← HerMoney with Jean Chatzky
HerMoney with Jean Chatzky
“I promised my son $250K rather than part of our family house, do I owe him the interest too?” (with The Moneyist)
00:24:09
Questions on money, inheritance & drama
Loading summary
Transcript27 lines
- [00:00]
LifeLock Advertiser
The new year brings new health goals and wealth goals. Protecting your identity is an important step. Your info is in endless places that could expose you to identity theft leading to lost funds. LifeLock monitors millions of data points per second. If your identity is stolen, our restoration specialists will fix it, guaranteed or your money back. Resolve to make identity, health and wealth part of your New year's goals. With LifeLock, save up to 40% your first year. Visit lifelock.com podcast Terms apply.
- [00:32]
Quentin Fottrell
There's only so much control that that parents can exercise over their children, especially after they're gone. The best kind of gifts don't come with strings attached, you know. All inheritance is treated as a separate property unless their sons sell the businesses, put them in a joint bank account or co mingle the money.
- [00:57]
Jean Chaty
Hey everyone, thank you so much for joining us today on Her Money. I'm Jean Chaty and I've been waiting for this one because on today's Mailbag, I'm fangirling a bit. I am joined by Quentin Patrell, managing Editor of Advice at Market Watch and the Voice behind the Money Ist, one of my favorite columns about the tricky, emotional and often messy, messy, messy, messy money dilemmas that we all face. If you have ever read one of Quentin's pieces, you know he does not shy away from the tough stuff from sibling rivalries, inheritance issues, secret bank accounts, you name it. He has tackled it with his own brand of insight, empathy and a touch of of dry wit. And today he is lending that wisdom to your questions. We got a mix of submissions from the Hermoney community and a few unforgettable ones from the Moneyist Archive, all centered around what really happens when money and relationships collide. Quentin, welcome. Thank you so much for doing this.
- [02:12]
Quentin Fottrell
My pleasure. Thank you for the lovely intro.
- [02:16]
Jean Chaty
Before I open the mailbag, tell me just a little bit about what you've been working on lately and what kind of questions you're seeing more of in the new year.
- [02:25]
Quentin Fottrell
Oh, good question. Well, a lot of this, a lot of the same like you mentioned, somebody who believes his mother has ghosted him after his father passed away. Somebody else whose girlfriend says he gives too much to his 28 year old son. Somebody who more newsworthy, who feels, who wonders whether they should buy a house or not with the Fed rate cuts and whether this is a good time to buy a house and all of that good stuff. And I also recently wrote sort of a review of 2025 and talked about how probably consumers should expect more of the same next year, despite the ringing of the New Year's bells. So, you know, when there's a big news story, like if there's a correction in the markets or, you know, a lot of my letters will become very newsy very quickly.
- [03:20]
Jean Chaty
How do you feel about the emotional stuff when you get asked about a father ghosting a son or a girlfriend issue? I mean, a lot of this stuff is not what's the best mileage credit card for me.
- [03:39]
Quentin Fottrell
That it's not. Which I think, I hope makes it different from other advice money advice columns out there. Because my background is. I mean, I've been a financial journalist for many a year, but also I have a background in psychology, so I feel like the combination is good. And as you know, a lot of financial decisions are emotional decisions as well. So I try to be fair. I try to see it from the other person's point of view who isn't mentioned in the letter. And I try to be compassionate. I do, as you say, maybe have a dry wit, sometimes try to use it wisely, but I veer away from being sarcastic or unkind. I feel like there's a. A lot of that already on the Internet and I don't want to add to it, but genuinely, I sometimes go into, like a zone. You know, I just. I don't always know exactly what I'm going to say when I'm. When I start writing and then it all just comes out. And then I feel like the money has took over my spirit and sort of wrote it for me. So I love that.
- [04:51]
Jean Chaty
That's fantastic. All right, we're gonna dive right in. This first one is, I have to say, right in the moneyest wheel. Instead of giving my son a share of a rental property that I co own, 5050 with my daughter, I promised to give him $250,000 as an inheritance instead, mainly because he had no financial input in that property. Here's my dilemma. Should I give him the full $250,000 at that point or the 250,000 plus the interest it's earned? Of course, I'd prefer to keep the interest. But is that fair? What do you think? What's the right way to balance equity and equality in inheritance planning?
