southcsag said:

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I forgot to mention that the Sibling with the house note also had an interest free loan of $100k during this same period, which was paid back before the folks passed away. In hindsight it seems like family loans are not a good idea.

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I think permabull nails it here. Sum total of help to this child seems to far outstrip the other three kids. Those three bank accounts are the parents way of equalizing the help. Did the child with all the loans tend to stay close to mom and dad? When I see this that is generally the case. The kid who was close physically feels shorted in inheretance because they took a lower paying job to stay close to mom and dad while the other siblings sought economic betterment further away. Not saying thats what happened here though. Black sheep sibling thinks all the financial help should be moot because any of the other kids could've asked for help from mom and dad but didn't. They probably see the other three siblings as not 'needing' the help as much because of the career/life choices the other siblings made.

I've got a friend going through this story basically wratcheted up a notch. Of the children, one lives with mom, unemployed, way too old to be doing this. Troubled past, burnt a lot of family bridges, mom resigned to the situation as he'd be on the streets otherwise. That black sheep thinks they're going to inherit the house and everything in it when mom passes and leave the other kids high and dry because they've all 'abandoned' mom. Other siblings have made it known that the house is getting sold. Fun thanksgivings.

There are 3 sides to every story, and we are only getting 1.

The only things we truly know:

• Sibling #1 got a home loan in 2000 for $170k. (We don't know if mom and dad offered to help or if sibling #1 asked for the help). Sibling #1 paid this loan back at $1000 per month for the last 24 years. (According to another poster that means they had an interest rate of around 6% and still owes around 60k of the loan.)
• Sibling #2, #3 and #4 are each getting a $135k in a brokerage account
• Also now adding Sibling #1 got a 100k interest free loan, which has been paid back in full

Looking only at the surface of these few facts, b/c we don't know any true details I tend to believe sibling #1 is getting the shaft (I'm not talking legally). So what if the parents financed sibling #1's house. They paid it back and nothing was taken from sibling #2, #3 and #4. Sibling #2, #3 and #4 could have potentially had had their home financed by mom and dad but didn't ask or was not offered. Sibling #1 should pay back the remaining balance of the home loan to the estate, of which they would get 1/4 of that back.

It's up to Sibling #2, #3 or #4 on if they want to be onerous about what their parents did. If all 4 agreed to split the brokerage accounts, they would all walk away with 101k instead of 1 sibling getting 0 and the other 3 getting 135k.

Again, we don't know sibling #1's story or the complete truth of this story and most of you are just making up stories of sibling #1 in your head. Calling them a black sheep....I doubt the parents thought of this child as a black sheep if they loaned them a total of 270k.

Troy91 said:

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The emotional argument is fun.

The fact that there are joint accounts in the names of each of the other 3 children that pass through right of survivorship and not the estate make the emotional argument irrelevant. Those 3 accounts are not subject to any division. They belong to the survivors.

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Again legally I understand and agree with that...but I'm not talking legalities and I don't think that was the point of the OP.

I think it's wrong to assume the child got "elbowed" out of 100k. Like has been previously stated, a $170k house in 2000 is worth roughly $500,000 today, on average, in Texas. If the child would not have been able to afford the house at the time but for the loan, which seems like a fair assumption, then he/she would not have benefited from the roughly 330k in appreciation.

A monthly payment of $1000/month over 30 years is $360k. That still leaves about $140k in appreciation value. Not far from what the others are getting.

I also think grief has something to do with this situation. I don't want to say this is what is happening but I have seen situations where the child who has to be bailed out by their parents grieve pretty bad when they lose their last parent and lash out. It's really not about the money but when you lose a parent you feel like you lost control and so you hyper focus on things you think you can control. I wouldnt take anything personally that is said by someone in that state of grief.

So the parents were paying for 1 child's house payment and putting an equal amount in another joint account for the either 3?

