Having money to help the kids

[Teacher Terry]

If you are on SSDI or SSI you have presumed eligibility and don’t need to provide medical records or other records to qualify. Other people apply and are told to obtain a copy of their medical records which would have a diagnosis, school records if they have a diagnosis from childhood, etc. Most of our clients are not on either. I have been retired for awhile but did this work in 3 states and since the program is 78% federally funded the criteria to qualify is determined by them.

What you read was how people automatically qualify which is what I talk about above. Above that is who may apply and may qualify for VR and it lists 3 federal criteria: you have a disability that affects your ability to work, you can benefit from the services and need the services to obtain or maintain employment. I just went to their website and the criteria hasn’t changed. If your son doesn’t have a childhood diagnosis or recent diagnosis VR will pay for the person to be evaluated by the appropriate professional to see if they qualify for a diagnosis. Many of the people can’t afford to do that because they aren’t working.

 

[RetiredHappy]

If you are on SSDI or SSI you have presumed eligibility and don’t need to provide medical records or other records to qualify. Other people apply and are told to obtain a copy of their medical records which would have a diagnosis, school records if they have a diagnosis from childhood, etc. Most of our clients are not on either. I have been retired for awhile but did this work in 3 states and since the program is 78% federally funded the criteria to qualify is determined by them.

What you read was how people automatically qualify which is what I talk about above. Above that is who may apply and may qualify for VR and it lists 3 federal criteria: you have a disability that affects your ability to work, you can benefit from the services and need the services to obtain or maintain employment. I just went to their website and the criteria hasn’t changed. If your son doesn’t have a childhood diagnosis or recent diagnosis VR will pay for the person to be evaluated by the appropriate professional to see if they qualify for a diagnosis. Many of the people can’t afford to do that because they aren’t working.

He had been seeing clinicians since 3 yo and had written diagnosis since 7 and a ton of speech and behavioral diagnosis and tests up to his college entry.

One of my challenges is that he is proud and does not want assistance, other than from me. He does not want to admit that he has ASD even though it is apparent in interviews and prolonged interaction with others. He has some involuntary ticks as well as going off into space during interactions. Changes are very difficult for him.

 

[Teacher Terry]

It’s a voluntary program and you have to want to work to be accepted. Maybe you could explain that your taxes pay for the program and everyone is only one accident or illness away from having a disability that could affect their ability to work.

 

[Safire]

The question how much financial help to give kids has been discussed before, with many opinions given on the subject. I recently helped my kids but expect 100% to be paid back. It starts with one of my kids and spouse trying to buy an FHA Repo, no problem qualifying, but then problem after problem creating delay after delay, to the point, 6 months had elapsed.
After reading about how MMM made an impulse home purchase, I looked into his method, at about the 4 month time frame, just in case I had to help with the purchase. Following his write up, I did the following.
I opened an Interactive Brokers account and moved my Taxable account of Vangaurd mutual funds there. I don't want to sell and incur the tax hit. The account has Margin use available. I can margin up to 50% of my balance. I went 39%. More on that later*. I recently wired their homes purchase price to my bank. Then I had a mortgage written between them and me. I wired the money to the title company. They have the house I have a mortgage. The plan is for them to complete all repairs and make it ready for a traditional mortgage. I expect them to get a new mortgage within one year, I had the contract written for two years just in case. The interest rate for the margin loan is 1.35%. *If the market had a flash crash, causing my margin to go above the 50%, IBKR would sell some of my mutual funds to bring it back to 50%. I don't want that to happen. As a precaution, I opened a home equity loan against my house, I will transfer $100,000 into my IBKR account bringing my margin loan down to about 33%. The Home equity loan is only 0.99% for the first 6 months. I wrote the mortgage at 4% for the first year an 6% for the second, I hope that 6% is a big incentive for them to get the house mortgage ready.
I thought this might help others if they have funds they don't want to sell, but would like to make use of the money. More details on MMM blog.

Haven't read all the replies but this isn't a good idea.

What if they cannot or will not get a "traditional" mortgage within a year? Would you forecloae in the property? Would you be willing to forecloae on the mortgage if you had a lein on the property?

It is bad business loaning money to friends and family unless you never expect it back and mentally write it off as a gift if things go wrong.

Ask me how I learned this the very hard way

 

[Koolau]

Haven't read all the replies but this isn't a good idea.

What if they cannot or will not get a "traditional" mortgage within a year? Would you forecloae in the property? Would you be willing to forecloae on the mortgage if you had a lein on the property?

It is bad business loaning money to friends and family unless you never expect it back and mentally write it off as a gift if things go wrong.

