Author Topic: Afraid dad is lying to me about his financial situation. Please advise  (Read 7510 times)

gillamnstr

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This is kind of depressing. I have been living a very mustachian life since I found this blog about a year ago. I was always frugal before as well. I had zero debt, and have been saving money to put towards fiance's mortgage to pay it off when I'm made part-owner.

My dad is a doctor and has always made great money, but has always had an over-the-top lifestyle to go with it. He's 67, I'm 37. His practice hasn't been going so well since 2008. He knows I have a lot of savings and a good job that pays well.

Today he calls me up with the following: he had always been paying off a college loan as part of a verbal divorce agreement with my mom when I was 21. He doesn't want to pay it anymore. So I'm now on the hook for $31,000 I never knew I'd have to pay off. He tells me he's retiring soon, and the practice hasn't been very successful the past few months and he has to cut back. This is not very like him, but since forever, when I've pressed him for his financial situation for retirement etc, he dodges the question or answers the question with something else that makes him look good. My mom is dependent on him for money as well as part of this divorce thing, and she is not very mustachian either. Apparently, he hasn't been paying her the full amount of whatever he's supposed to pay. Though my dad has made a large salary his entire life, I have a feeling he has screwed up and it's really hitting him now that he's about to retire.

I realize that they are grown-ups and have done this to themselves. At the same time, they are my parents. My question is this: I realize that kids can be held liable for their parents debts in some circumstances. Specifically I've heard of retirement home debt coming to haunt children. I can take care of the student loan, but if their situation is really bad, how much can this affect me? What questions should I ask? How liable for them am I and how can I possibly plan for this financially to make sure they're okay?

Frankies Girl

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In most cases from what I've read, any debts incurred by your parents can't be passed on to you except for very narrow circumstances, like you being a cosigner on a loan for instance. So unless it is something like that or you live in a state that has some weird law that requires children of destitute parents to be responsible (I think there are a few), you have zero liability (but do your own research and don't take the word of some random stranger on the internet).

If your dad runs through all of his money and has to go into a nursing home, he'd qualify for something (might not be a great place, but basic care and medical) through medicare/caid.

You need to have a good hard look at what your relationship is, and what you feel comfortable doing for them. It doesn't have to be providing money to support them if you don't want it to. You also need to discuss whatever plans with your fiance - as earmarking money for your parents (if that is what you want to do) needs to be a mutually agreed upon decision. And realize that "no, I can't give you money to live on" is a viable answer if you're asked.

And lastly, if it was me, if the money discussions aren't a two way street, I'd say stop sharing any details about your finances with them. They don't need to know that their kid is a tappable source to bail them out of a spendy lifestyle.


happy

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I would imagine he's embarrassed that he's no longer the financial success most physicians would expect to be. It might have been quite hard for him to ask you to pay the student loan.

If it were me, I would pay off the loan. Offer financial advice (which you've done), but if he's not willing leave the door open, but leave him be. Be prepared to provide emotional support, he's likely to be finding this very confronting.

And as Frankies Girl says, be very frugal with information about your finances. Think about what you'd be prepared to do about bailing him out if at all, ahead of time, just in case the question comes.

Sorry not from US so can't help with the legal question.

MooseOutFront

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Why is he so set on early retirement?  Seems like he could just work until 80 like most physicians.

HazelStone

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I realize that they are grown-ups and have done this to themselves. At the same time, they are my parents. My question is this: I realize that kids can be held liable for their parents debts in some circumstances. Specifically I've heard of retirement home debt coming to haunt children. I can take care of the student loan, but if their situation is really bad, how much can this affect me? What questions should I ask? How liable for them am I and how can I possibly plan for this financially to make sure they're okay?

Filial support laws. Yes, they are a thing. Not enforced very often, varies by state, but I wouldn't be surprised if states push this more as the Boomer generation ages and Medicaid gets even more strained.
http://www.bankrate.com/finance/insurance/parental-support-nursing-home-bills-1.aspx

Frankly, I think you have bigger near-term concerns, like their pulling out emotional arguments to get "help" from you. He has already reneged on a verbal agreement. You are already "helping" him by taking over a non-trivial amount of debt/cash flow. Talk over the situation with your SO and you will need to determine how much further support you are willing to give either parent and under what circumstances. And don't sign anything regarding your parents before you run it by a lawyer.

GizmoTX

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Does your mother agree with the details of the college loan? You should ask for the paperwork to pay it off directly rather than giving money to your father for it. Also find out what your state laws are regarding parental support.