Ugh. Family. Some of you may have seen/followed the LONG, many years on the post regarding Mr. Schwack's family mess. I learned a lot from that and had many discussions with my Mom for about a year - luckily prior to her unexpected passing - to get things in order. We consolidated her investment accounts, checked how her various other accounts were set up, had current lists of all accounts including who I was to contact on her & my Dad's pensions, etc.

My Mother died this year in her 90's -with a will, but there was no need to probate. She owed no money, she named us all as beneficiaries on her investment accounts, a hard to deal with annuity, employer life insurance, teachers retirement & did a transfer on death deed on her home.

The only gray area is the joint bank accounts with me. She did that years ago when my Dad died in case she became unable to handle things, the money would be easily accessible to provide for her. At her passing, her attorney said that technically those accounts were my money. That said, knowing my Mom well & her wishes for everything to be equal, I have handled everything with ease - money market account, the bulk of her checking & CDS were divided among us all & the last checking account will be handled the same way once things are completely finished. Last thing is to sell her condo in Bryan & then that will conclude everything.

All this to say advance planning makes all the difference, y'all. I was incredibly lucky that my Mom agreed.

I hope things go well for you, OP.

edit to add capital "M"s that I missed when referring to her - she deserves it!

schwack schwack said:

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Ugh. Family. Some of you may have seen/followed the LONG, many years on the post regarding Mr. Schwack's family mess. I learned a lot from that and had many discussions with my Mom for about a year - luckily prior to her unexpected passing - to get things in order. We consolidated her investment accounts, checked how her various other accounts were set up, had current lists of all accounts including who I was to contact on her & my Dad's pensions, etc.

My Mother died this year in her 90's -with a will, but there was no need to probate. She owed no money, she named us all as beneficiaries on her investment accounts, a hard to deal with annuity, employer life insurance, teachers retirement & did a transfer on death deed on her home.

The only gray area is the joint bank accounts with me. She did that years ago when my Dad died in case she became unable to handle things, the money would be easily accessible to provide for her. At her passing, her attorney said that technically those accounts were my money. That said, knowing my Mom well & her wishes for everything to be equal, I have handled everything with ease - money market account, the bulk of her checking & CDS were divided among us all & the last checking account will be handled the same way once things are completely finished. Last thing is to sell her condo in Bryan & then that will conclude everything.

All this to say advance planning makes all the difference, y'all. I was incredibly lucky that my Mom agreed.

I hope things go well for you, OP.

edit to add capital "M"s that I missed when referring to her - she deserves it!

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agree with this. If it is a joint account that was used for expenses during life, that is likely a "fair to equitable " split even if it is not legally required.

Three separate accounts with survivorship? That demonstrates a very different intent.

Having lived through something similar....would recommend prayers and grace on all sides, as a loving family is way more important than the amount of money subject to conflict in this situation.

Optimal solution - 3 white sheep kids accept that black sheep needed help back in the day and loving parents provided that help. Instead of just giving the black sheep the money, the parent's were wise enough to establish a mechanism where their other 3 children benefited from the arrangement, although in an imperfect way to say the least. The $135K per child is a nice added benefit to those 3 children over and above their inheritance per the wishes of the parents. As an act of good faith, the 3 white sheep kids should forgive the remaining $60K loan of their sibling, as without a signed contract, it would be very difficult to enforce. Black sheep kid should be required to sign a release for any claims against the $135K X 3 that his/her siblings receive as part of the arrangement.

Black sheep kid should recognize an interest free loan, plus appreciation of the property he/she was able to purchase has far more value (after the fact) than what his siblings received, and should continue to love and cherish his parents love, kindness and memories, as well as work to maintain a harmonious relations with their siblings. As a parent, I can assure you that is what the parent's would want more than anything else.

Prayers extended for this family.

Yeah, very odd situation given the borrower now seems surprised. I could see 2 scenarios:

1) they did a lot for #1 and therefore felt the others deserved more. At a minimum, a conversation and understanding here seems to be missed, and now they've left the possibility for a rift between siblings. Maybe it's on #1 for not understanding what was explained

2) they just screwed up the math. People do suck at math. Maybe logically they thought "we are loaning from the estate so you are basically paying back your siblings, sweetie." But math fail if that was the case. Putting it in 4 accounts works. 3 tilts it to where that loan was 6% + $100k (if in a world without this loan, the intent was to split the estate equally). Ouch.

It wasn't in interest free loan though. It was at a minimum a 5% and more likely 6% interest loan during a time when mortgage rates averaged below both.

ABATTBQ11 said:

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AgsMyDude said:

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So the parents were paying for 1 child's house payment and putting an equal amount in another joint account for the either 3?

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No. 1 child got a loan from parents and has been paying it back to them. Parents put that money into brokerage accounts for other 3 siblings. Not sure how the rest of the estate is split or the size, but the 3 siblings are each getting $135k while the child with the loan gets nada.

Honestly, parents seem kinda ****ty unless they were giving child 1 a bunch of money that isn't mentioned anywhere here.

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OP has explained in the thread that the parents also gave an interest free loan of 100k to same child. You run the numbers on your retirement and see how big of a dent $183k (inflation adjusted) no interest and 311k (inflation adjusted) 6% 30 year terms change your retirement finances today. From two moderate earning parents as well.

Black sheep sibling shaped mom and dads retirement downward by over a million dollars. $270k put into the market in 2000 would be worth $1,400,000 today. Siblings loan meant that money was delayed into the market. The sum total of the sibling accounts is 405k. Each kid would have recieved 350k under the same arrangement if son hadn't had to do family loans.

The siblings are getting considerably reduced outputs here and he got the best terms.

He didn't quantify a term and said it was paid back. So the value of that can't be determined. His description just made it sound like sometime in that 24 years. Could have been 1. Could have been 24.

DannyDuberstein said:

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It wasn't in interest free loan though. It was at a minimum a 5% and more likely 6% interest loan during a time when mortgage rates averaged below both.

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Doesn't really my with my solution - 5% or 6%. I'm saying the 3 other siblings did just fine given the good investment decisions the parents made and they should take their extra 135K over and above what sibling #1 received and forgive any outstanding debt he/she owes.

Sibling #1 was able to make a $170K investment that has likely doubled in value as of today, that they could not afford back in 2000 thanks to the parents funding. If the doubling assumption is accurate, sibling #1 has benefited by $170K on that investment. The other 3 siblings have received an added benefit of $135K each. Call it even and consistent with the parent's wishes.

Fireman said:

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DannyDuberstein said:

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It wasn't in interest free loan though. It was at a minimum a 5% and more likely 6% interest loan during a time when mortgage rates averaged below both.

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Doesn't really my with my solution - 5% or 6%. I'm saying the 3 other siblings did just fine given the good investment decisions the parents made and they should take their extra 135K over and above what sibling #1 received and forgive any outstanding debt he/she owes.

Sibling #1 was able to make a $170K investment that has likely doubled in value as of today, that they could not afford back in 2000 thanks to the parents funding. If the doubling assumption is accurate, sibling #1 has benefited by $170K on that investment. The other 3 siblings have received an added benefit of $135K each. Call it even and consistent with the parent's wishes.

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Edited to add - I see what you are saying on the interest rate, but if they knock off the final 6-years of payments that interest rate is now well below market. Forgive the debt and take your $135K siblings 2 - 4. Sibling #1 - you got the deal agreed to with your parents, plus forgiveness of $60K in debt, plus investment appreciation of your property. I don't think you are getting screwed, and in actuality, you may have come out better than your siblings.

Not that any of this is helping OP, but I must be missing something.

At the time the loan was made, the standard rate was over 8%. Assuming he would have only been able to pay a $1000/month at the time, an 8% interest rate would have locked him into a $136k home (using ChatGPT for the math here, so forgive me if this is off). Today, that home would be worth $391k. That's substantially a worse deal than the $170k home ($489k). You cannot assume he would refinance and get a better deal when he didn't on the actual deal.