Ask me how I learned this the very hard way

Never loan money to friends or relatives. It ruins their memories.

 

[HolaDEA]

When my dad passed away, he left good sized 401k behind. He was blue collar but saved aggressively. I thought my mom would be set, but my sister has had significant health problems, is going though a divorce, and has four kids. She brings all her problems to my mom to solve by writing a check. My mom just can’t say no. I really worry about my mom having enough money and also what my sister expects to do when my mom passes. I don’t care if my sister takes all my moms assets but I hope she doesn’t expect to start dipping into my pockets.

 

[Time2]

Haven't read all the replies but this isn't a good idea.

What if they cannot or will not get a "traditional" mortgage within a year? Would you forecloae in the property? Would you be willing to forecloae on the mortgage if you had a lein on the property?

I doubt I would foreclose, but I may keep the contract at 6%, and slowly sell off some mutual funds to get rid of my loan. 1 year from now, they should easily have an income over $200k, so I would hope they will qualify for a mortgage on a $240k house.

It is bad business loaning money to friends and family unless you never expect it back and mentally write it off as a gift if things go wrong.

Ask me how I learned this the very hard way

Yes, in the end if there was a default, it would be subtracted from her inheritance.
I do hope this is all over in one year though. One reason being, I can't control my income for tax planning if I have interest income.

 

[brett]

Heh, heh, son asked me to co-sign a loan with him. I said "no" but gifted him a "starter amount" for the business he wanted to open (a bar/restaurant) Looking over the paperwork for the loan, there was virtually no limit to my liability (theoretically, about $100K, but that could have sky rocketed under certain conditions.) Guess what. The business went bust. Not sure how he ever got out from under. His next venture - same thing - did well until his partner absconded with the church funds - er, well, you know. His third attempt did very well, he also bought a house which he made a fortune on. Then he blew it all on a farm which, to this day, I don't know if he is out from under it.

My point. NEVER co-sign anything when you are retired. You have no way to make up a loss that may be relatively unlimited. A young person can find a way out of a big loss (bankruptcy if need be) but bankruptcy for a retired person is a very sad thing indeed. Just sayin' so YMMV.

Agree completely. We would never co sign a loan for anyone...child or relative.

Why....there is a clear reason why lenders do not feel they are a good credit risk and require a guarantor. That speaks volumes to us.

At one point we were considering helping a SIL's business. We decided against it. If his business was going to go bankrupt any monies we would have provided would go into the creditor pool. We decided to hold our powder and wait.. If the did go bankrupt we would be more than happy to assist financially after the fact.

Fortunately the business stayed afloat and flourished. Those hard times made him a much better manager.

 

[teej1985]

My parents have gifted me money for down payment, but they would never co-sign for anything, which makes perfect sense. They justify it as advanced inheritance, rather me enjoy it while they are living.

Lending to or borrowing from family just seems super awkward.

What if you need to foreclose?

 

[hogfan55]

I have two kids trying to figure out how to buy homes.
They don’t like my advice, “save more”. They entered adulthood years ago.

Neither are savers. In fact both tend to be “blowers”.
I hate wasting money but I like a nice quality of life.
We will leave something for the kids but I’m moving more towards supporting charities and blowing most myself.
Most of what my kids get is likely to turn into consumable assets: cars, clothes, restaurants. I’d rather see some of my money have a positive impact on the world.
It’s curious that our kids are like us in many ways but so different in others.
I would always help them with basics. Would never co-sign a loan with them.

I can so relate. I was given nothing other than a good raising by my parents. I’m now in the same place as you. I worked and saved and sacrificed for 50 years. Now my children refuse to work and have squandered any so called “help” I have given them. One of the biggest regrets I have is not being able to really help them because any way I tried was a waste of time and money. I’ve decided to hopefully exit this world with $1 in the bank but if there is more it will go to charity where it can actually help others.

 

[Joylush]

I would think that your children owing you money would have a high potential to alter your relationship with them in a negative way.

I financed my daughter’s mortgage saving her a boatload in closing costs. I only did so after she came up with 20%, had extra in the bank to cover maintenance cost, and after seeing her credit score. That was five years ago. I used to escrow for taxes and insurance but turned that over to her to do herself after the first couple of years. House has increased in value 100k since then.

In no way has this altered our relationship. And my daughter is secure in knowing she could work for any wage anywhere and always afford her $329 a month mortgage payment. This year I’m going to lower the interest rate on the loan from 3.5% to 2% which will save her an extra $65 a month.

The girl is 30 years old and could pay her mortgage off in full from her savings 5 times over. Being her lender was a low risk proposition for me and she would never skate out on a bill, much like me.

When her twin brother bought his first house there was no way I’d ever consider being his lender and I know that might lead to potential relationship issues. I did help him with the down payment, with no expectations of repayment, just a bonafide gift.

So much depends on the nature and maturity of the adult child as to whether it might change the relationship.

 

[newlyold]

Cover their needs for security while they're young--prior to college graduation. After that rewrite your wills so your favorite charities are supported. Your kids will have the ability to stand on their own two feet if you did a good job raising them, and if they're healthy. We've re-written our will so our funeral costs & debts will be covered when we die, but the remainder doesn't go to the kids--it goes to things like the American Cancer Society, Minnesota Public Radio, and the like. We want our passing to bring good to many instead of only sending unearned income into the kids' hands. Perhaps if/when they have children we'll rewrite it again to cover college costs for grandkids. We've seen too many cases where inheritance funds going to offspring are quickly squandered, and the kids end up hurt by the money instead of using it to purchase a home, start a business, or squirrel it away for their own retirement. We can make a difference in the lives of many people by donating those funds to medical research and to ways of making the lives of many people better. Of course, we discussed this with our children prior to making those changes to the wills, so the kids don't think we're angry or punishing them in any way. It was easy news for them to accept, simply because we've always been that way with charitable donations; they weren't surprised or dismayed in any way. They'd expected it, and they've come to look up to us as examples of how people should treat their good fortune: share it with those in need, rather than hide it away within a family. No one needs more 1-percenters, but we all need great health care and medical research, and openness in news reporting about politics.

 

[Koolau]

My parents have gifted me money for down payment, but they would never co-sign for anything, which makes perfect sense. They justify it as advanced inheritance, rather me enjoy it while they are living.

Lending to or borrowing from family just seems super awkward.

What if you need to foreclose?

Yep, leant BIL a significant chunk of cash many years ago. Eventually, he stopped paying on it. What do we do? Un-invite him to Christmas and TG? Probably not. It was obvious that he felt we were "rich" and could afford it. We just never spoke of it. As I said, lending to friends or family ruins their memories. But I did learn my lesson though YMMV.

 

[brett]

It is better to give with a warm hand than a cold hand.

 

[RobLJ]

Over the last 10 years, we've gifted the oldest (the winemaker) a used Subaru Outback and Legacy and recently sold the Silverado at 60% of value to them since they are thinking of a camping trailer to camp with the 2 year old and 4 year old. I suspect we'll cancel the Silverado agreement when we get taxes next year, which will be enough to pay off the RAV4 Prime we bought since DW didn't like driving the Silverado. They did sell their Versa and give us the money from the sale for the Outback; neither of us liked them driving from Cali Central Valley to Colorado in the winter in the Versa and they needed more room.

The youngest moved in with us last March when he was laid off in Seattle in Dec 2019, but he got a programming job almost immediately. We've got loads of room and he isn't sure whether he will stay with the job, so I told him buying wasn't the greatest idea particularly since Reno prices have shot up, spectatularly. We're in no hurry to kick him out; he pays for the booze, but we may ask him to pay 300-350$/month in fall since I figure that's about what he costs us. At some point early next year, I figure he will look for a rental. Or if we move, which is a possiblity, we may sell him the house at a discount with an agreement to use the downstairs bedroom (which he's now using) when we come back to Reno in winter/spring.

Once we shuffle off the mortal coil, I suspect they'll be getting some real money but right now, I figure we'll continue contributing to the grandkids' college funds every year and helping out. They both are financially independent which was the goal (the yewt could easily move out into a rental and he looks after the cats and the house while we are gone camping/hiking). It's quite possible the yewt will take a job in San Francisco next year, since he's had a few offers. We haven't spent what we have taken out the last 3 years and that is before SS.


I don't see anything particularly wrong with the OP's help or the other poster with the son who isn't working, with the proviso that one should not jeopardize their own safe retirement to help. I/DW refused to cosign a car loan for my sister&AgedP (but we were willing to give them a used car from DW's BIL and we contributed to the AgedP's support every month); every situation has it's own unique circumstances. It makes sense to me to try to do what you can, what makes sense, and what does not put you at risk while you are living. This intersects uneasily with long-term early FIRE, obviously, but I am thinking the later in FIRE we go the more we can do (particularly after taking SS).

 

[Souschef]

It is better to give with a warm hand than a cold hand.

That really sums up our philosophy too . Well said!

 

[aja8888]

That really sums up our philosophy too . Well said!

Same here.

