Am I an old feminist?
A grandmother was widowed over 30 years ago and left with some savings, small pension and a fully paid for house. She decided to move to a senior apartment complex and convert her house into 3 apartments (the rent paid her apartment rent, expenses of the house, and a little extra). Two of her grandsons rented 2 of the apartments in her house and in the last 10 years the value of the house apartments has increased, but grandma did not raise the rent. Then grandma died and the house is now owned by a son (grandsons' uncle). The uncle has offered to sell the home to his nephews at an amount $200,000 under appraised value, but nephews still have problems qualifying for a mortgage. My neice has been living with one of the nephews on and off for about 4 years. My SIL left a large amount of money (about 1/4 of the house purchase price) in a trust fund for my niece with myself as the trustee. The nephews want to move into the large apartment and rent the two others to help pay the mortgage with my neice helping with the down payment and responsible for living expenses but NOT having her name on the deed.
I refuse to release the money unless her name is on the deed or on a LLC which puchases the home and counts ownership as total monies invested, including living expenses, house maintenance, and mortgage payments. LLC must include language for buy outs options when this trio splits up. BTW: My neice does not have to be on the mortgage to be on the deed, she just has to agree to put her share up for the mortgage.
I am, of course, just an old feminist for insisting my niece is legally protected. Or am I? I am advising her from a protective stance, but I do feel an extra burden because her mother wanted me to sign off on how she spent the money.
17 Answers
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Lenders can be very helpful because they want to protect everyone, including their risk.
If not, then tell her to remove herself entirely from this entire plan. Even if her name was to be on the deed, I sense that her cousins may not be the best co-owners with her.
If the nephews will rent the large apartment together and rent the other 2 apartments out, then where is your niece going to live?
What does she gain by "helping with the down payment and responsible for living expenses but NOT having her name on the deed"?
I'm asking this rhetorically since this question needs to be posed to her, to allow her critical thinking skills to form. I think your job is to put options and probable pros/cons in front of her and have her decide. I'd have her talk to a financial advisor, not a CPA. Don't protect her to the point where she won't learn anything.
Maybe she would be better off lending them the money for the downpayment (using a full and sturdy legal contract) at the same going market rate (since they're probably not going to get qualified for a mortgage) but at a better rate than she'd make in any other investment. If the nephews default, a lien could be put on the house?
I think the worst part of the plan is that there's multiple owners involved. I find this likely messy now and into the future.
You're being a responsible (and loving) Aunt and Trustee. Feminism has nothing to do with it, IMO.
Living with someone on and off does not sound like a committed relationship that is going to last or blossom.
Please help her see this as a purely business transaction. And introduce her to wwe.bogleheads.org.
There is a short and sweet posting there called If You Can that is a great blueprint for becoming financially secure.
Seems like there’s a lot of potential “loaning” in what’s happening here.
Please go to a Trust and Estate attorney who will not only tell you that you are RIGHT, but that you have a FIDUCIARY RESPONSIBILITY to protect your niece. That is one of the highest responsibilities under our law.
Please see the attorney TODAY. Your Trust pays for this expert advice. Do not do this without legal counsel.
Protect your niece. She has a history of making bad decisions, and if she ties herself into this scheme via you, she isn't likely to be able to get herself out of the resulting mess.
For instance, she's planning to take in her boyfriend (he's then a tenant and eviction problems may result when they break up). And take in boyfriend's brother (same problem). And maybe his girlfriend (same problem). If they don't pay for their food, don't pay her some rent, decide to be jobless and smoke weed all day - then what? If niece had shown any inkling of responsibility and planning in her past actions, maybe. She might know what she's doing. That's unlikely from my vantage point.
This is a situation setting up a downward spiral, loss of friendships, angry relatives, and niece's continuation of aimless meandering through life without any real goals. When it fails, you might feel guilt and have to make it up to niece (bad idea).
Just NO.
I do not understand what I call "independence". I wanted to earn my own money and control my own life from my teens; so did my nephews (who I gave an education and promise that would be all I gave them). Even the grands and my foster sons LOVE making (and spending) their own money. The grands and my foster son have thousands of dollars saved from jobs they have worked for $8-12 an hour. My youngest grand-nephew (age 8) is ecstatic he made $40 last weekend "working" tieing up boats at a marina and helping boats get into the fueling station. He's saving up for a scooter. They have had everything they need - but not everything they wanted. My SIL wanted her daughter to have everything she could give her without any responsibility. We started butting heads long ago when she overran the roaming charges on her cell phone 3 months straight. I turned the phone off and her mother went out and bought her another one. So I've been cast as the "mean" aunt for more than 20 years. It may be too late to change anything but I going to try.
Please know that some people are just chronic money wasters. My MIL and stepFIL were those people. They had 0 ambition; blew through 2 inheritances and had $0 when they died (less than 0, they were in debt and had also borrowed money from everyone they knew, including their church which paid their mortgage once until I called up the church and gave them the low-down. We went to the same church). My stepFIL had a college degree in FINANCE fps. My BIL went through great pains to create a budget for them, only for them to completely ignore it.
Since your niece is "old enough to know better" maybe consider giving her all the money from the trust and wash your hands of it. At least you can stop being "the mean aunt" — until she's broke and then comes to borrow from you. Then you just smile and say nope and resume being the "mean aunt".
My youngest she saved, living home at the time, when she made $9 an hr.
You are right. Your a trustee for a reason. If you let her have the money, it will be squandered.
I'm trying to find a house "bargin" for her but she's not interested in a lipstick fix-it up home and she cannot afford the perfect house she wants to move into. Maybe it's not fair but I find myself comparing her behavior to my nephew: he brought a house an elderly woman had lived in that had not had any updates (including paint) in decades. He painted every surface (including ceilings), refinished the oak floors, put new linoleum in the kitchen and bath and installed a fiberglass tub surround - all less than $10,000 - and moved into a beautiful structurally sound house! A couple of years later he put a new roof on and added a heat pump.
I get that you're very helpful and you love her. She's probably always been able to depend on you. However, based on her past, she's seldom stepped up to the plate to be responsible for herself. Your help doesn't encourage her to change.
Can't you back off and be less available? Otherwise you're going to be cleaning up her messes for the rest of your life. Why would anyone want to do that???
Anyone living there should be paying market rate rents. It is an investment, not a house for people who may have a failure to thrive, or other self-supporting issues. You said: "nephews still have problems qualifying for a mortgage." Sounds like a bad investment for your niece. Sounds like the trio cannot afford to buy the house.
I might consider releasing some of the trust money for niece by paying 1/2 the rent (or matching the rent) on a suitable place for herself. Her efforts to work and pay her rent will help her become more stable. Living closer to her work will help her. Giving her another $1,000 gift card is enabling, and has already failed. Your question is about the niece? If niece moves anyone into her rental, they can pay the other half instead of her trust funds. That way, she would have to be selective and allow only a person in who is able to pay their half of the rent.
Apologies for the very strict opinion. If people are provided everything almost free, it will disable many from earning their own living, and being unmotivated to step up their efforts towards a better life.
You are frugal by choice. Teach that to those you are helping. I think you are doing that for your adopted foster people. I really admire you for all you are doing.
Any financial decisions should be clean, not complicated or predicated on buying a home/property based on if the trio or boyfriend/girlfriend relationships work out.
The homeowner, (related to the nephews?) should raise the rents in the house with the 3 apartments.
Any feminist, old or young, is usually pro the freedom to choose their own lives by earning it.