Aware of the rate then because that is when we bought our first house. That was very brief though. Average was close to half that over that time. Would have been absolutely bonkers not to, likely at least twice. They didn't go get a mortgage, but at this point I bet they wish they had since they didn't understand the arrangement

one MEEN Ag said:

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ABATTBQ11 said:

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AgsMyDude said:

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So the parents were paying for 1 child's house payment and putting an equal amount in another joint account for the either 3?

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No. 1 child got a loan from parents and has been paying it back to them. Parents put that money into brokerage accounts for other 3 siblings. Not sure how the rest of the estate is split or the size, but the 3 siblings are each getting $135k while the child with the loan gets nada.

Honestly, parents seem kinda ****ty unless they were giving child 1 a bunch of money that isn't mentioned anywhere here.

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OP has explained in the thread that the parents also gave an interest free loan of 100k to same child. Thats worth around 30-40k in interest to the son and easily over $200k in opportunity cost to the parents. Parents clearly saw that they were gladhanding one child and not doling out any financial help to the others. To me, thats a way bigger gimme than a 6% loan for 30 years.

The interest from the loan didn't have to be invested. Didn't have to go to the kids. The fact the parents turned $333 a month per child into 140k per child is just a reflection of good investing.

You run the numbers on your retirement and see how big of a dent 100k no interest and 170k 6% 30 year terms change your finances. From two moderate earning parents as well. Black sheep sibling basically shaped mom and dads retirement downward by a huge sum.

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You don't know any of that for a fact.....Could some of it be true, sure...Could the parents have been entirely invested in Enron stock and that's what they sold to allow these loans? Maybe, so in that case this sibling saved the parents retirement and allowed the the other 3 siblings to even get an inheritance.

We have been told that sibling #1 got an interest free 100k loan, but not how long it took to pay it back, so again you are making up the value/cost of that loan.

Did sibling #1 get help from the parents, absolutely. How do you know that no other sibling got any financial help? Again you don't as the OP never told us that......the OP hasn't told us a lot.

I will say it again: There are 3 sides to every story, and we are only getting 1.

I'm presenting the highest and best opportunity case here. Its the biggest indictment of the sibling's loans on mom and dads finances. Adjust my numbers downward if you want. I can't see how A) a child who got 170k loan from mom and dad when they clearly couldn't go to a bank and B) got a 100k loan interest free can look at their siblings and think they got cheated when it looks like those siblings asked for nothing over the same time period.

Sorry, but to me it makes no difference what the sibling spent the 170k loan on, so the current value of his home means nothing. What if he would have spent that 170k on hookers and blow? How does that affect your perspective of this situation?

What the parents have done is done, so now it's up to sibling #2, #3 and #4 to look at ALL the facts and determine if the parents did shaft #1 and if so split the brokerage accounts or the parents didn't shaft #1 and keep their brokerage accounts and possible lose a family member.

S&P500 is about 3.5X now vs what it was at the start of 2000. And because of the dot.com bust and 2008, it would have taken until 2013 for that money just to get above water if it had been in the S&P500. All a matter of perspective and timing. A fixed 5-6% return would have been a much better deal for over half the life of the loan

one MEEN Ag said:

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I'm presenting the highest and best opportunity case here. Its the biggest indictment of the sibling's loans on mom and dads finances. Adjust my numbers downward if you want. I can't see how A) a child who got 170k loan from mom and dad when they clearly couldn't go to a bank and B) got a 100k loan interest free can look at their siblings and think they got cheated when it looks like those siblings asked for nothing over the same time period.

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You don't know it was the biggest indictment on mom and dads finance....What if this loan was from a CD that matured around that time and how do know that sibling #1 clearly couldn't get a bank loan?

Again you are making up stuff to make it sound worse.