 

[Sunset]

When my dad passed away, he left good sized 401k behind. He was blue collar but saved aggressively. I thought my mom would be set, but my sister has had significant health problems, is going though a divorce, and has four kids. She brings all her problems to my mom to solve by writing a check. My mom just can’t say no. I really worry about my mom having enough money and also what my sister expects to do when my mom passes. I don’t care if my sister takes all my moms assets but I hope she doesn’t expect to start dipping into my pockets.

What happens to your mom when she has zero assets ? Can she afford on SS to pay the housing expenses and medical ?

As to the [-]leech[/-] asking sister, just tell her NO when she asks you. Besides you may be supporting your poor Mom at that time.

 

[Joylush]

When my dad passed away, he left good sized 401k behind. He was blue collar but saved aggressively. I thought my mom would be set, but my sister has had significant health problems, is going though a divorce, and has four kids. She brings all her problems to my mom to solve by writing a check. My mom just can’t say no. I really worry about my mom having enough money and also what my sister expects to do when my mom passes. I don’t care if my sister takes all my moms assets but I hope she doesn’t expect to start dipping into my pockets.

Your Mom or your sister? I was duped into giving my parents a large sum of money which I fortunately attached to their home so I would get it back eventually. This was to make their retirement easier.

They were able to pay off a loan in full they had on two rental properties so had that extra income to help them in retirement. Well apparently they weren’t all that needy and decided to buy my brother (a lifelong criminal released from prison for the second time who was recently married to a woman he met on his prison work release bus) a house.

Boy did I feel duped. I no longer have a relationship with any of them.

 

[Letj]

Thank you, Teacher Terry. My son has high functioning autism spectrum disorder and probably does not fall under vocational rehab. I will certainly look into it.

That’s the situation with my daughter as well. To anyone who doesn’t know her well she appears appears confident and capable but in reality she has many comorbidities which would make it difficult to hold a job. I am resigned to having to provide for her.

 

[pb4uski]

.... Although all of these grandkids are in their 20s and 30s, they were very surprised that they were not receiving more from his estate.

Sad. The downside of financial coddling methinks.

 

[pb4uski]

He does not have Asperger's. He was first classified as having communication and language development disability, before the days of when Autism Spectrum Disorder was coined.

To be specific, he has auditory processing disorder so he finds it difficult to process and retain what he hears.

His reading comprehension is very good and has high IQ, hence he successfully pursued 2 separate Bachelor degrees to improve his chances for employment. I had spoken to some of these agencies who told me that with his 2 Bachelor degrees, he would be deemed unsuitable for their assistance.

So it sounds like jobs and/or professions that rely more on written communication (via email, documents, etc.) rather than verbal communication would be his sweet spot?

 

[pb4uski]

Never loan money to friends or relatives. It ruins their memories.

+1 if you can help it.... "Neither a borrower nor a lender be".

Though I did lend $3k to a friend about 20 years ago for him to get rid of his gold-digger, cheating wife in a divorce. He paid me back in full, earlier than expected. I continually remind him that it is the absolutely best $3k that he ever spent.

 

[Joylush]

+1 if you can help it.... "Neither a borrower nor a lender be".

Though I did lend $3k to a friend about 20 years ago for him to get rid of his gold-digger, cheating wife in a divorce. He paid me back in full, earlier than expected. I continually remind him that it is the absolutely best $3k that he ever spent.

Sounds like you were both good friends to each other. I generally do not recommend loaning money to friends/family. I have had several bad experiences.

But then again I’ve also had several like yours. Three of them were secured loans to qualified people who didn’t need the help but the arrangement was good for them and good for me. Another I made clear that I didn’t expect to ever be paid back because I didn’t want it to damage the relationship. They paid me back in full which attests to their character in my mind although I would not have thought less of them had they not.

When I asked them why they insisted on repaying me they said, “You were a godsend to me when I was in need. I would never not pay you back or do anything to make you feel taken advantage of. And now I know you have my back. If in the future I ever need help again I know you would be there for me if you could be and I wanted you to know I would be worthy of your help.” And I believe him.

So it does work out sometimes but more often than not it doesn’t.

You are a good friend.

 

[RetiredHappy]

So it sounds like jobs and/or professions that rely more on written communication (via email, documents, etc.) rather than verbal communication would be his sweet spot?

Yes, if only he can find such positions and get hired. I asked him to look for jobs like online chat and such. Zilch to date. We did have him work for us for 5 years when he first graduated from university while we were running our business, until we sold. The new owners laid off a bunch of folks 6 months later and that included him. He has very strong work ethics and is generally a very good "kid". His strength is in Math and just completed his Accounting degree when the pandemic hit. He does not smoke, drink, gamble, do drugs etc. Sometimes I think of setting up an administrative type support business and have him work with me to create income for him. But then it sounds like work to me.