As you've noted, it's a slippery slope -- is a child responsible for repaying all or part of what it took for his parents to raise & launch him? IMO, I think not, but you will have to wrestle with what you believe is fair vs opportunism. Had you known about the need for the loan at the time, you might have made different choices, but were never given the chance.

eyePod

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Does your mother agree with the details of the college loan? You should ask for the paperwork to pay it off directly rather than giving money to your father for it.

This is a great point. Even though they verbally said they'd pay for it, it's still your debt. Take it into your own hands, because if both you and your parents are on the loan and they default, you'll get nailed for it.

ShoulderThingThatGoesUp

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Definitely pay the bank directly.

TrMama

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We've been dealing with something similar with MIL for, well forever. Unlike your father, she's dumb as a post, so that makes it easier to get info out of her. Ditto what others have said about finding out exactly what the fillial laws are for your state and making sure you're not listed as a debtor on any of their debts. If you opt to take over the student loan, make sure you are the only debtor listed on it and pay the bank directly. You do not want to be listed on there with either of your parents.

You also need to decide for yourself what your boundaries are. Will you provide financial help? Will you attach strings to that help? Will you care for them in your home if/when they become ill?

With respect to long term planning, my best advice is to try to get them to downsize early. In fact, now would be a good time. I assume your Dad has a big house and possibly other assets/toys. See if you can talk him into selling these to reduce any maintenance expenses and provide some capital.

If he sells his practice, can he continue to work for someone else? Even being a locum or working part time should provide some income for him to live on.

affordablehousing

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This hit home. My folks are together but in general had avoided communication about finances for quite some time. I'm sure the above advice is fine for thinking about legal ramifications but seriously there's another side to this. Are you going to put your dad out of his house because you won't pay a loan he took out? I've found the biggest issue is getting the issue out in the open. In my case, I made my parents look at me like a financial consultant/counselor, and talk directly about the situation. A lot got revealed when I refused to give them anything until they let me look at their tax returns, mint account, loan balances etc. It seems to me there are a lot of repressed feelings and I bet your father feels unbelievably guilty for putting a strain on people. If you are going to help, it may be worth hiring a financial counselor that blend therapy and financial advice. try to get your dad to talk. I've found, after around 5 months of weekly "sessions" I'm finally making some progress. Good luck.

GizmoTX

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Re: Afraid dad is lying to me about his financial situation. Please advise
« Reply #10 on: March 26, 2015, 11:54:35 AM »
With respect to long term planning, my best advice is to try to get them to downsize early. In fact, now would be a good time. I assume your Dad has a big house and possibly other assets/toys. See if you can talk him into selling these to reduce any maintenance expenses and provide some capital.

I tried to convince one of my brothers to do this after he became disabled after major heart surgery. The surgery saved his life, but the damage to his health (not just heart) was already too far along. We gave him $10K right after his surgery because he had no savings & had planned to work forever, but no more when it became apparent he wasn't about to change his ways. He cut a few ridiculous expenses, but refused to downsize or to sell one of their two cars (in case he recovered enough to start driving again), trashed his credit, eventually lost the house, & declared bankruptcy. Today he is living on LTD & SSI.

Bracken_Joy

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Re: Afraid dad is lying to me about his financial situation. Please advise
« Reply #11 on: March 26, 2015, 12:41:19 PM »

I realize that they are grown-ups and have done this to themselves. At the same time, they are my parents. My question is this: I realize that kids can be held liable for their parents debts in some circumstances. Specifically I've heard of retirement home debt coming to haunt children. I can take care of the student loan, but if their situation is really bad, how much can this affect me? What questions should I ask? How liable for them am I and how can I possibly plan for this financially to make sure they're okay?

Filial support laws. Yes, they are a thing. Not enforced very often, varies by state, but I wouldn't be surprised if states push this more as the Boomer generation ages and Medicaid gets even more strained.
http://www.bankrate.com/finance/insurance/parental-support-nursing-home-bills-1.aspx

Frankly, I think you have bigger near-term concerns, like their pulling out emotional arguments to get "help" from you. He has already reneged on a verbal agreement. You are already "helping" him by taking over a non-trivial amount of debt/cash flow. Talk over the situation with your SO and you will need to determine how much further support you are willing to give either parent and under what circumstances. And don't sign anything regarding your parents before you run it by a lawyer.

