Dear Quentin,
My husband and I have three wonderful college-aged kids and have always gotten by on our own, despite major life struggles. We have saved $500,000 for retirement, but have only managed to pay off $200,000 of our home.
Five years ago, my wealthy father offered to help with our children’s education, which was a pleasant surprise. He retired with approximately $8 million to $10 million, which includes his real-estate and property portfolios. His home and cars are paid outright.
He had asked if we would like help now or in five years when his land investment matured. He seemed to want the latter. So I said, “OK, we’d love help in five years.”
“‘I am 51 and have a cataract, limiting my ability to work.’”
In the meantime, my parents bought my youngest sister, 30, a $900,000 house to run a drug-rehab center. She does pay him $5,000 a month rent for this investment. My sister and husband are former addicts who have cleaned up their lives, and are doing much better for the most part. My dad is of sound mind, but it’s shockingly unlike him to give anyone money, especially $900,000.
He also quit-claimed a home to her, which she sold for a large profit. My mom now has dementia. I am 51 and have a cataract, limiting my ability to work. Two of our children have disabilities, and would really benefit from help with education.
I finally asked my dad about it the other day, but felt mountains of shame and guilt for asking. He responded that he no longer plans to give our children anything for education until he’s gone.
I’m worried my younger sister and husband will literally inherit everything now and later.
What can I do?
Feeling Let Down in Missouri
Dear Feeling,
Focus on what you can control, and don’t worry about FEAR — future experiences appearing real. That is, focus on your health, your family, and your finances. They are all connected. What your father does with his fortune is beyond your control, and from what you say it seems unlikely that your father will leave his entire fortune to one child.
Your cataracts are your No. 1 priority. Medicaid covers cataract surgery, but lenses to correct astigmatisms can cost $1,500 per eye, and up to $3,000 per eye for more complicated problems. Addressing this, with or without your father’s help, will help you regain financial independence, and reenter the workplace. You can’t rely on your father’s inheritance.
For those who are on Medicare, Original Medicare covers 80% of the approved cost of cataract surgery under a physician’s care, again using traditional surgical techniques or with lasers, according to the Centers for Medicare and Medicaid Services. The patient is responsible for paying for the other 20%, and there is Medicare deductible — $226 for Part B — has been met.
“‘Focus on your health, your family, and your finances.’”
Your father, for his part, could set up a trust for children he believes may be more likely to spend the money recklessly, especially if they have a history of substance misuse. That could reduce the temptation to spend their fortune, or use the money for bad investments. Such a trust could provide an income for her daughter, perhaps if she met certain conditions of sobriety.
The beauty of the grandparent/grandchild relationship is that it can exist independently of the relationship with the parents, if all parties agree to put the children first. A 529 plan is a smart way to save, invest and pay for college expenses in a tax-advantageous way.
“‘It may be that your sister is has not been handed $900,000.’”
As my colleague Alessandra Malito points out, grandparents are ideal candidates to set up tax-advantaged 529 plans for their grandchildren. “When Grandma and Grandpa set up a 529 plan, which is a state-sponsored college tuition account, the assets don’t count against the child when they’re filling out their financial aid applications,” she writes.
Live your best life. Show your kids and, yes, your father that you can live with or without his money. Your sister’s life is her own — as frustrating as it might be that he has invested in her rehab. It’s not clear whether he “gave” her this building/business or whether he invested in her business, given that she is paying rent.
To put her $5,000 monthly rent in context, a $900,000 loan over 30 years with 5.4% interest would result in a monthly repayment of roughly $5,712. It may be that your sister is has not been handed nearly $1 million outright. Either way, she has put it to good use, and is being of service to people who have had similar experiences with addiction.
It takes a lot to ask for help, but it takes a lot more to wait for an answer or, indeed, get an answer that you did not want. Processing his refusal, however unfair it may seem, has produced those feelings of shame and guilt. It’s the toxic waste of having our pride and ego bruised, but those feelings are only as real as you allow them to be. Process them, and let them go.
If you, or a family member, needs help with a mental or substance use disorder, call SAMHSA’s National Helpline at 1-800-662-HELP (4357) or TTY: 1-800-487-4889, or text your ZIP code to 435748 (HELP4U), or use SAMHSA’s Behavioral Health Treatment Services Locator to get help.You can also find more resources and advice for families from SAMHSA here.
You can email The Moneyist with any financial and ethical questions at [email protected], and follow Quentin Fottrell on Twitter.
Check out the Moneyist private Facebook group, where we look for answers to life’s thorniest money issues. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.
The Moneyist regrets he cannot reply to questions individually.
More from Quentin Fottrell: