Should I Bail Out My Bro from a Million-Dollar Mess?

Hi Barefoot,

My dad died three years ago and left his house ($1 million) and super ($200,000) to my brother, and made me the executor. I was self-sufficient, so Dad told me I would not receive anything. Fair enough — I respect his wishes. Now my brother and his adult kids have almost run out of cash and are looking to me to bail them out, the way Dad always did. But I have my own family! How can I help my brother manage his affairs without preaching to him?

Hassan

Hi Hassan,

Plenty of people in your situation would’ve been bitter about not getting any inheritance, but not you. Instead, you were concerned about your brother’s needs, not your own.

That is deeply impressive.

So your next decision should continue in the same vein: it’s all about what’s best for him (and his kidults).

And giving them money is not it.

Your father’s money simply enabled his poor behaviour. It hindered rather than helped him. So deciding to give him more money would be like buying an alcoholic a beer because they’re thirsty.

My view?

Offer to help your brother to set up his basic spending buckets — and even be an ‘accountability partner’. Or, if that’s awkward, support him to go and see a free financial counsellor (call the National Debt Helpline on 1800 007 007).

Your old man understood that you were strong enough, both financially and emotionally, to make it on your own, and that’s why he didn’t feel the need to give you any money. He was right.

Your brother is the real winner, though. You’re not only someone who can be a good money mentor, but you sound like a great bloke too.

Good luck.

Scott

Family Feud

Hi Scott,

I am 26 and recently got married (yay!), but my husband and I are not sure how to combine our finances. He owns a house with his brother, and I have a decent inheritance which I would not like to lose if we ended up divorcing (yes, I know it’s a bit early for that!). I thought of leaving the inheritance in the offset account, but if my husband dies I do not want to lose it to my brother-in-law either! How can we make it all work? Do we need a (post) prenup?

Ashley

Hi Ashley,

It sounds a little like you want a Meatloaf marriage: “I would do anything for love, but I won’t do that (share my inheritance).”

The way I see it, there are three things you can do:

First, you can go to a lawyer and draw up a ‘binding financial agreement’, which will set out who gets what if you want out of the marriage like a bat out of hell (another Meatloaf reference … ask your parents). The downside to binding financial agreements is that they can be expensive, and they’re often contested.

Second, a more practical approach could be for both of you to write single wills which state that your parents (or whoever) get your stuff in the event of your death. These wills can be updated as you go through life.

Third, if you want to avoid a lot of financial heartache in the future (and also avoid the costs associated with the first two options), I’d seriously consider talking about your feelings to someone qualified ‒ and that’s not me!

Fact is, you’re still in the honeymoon phase of your marriage (which, in my personal experience, lasts until the first kid pops out) yet you’re already choosing money over marriage.

That doesn’t make you a bad person, and it’s nothing to be ashamed of. It just means you have doubts.

And those doubts won’t go away.

Scott

We’re Rich!

Scott,

My husband (30) and I (24) have inherited an eye-watering $6.5 million! We have paid off our mortgage, bought an investment property and cleared our debts, yet we have no idea what to do with the rest of it. (We have locked it up in our high-interest account while we decide what next.) Now that we have the financial freedom to enjoy our weekly wages freely, we want to be wise with our next move. What do you suggest?

Tim and Sarah

Hi guys,

You have reached your ‘enough’ figure at a time when most couples are still trying to scrape up a house deposit.

That’s the first bit of advice: understand that you have ‘enough’. More money won’t make you any happier from this point on. In fact, as you’ve probably worked out, having lots of zeroes in your bank account is actually bloody stressful, right?

Well, here’s how I’d think about it if I were in your shoes.

Let’s say you have $5 million, which you decide to invest in a low-cost index fund (via a family trust for asset protection).

I want you to think of that investment the same way I think about my family farm (stay with me here!). Twice a year your ‘farm’ will deliver you a golden harvest, in the form of dividends, and it will grow each and every year.

In my case, the land value of my farm goes up, down and sideways (just like share prices), but I don’t care, because I’ll never ever sell my family farm. Besides, it’s the harvest that puts food on the table.

In your case, your ‘farm’ should deliver you around $275,000 pre-tax a year.

Yes, there will be the occasional ‘drought’, and lean times -- but as long as you own the farm, you collect the harvest.

And that’s the lesson: you plant once, and then you can harvest forever.

And that is why you have more than enough.

Scott