Yep, nowhere has it been stated that they couldn't have gone to a bank. If that was the case, I'd be curious to know. My grandmother held the mortgages on my parents and my aunt/uncles house at one point decades ago. They were all as squared away as can be when it comes to $$$, but she saw the opportunity to get a decent fixed return and they all paid her back. All formally documented as well as accounted for in the will. Everyone on the same page communication-wise. Not advisable for all families, but sometimes families support each other and it's mutually beneficial.

slop01 said:

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one MEEN Ag said:

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I'm presenting the highest and best opportunity case here. Its the biggest indictment of the sibling's loans on mom and dads finances. Adjust my numbers downward if you want. I can't see how A) a child who got 170k loan from mom and dad when they clearly couldn't go to a bank and B) got a 100k loan interest free can look at their siblings and think they got cheated when it looks like those siblings asked for nothing over the same time period.

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You don't know it was the biggest indictment on mom and dads finance....What if this loan was from a CD that matured around that time and how do know that sibling #1 clearly couldn't get a bank loan?

Again you are making up stuff to make it sound worse.

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If everything was fine finances wise and what I outlined doesn't move the financial needle-then why are there siblings squawking over 135k here? And basically 'just' 30k per sibling to make the aggrevied party whole. Clearly the finances aren't upper middle class 'fine' around here. OP said parents were teachers raising four kids you do the math about how big of a dent these loans put on finances. Did mom and dad enjoy the security of investing in their kids compared to the market? Probably, but you can see that mom and dad enjoyed the market returns as well because thats where the money went after it came back from the sibling loan.

Even cutting my financial model in half shows the sibling came out way ahead here and that mom and dad took a huge opportunity cost cut to make these loans. What did he go do with 170k + 100k and 24 years of a head start?. If he could've gone to a bank and made an above board loan, why would you put your parents through that?

Mom and dad clearly share some thinking here, if they didn't it would've all been split 4 ways and we would all actually be working on a monday.

one MEEN Ag said:

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slop01 said:

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one MEEN Ag said:

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I'm presenting the highest and best opportunity case here. Its the biggest indictment of the sibling's loans on mom and dads finances. Adjust my numbers downward if you want. I can't see how A) a child who got 170k loan from mom and dad when they clearly couldn't go to a bank and B) got a 100k loan interest free can look at their siblings and think they got cheated when it looks like those siblings asked for nothing over the same time period.

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You don't know it was the biggest indictment on mom and dads finance....What if this loan was from a CD that matured around that time and how do know that sibling #1 clearly couldn't get a bank loan?

Again you are making up stuff to make it sound worse.

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If everything was fine finances wise and what I outlined doesn't move the financial needle-then why are there siblings squawking over 135k here? And basically 'just' 30k per sibling to make the aggrevied party whole. Clearly the finances aren't upper middle class 'fine' around here. OP said parents were teachers raising four kids you do the math about how big of a dent these loans put on finances. Did mom and dad enjoy the security of investing in their kids compared to the market? Probably, but you can see that mom and dad enjoyed the market returns as well because thats where the money went after it came back from the sibling loan.

Even cutting my financial model in half shows the sibling came out way ahead here and that mom and dad took a huge opportunity cost cut to make these loans. What did he go do with 170k + 100k and 24 years of a head start?. If he could've gone to a bank and made an above board loan, why would you put your parents through that?

Mom and dad clearly share some thinking here, if they didn't it would've all been split 4 ways and we would all actually be working on a monday.

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Again you are just adding a story to the facts that have been presented....just because both parents were teachers means nothing other than they were teachers and most likely received a modest salary, but it does not mean they were dirt poor or not upper middle class.....OP has left out a lot of details so you should only be making decision based on the facts known not what could have been.

What difference does it make what he did with the 170k + 100k loan of which was paid back. And I don't understand what this head start you are talking about. Was there a race being run that I am not aware of? Where was he trying to get to before the siblings?

And the person squawking is the OP...OP came here asking if we thought the money should be split 4 ways and by doing that it makes me think that OP thinks it should be split as well. If OP didn't think splitting the money was the right thing I don't think OP would have posted the issue on a message board.