the haves and the have nots. My parent is the have and this sibling of my parent is the have not. Of course they both started with nothing. There is a lot of resintment there. Internal to that side of the family it is bad.

I think after a life time of bad financial habits it is going to be hard to change. My thoughts are how can I maximize income, minimal risk, try to keep principal in tacked, not to sure how I feel about the trade of of inflation over time, etc. Plus set it up where they can't blow it.

Keep em coming!

Tomcat98

 

[HFWR]

1. Have him buy an immediate annuity (guaranteed income for the rest of his life).
2. Run away from this "train wreck" that is going to happen very quickly.

Good luck ...

- Ron

Also agree, except I'd reverse the order...

 

[brewer12345]

If you want to get involved, see a lawyer to find out how not to get sued later on. Then contact TIAA-CREF and USAA about pricing on an immediate annuity.

 

[Texas Proud]

I agree with the reversal.....

YOU should not do anything... make a few suggestions like an annuity or a trust... and then let HIM do everything else... don't even ask how things are going...

Send him to a blood sucking financial advisor... he sounds like someone who SHOULD pay for one...

But, for someone who can not manage money it is best that they can not get to it at all... which leads to the annuity.. it also does not need to have any insurance component... just a plain old annuity with monthly payments... maybe even get one that adjusts with inflation...

PS... I heard of an in-law (who we don't see ever) that had gotten a settlement because her husband had died of asbestos... she ran though all the money in a little over 5 years and now is back to nothing... nobody could get her to do anything right... she kept the whole amount in a checking account because it was 'safe'...

 

[modhatter]

I am not a fan of annuities. However, in this case (which I am very familiar) as some of my own family fit the same mold) an annuity is the only way to go. If you put it in anything else, they will without question at some point "cash it out" for something they must have it for.

Case in point. If I left my mother $175,000 in a lump sum----I GUARANTEE you she would go through it in less than a year, and have little to show for it. No words of wisdom, no education, no financial planning would make any difference in her spending. So if you care at all about this person's life, then I would direct them to an anuity that could not be cashed out.

Just an opinion from someone well versed in this subject.

 

[wabmester]

Gosh, a lot of people here don't like to help relatives. That's a personal call. Assuming you want to help, here's one other thought.

If he's as poor as you say, he's probably dependent on medicaid. Is that the case? If so, he'll lose his benefits when he gets the inheritance, and that will open up a whole new can o' worms for him (and potentially the family). Even an annuity will potentially screw him.

 

[Bram]

Gosh, a lot of people here don't like to help relatives.

Perhaps that is because they have been burned, as I have.... BADLY... on the subject of "relative & money".

Furthermore, Tomcat did not say that the inheriting relative her/himself had asked for Tomcat's input.... it was OTHER relatives who were soliciting (with who knows what kind of motives?).

Personally, I would run like the wind.

 

[savedapile]

The relative did not ask for help. I would ask first if they wanted some.

If by some remote chance they say yes, then first advise to read a few choice books. Four Pillars and Your Money or Your life come to mind. Get info on annuities and give it to them to look at. Ultimately they need to make the choice what to do with the money, not you.

My relative who knew money was coming had it spent and more before it even got to them. They "deserved" it. Still have nothing to show except a bigger mortgage, car payments and a trip they bought airline tickets for and will put lodging, food etc. on a credit card. No money in the bank at all. And they call me cheap.

 

[Tadpole]

I would walk away saying (substitute your own opinion): If it were me, I'd buy an immediate annuity at _____. (A reputable annuity provider that you have pre-screened)

This is a set-up for a helper to be targeted as the villain of every bad day of this person's future.

 

[Arc]

First I'd ask him what he thinks. I assume he knew $ were coming and has probably given it some thought. This answer would probably be best gage for whether he is open to help or not. It may also tell you exactly how fast you should run away. Good luck.

 

[frayne]

Looks like a lose-lose situation any way you cut it. IMHO

 

[kaudrey]

Hi Tomcat,

I can understand your desire to help. My mom has a sister just like your relative.

My aunt and her second husband are both still working (she's 74 and he's in his mid 60s, or so). They have no savings, spend more than they take in (which isn't a lot), and always seem to have a different car or are talking about new computer equipment or whatever.

My parents, on the other hand, retired 12 years ago at 57 and will never run out of money (not rich, just LBYMers). After my grandmother died 5 years ago, my parents started giving my aunt some money each year at Christmas. They want to help a little, but not totally enable them. They do it no strings attached, because they realize they can't change the spendthrifts' ways. But it's not enough that they feel they can just go blow it all (well, maybe they do blow it, I don't know).

I agree that a discussion with your relative is a good place to start. Will he listen? Is he open to ideas? Or will he get defensive and tell you butt out? Hopefully, he'll be willing to listen. A trust or immediate annuity might the way to go here, assuming he agrees that the goal should be to make the money last a while.

 

[JDARNELL]

Perhaps that is because they have been burned, as I have.... BADLY... on the subject of "relative & money".

Furthermore, Tomcat did not say that the inheriting relative her/himself had asked for Tomcat's input.... it was OTHER relatives who were soliciting (with who knows what kind of motives?).

Personally, I would run like the wind.

Interesting how most folks assumed male. This relative is an aunt. My parent and this aunt can't really discuss money and get along due to the financial differences with the have and have not mentality. Over the years my parent has tried to help her but I think it has made it worse. My cousins don't want to see their mom in the poor house and they don't want to have to pay her bills in the long run. I am also a little concerned that everyone has their hand out when this occurs.

While this aunt has not asked for help over the years I have heard second hand that when this ever did happen she was going to ask me. I would really like to see her have some quality of life her remaining time because there is some emotional tie.

I really could see her blowing the money if it remains in her hands. I have thought about the annuity route, ladder CDs, and just depositing the interest in her account. She may want to leave some omney to pass to her two kids. No matter how you cut this it is going to be ugly.

Tomcat98

 

[JDARNELL]

Hi Tomcat,

I can understand your desire to help. My mom has a sister just like your relative.

Or will he get defensive and tell you butt out? Hopefully, he'll be willing to listen. A trust or immediate annuity might the way to go here, assuming he agrees that the goal should be to make the money last a while.

My guess is initially defensive, then some tears, then I an screwed what do I do?

Tomcat98

 

[Nords]

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.

 

[Caroline]

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:

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.

 

[Martha]

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.

 

[JDARNELL]

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

 

[JDARNELL]

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