My son and daughter-in-law are expecting a child. They live in a small, two-bedroom apartment, and I’d like to see them take advantage of the depressed housing market and low interest rates to buy a home. To help them do this, I’m considering giving them $50,000 toward a down payment. What worries me, though, is that they don’t seem to be very good at handling money (for one thing, they never manage to pay off their credit-card balances). I know a house would be a big step up for them, and I’d like to lend them a hand. But giving them $50,000 would be a sacrifice for me, and I fear they could default on the mortgage and the money would be lost. What should I do?
-Liz, Kansas City Dear Liz:
Put away your checkbook.
The merits of homeownership notwithstanding, it rarely is advisable for parents to compromise their own financial security in order to help an adult child move up the housing ladder. And it’s never a good idea to go handing out big bucks when there’s an obvious danger of the money being lost.
If your son is as financially illiterate as you fear, the odds are low that he’ll be able to help you out should your finances ever hit a bump in the road. That’s reason No. 1 not to make a gift that could imperil your security. Plus, from what you say, your son and his wife sound like good candidates for one day winding up in a financial hole. If you want to be able to help them then, hang on to your money now.
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I fear my mother’s husband is blowing me off. Mom is in her mid-80s and has mild dementia — mainly memory loss. Her husband of 12 years is a few years older. His son does their taxes and looks after their finances. At this point, Mom can’t keep track of her investments or income, so she’s asked me to keep an eye on things. But her husband and his son say there’s nothing I need to know, and they refuse to give me any information. I feel torn. I don’t want to butt in, but there’s no way I can look out for my mother’s interests if I’m in the dark. How can I solve this without upsetting people? Mom gave me power of attorney, if that helps.
-Megan, Hamilton, Ontario Dear Megan:
As long as your mother’s husband and his son stonewall you, there’s no way to resolve the situation without upsetting people, namely them. So be it. Your mother wants you to have access to her financial records, and these folks’ refusal to provide it ought to make you suspicious — suspicious enough to hire a lawyer. He or she can tell you how best to employ that power of attorney to get the information you seek.
We can appreciate, of course, why you’d prefer not to be confrontational with your mother’s husband. But the time has come to ruffle some feathers. Your mother’s financial security — and perhaps your inheritance — is at stake.
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My friend “Lisa” contends that her family is more altruistic than ours. Her reason: When they donate clothes to charity, they don’t write off the contributions on their taxes, while my husband and I do. I contend that Lisa’s nuts. Who’s right?
-Sally, North Jersey Dear Sally:
You are. A bag of clothes is a bag of clothes, whether or not it’s written off. By not taking a deduction when they donate one, Lisa and her husband aren’t being any more generous with the charity. All they’re doing is increasing their tax bill.
If your friends want to pay more in taxes than the law requires, that’s their privilege. But it doesn’t make them morally superior.