Parents often go to great lengths to help their children – some in fact to their own financial detriment. That was the case with Dan and Sarah. In their early 80’s, Dan and Sarah were referred to us by their daughter. She wanted us to help them craft a financial plan so they could live securely for the rest of their lives. While on paper there appeared to be enough income to cover their expenses, every month they somehow ran short of money. Although we met with these parents at length about this puzzling situation and repeatedly analyzed the data they had shared, we just could not discover why they were experiencing monthly shortfalls.
After several meetings with the couple, Dan finally made a confession. They had three children, two of whom lived in Minnesota and were financially stable. The third, a son named Paul, was experiencing financial troubles. Wishing to help, Dan and Sarah were providing him with monthly financial assistance. Married with two young children, Paul lived in Texas, owned a home and had spontaneously quit his job. Soon thereafter, he began receiving threatening letters from his lender about foreclosure if the family did not resume paying the mortgage. With the intent to help Paul until he could get “back on his feet again,” Dan and Sarah began making the house payments for him. They did so even though Paul was not making any attempt to improve his financial situation. This continued for quite some time despite Dan and Sarah’s insistence that he become more financially responsible. When they threatened to discontinue their support, they actually received guilt-inducing letters from Paul, Paul’s wife, and even the grandchildren asking why Dan and Sarah did not love them and pleading to continue the support. Seeing no other choice, Dan decided the only way he could solve the situation was to buy the house and have Paul make rent payments. However, after Dan and Sarah purchased the home, Paul failed to make any rent payments, nor did he pay any of the expenses to maintain the home. So now these elderly parents were on the hook for both the monthly payment and maintenance! If something was not done to end this draining financial dependence, Dan and Sarah would likely run out of money themselves. Feeling as if there was no way out, Dan and Sarah and their other two children were understandably anxious. Understanding that they were asking us to help them find a solution, we knew the critical element was to solve the “Paul problem.” We arranged another meeting and insisted that the two responsible children be present. Together the family took our advice that all future communication between Paul and his family and Dan and Sarah would be funneled through our firm. Next, we found an attorney in Texas to begin the process of eviction. She sent legal notices regarding the unpaid rent and a timeline of activities needing completion in order to prevent eviction. Just before the family was to be evicted, Paul magically obtained a mortgage on the home, and to Dan and Sarah’s great relief, purchased the home from them.
Once the burden of Paul’s home was off their shoulders, Dan and Sarah were able to resume their lives with greater cash flow for themselves. They promised not to send future support payments to Paul again no matter what, and to limit their expenditures on Paul and his family to modest holiday and birthday gifts. Some years later, Paul even visited Dan and Sarah and they were able to rekindle a more healthy relationship. While every situation does not turn out this well, our team was pleased to have played a role in this case.
*Some details have been changed to preserve client privacy.