Never heard of this. I'm in a filial support state. Good for me to keep on the radar, considering some less than ideal financial choices by my parents and my in laws...

zolotiyeruki

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Re: Afraid dad is lying to me about his financial situation. Please advise
« Reply #12 on: March 26, 2015, 01:44:28 PM »
This hit home. My folks are together but in general had avoided communication about finances for quite some time. I'm sure the above advice is fine for thinking about legal ramifications but seriously there's another side to this. Are you going to put your dad out of his house because you won't pay a loan he took out? I've found the biggest issue is getting the issue out in the open. In my case, I made my parents look at me like a financial consultant/counselor, and talk directly about the situation. A lot got revealed when I refused to give them anything until they let me look at their tax returns, mint account, loan balances etc. It seems to me there are a lot of repressed feelings and I bet your father feels unbelievably guilty for putting a strain on people. If you are going to help, it may be worth hiring a financial counselor that blend therapy and financial advice. try to get your dad to talk. I've found, after around 5 months of weekly "sessions" I'm finally making some progress. Good luck.
Before agreeing to help anyone financially like this, I'd personally require some assurances that they would change their ways first.  It may sound patronizing, but it's a lot like dealing with kids.  It's bad to say "ok, I'll pay for this, but you have to sell that extra boat next month."  It's better to say "if you sell the boat, downsize to one car, and stop going out to eat, THEN I'll agree to help."

From what I've heard (and thankfully I've never dealt with this), when dealing with family, there are only two sane choices:  either A) give the money with no expectation of getting it back, or B) act like an investor or a lending institution--you want full financial disclosure and some control over their financial actions.

GizmoTX

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Re: Afraid dad is lying to me about his financial situation. Please advise
« Reply #13 on: March 26, 2015, 02:02:47 PM »
From what I've heard (and thankfully I've never dealt with this), when dealing with family, there are only two sane choices:  either A) give the money with no expectation of getting it back, or B) act like an investor or a lending institution--you want full financial disclosure and some control over their financial actions.

Actually, only (A) is the sane choice -- you have little control over their financial actions unless you have legal guardian status. You can & should demand full disclosure as an upfront condition, & then decide if you want to proceed. Loans are for banks.

Catbert

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Re: Afraid dad is lying to me about his financial situation. Please advise
« Reply #14 on: March 26, 2015, 02:56:40 PM »
Well, here's the good news.  He's likely been paying the maximum into SS for 30 years.  While max SS won't fund his current lavish life style it will fund a decent life.  He does need to sell his practice, his house, his toys, etc. - the sooner the better.

gillamnstr

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Re: Afraid dad is lying to me about his financial situation. Please advise
« Reply #15 on: March 26, 2015, 03:25:51 PM »
Thanks for the support and feedback everybody. I took on the debt. Had a talk with my sister who is also mildly aware of the potential mess. She has always planned on my mom living with her.

My dad is sending me some of his financial info to look at. Luckily his wife is pretty mustachian, though I'm sure she's out of the loop because they keep their finances separate.


TN_Steve

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Re: Afraid dad is lying to me about his financial situation. Please advise
« Reply #16 on: March 26, 2015, 05:38:53 PM »
...

Filial support laws. Yes, they are a thing. Not enforced very often, varies by state, but I wouldn't be surprised if states push this more as the Boomer generation ages and Medicaid gets even more strained.
http://www.bankrate.com/finance/insurance/parental-support-nursing-home-bills-1.aspx

...

Yep.  And keep in mind it is the law of the state in which your parent goes into nursing home, not your own state (if they differ), that would govern....

ltt

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Re: Afraid dad is lying to me about his financial situation. Please advise
« Reply #17 on: March 26, 2015, 05:46:14 PM »
Things change, people change.  You are 37, he's in his 60s.  Even if he is lying about his financial situation, that is his choice to do so.  A verbal agreement many years ago is just that--it doesn't mean that circumstances won't or don't change.  If you are the one that signed on the dotted line, you are the one that is responsible. 

Of course, children always wish that everything is nice and clean and tidy as their parents age, so what you can do is hope for the best, but prepare for the worst.


NoraLenderbee

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Re: Afraid dad is lying to me about his financial situation. Please advise
« Reply #18 on: March 26, 2015, 06:00:40 PM »
Sorry about the situation. Regardless of whether it's "really" your debt or his or whose--it sucks to find out you've got a five-figure debt you didn't know about years after graduation. If you graduated at the usual age of 22, that's 15 years in which he could have paid it off, probably multiple times. Ouch.