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Dear Moneyist,
My brother is in his mid 50s and is not financially stable. He has no problems making money, but seems to have trouble managing it. He has told me on multiple occasions that he has no retirement funds saved. He is self-employed. Over the last 10 years, he has borrowed a total of $30,000 from me to help piece things together when needed. He has paid all of this back, but each time it takes longer and longer. I charge him no interest and don’t set a formal repayment schedule, so I really can’t complain. While he has never declared bankruptcy to my knowledge, he has restructured his debts twice. I know this is subjective, but I’ve seen him spend money that could have gone to a retirement account on big vacations, etc.
Three of my previous loans were to keep him from losing his home. Currently, he owns a home that he can more easily afford. Because of his poor credit, he did not qualify for a traditional mortgage but the seller was willing to owner-finance for him. Thankfully, it was at a decent rate. Our mother just passed away and I would like to give my brother my half of our inheritance, but only if he would use it to pay off his mortgage. My fear is that he will borrow against his home in the future (he’s done this before), and could still end up losing his home down the road. I’m not sure there is a way to prevent this from happening, unless I was on the deed too. That seems messy.
The Moneyist: My husband earned less than me for a decade, so I paid more towards our expenses. I want him to repay me
Should I just hold onto my half of the inheritance and set it aside for him to use if needed given that gifts with strings have such a stigma? My goal is to make sure he has a roof over his head when he can no longer work. I also want to be smart about how I help him. I may not always be able to help him out financially, and he has no one else to turn to. I am not close with him, but I do feel an obligation to him. I’m not concerned about straining our relationship, because we really don’t have one. Any advice you could offer would be greatly appreciated.
Kindly,
Younger Sister in Texas
Dear Younger,
Your letter has such clarity, consideration and compassion. Thank you for writing it.
In a world where so many people want so much just because they want it, your letter was a refreshing, welcome change of pace. I also understand that you have been doing your best to provide intermittent financial support for your brother, while doing your best to help him maintain his financial independence. It’s a delicate balance. You, more than anyone, know his patterns and, I suspect, have some idea what led to his previous financial problems.
My first instinct was to provide money in a trust for your brother to be used solely for the purpose of mortgage repayments and an endowment to help pay for its upkeep, but given your brother’s unstable financial history I see that as a last resort. Past behavior is the best predictor of future behavior, and if your brother receives a windfall, it could trigger whatever need he has for instant gratification or overspending.
Instead, I suggest you go straight to the source, and suggest a financial therapist and/or adviser to go through his accounts, analyze his mistakes and help him figure out what could be the cause of his problems. He could have emotional problems — after all, most financial decisions are also emotional ones and, let’s face it, who doesn’t have emotional problems — substance-abuse issues and/or he could simply get overwhelmed.
When the American Psychological Association started posing the question in 2007 about what stresses people out the most, the No. 1 answer was money. Fear and anxiety over money can lead to paralysis, and that’s when bills start to pile up, and the problem snowballs. The field of financial therapy includes psychotherapists, marriage counselors, social workers and certified financial planners. They deal with hopes and dreams, as well as outgoings and expenditure.
Resist the temptation for a dramatic intervention. Not unless your hand is forced.
You can email The Moneyist with any financial and ethical questions related to coronavirus at qfottrell@marketwatch.com. Want to read more?Follow Quentin Fottrell on Twitterand read more of his columns here.
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