- [05:37]
Quentin Fottrell
Well, as always, I think the clue, Jean, is in the question. I think the inheritance, if at all possible, should be as equal as possible. But before I even answer that, I would say to this woman that given that you have to save to give Your son this $250,000 raises an amber flag, at least for me. I don't think you should ever Compromise your own financial security for a promised gift or inheritance during your lifetime. So I feel like she needs to talk to an estate planning attorney, an accountant about her assets, her home and her future needs and retirement, because that should be her number one priority at this point. And that of course includes long term care or any unforeseen medical or house related expenses. But of course, giving your child a living inheritance can really help them reach their goals. And I'm all for that. That's why the IRS has these rules about how much you can gift and then you get in a year before you fill out a tax return and your lifetime gift allowance and all of that. So. So I feel like that's definitely a good idea. If she wants to make sure that each child gets exactly the same inheritance down to the last red cent, she could give her son the monetary equivalent of the share of that rental property. That's if she can afford it and allow her daughter to own her home outright that she has a share in. Because I feel like forcing her daughter into becoming a joint landlord with her brother against her wishes or that her knowledge would be a weird flex and best to be avoided if she can afford it. But as always, Jean, I feel like the clue is in the question.
- [07:20]
Jean Chaty
Yeah, well, clearly she's reluctant to hand over this money. Right. She wants to hold onto the interest. And I think from the perspective of both a mother and a child, the last thing that we want is for our kids to then have to turn around even after we've supported them and support us. Right. So maybe kick the can down the road and don't give anything until you're really sure that you can afford it or you die.
- [07:56]
Quentin Fottrell
Right. Yeah, I mean, I really, I absolutely agree. I mean, she can at a later date, in order to equalize the inheritance, she could adjust the various distributions in her will or in a trust, reducing one share and increasing the other and accounting for the money that she's invested in her daughter's property. You have these hotchpot clauses that can help ensure that kind of bareness by deducting any advance gifts from the inheritance share as well. But absolutely, I think sometimes the clue is in the question and other times the person. We end up answering a question the person didn't ask. And in this case, I think we both have the same answer, Gene, which is look after yourself first to make sure you have enough money.
- [08:41]
Jean Chaty
Yeah, absolutely. Our next question is from Melissa. She's a member of our private her money Facebook group. She says, I'm hoping you can Guide me through the process of setting up a Ladybird deed in Florida. My father owns his home outright, along with several other assets. Cars, motorcycles, a tool shop, some savings. He's already created a will naming me as his sole beneficiary. And I have a notarized power of attorney. I'd assume that would be enough, but I've been told I'll still have to go through probate. I'm trying to find a way to avoid probate if possible. I've looked into a Ladybird deed, but I don't really understand the process. I also don't have the money to hire an attorney and the clerk of my court and the clerk of court in my county hasn't been helpful. My dad wants me to inherit the house and eventually pass it down to the grandkids, my kids, so they'll have a solid start in life when they're older. I don't plan to live in the home. I own my own house and honestly, I think my dad's is haunted. I'm never living there again. The plan is to rent it out and use that income to cover property taxes, upkeep and other expenses. What worries me most is the potential for a drawn out probate process. My dad has daughters from a previous marriage he no longer speaks to, and while I'm not sure they would contest the will, I want to be prepared for anything. Right now, the house is worth about $350,000. My dad is in his mid-60s. He plans to retire next year. I'm comfortable with the paperwork and he's willing to put me on the deed, but I'm unclear about what specific documents we need and how to properly file them. Can you explain the steps to set up a Lady Bird deed or suggest the most cost effective way to make this transfer smooth for the future? I have never heard of a Ladybird deed.
- [10:46]
Quentin Fottrell
Oh wow, right? Well, I have only through my own research. So Florida, Jean, is one of a handful of states, I think it also includes Michigan, Texas, Vermont, West Virginia that have these Lady Bird deeds. And they are basically. They do make this process much simpler. They're basically special documents that allow the transfer of real estate while allowing you to keep full control over the property during your lifetime. So you can sell, you can remortgage, you can change beneficiaries at any time should the fancy take you. And you can also then automatically pass the property to your chosen heirs upon your passing. And importantly, as this person points out, the bypass probate part is important and potentially they can also Protect you from Medicaid estate recovery in certain instances as well. So they can be very useful. I agree. Probate is a public washing of your laundry. It's a very public process. So anything you can do to avoid that is, I always think, a good thing for people. Ultimately, I think this is a question for a lawyer. And of course, any kind of legal documentation like this should be undertaken with the counsel of a lawyer. And as the property owner, you would need to sign the deed before two witnesses and a notary. The deed should name the intended beneficiaries must have a formal legal description of the property. It can't just be the mailing address. So together with the lawyer who specializes in these issues, you can achieve this quite. You know, in some cases it could take a week to get this done. So the advantage is, you know, it avoids probate. They can be less expensive and even more effective than a living trust. You can, and you can change your mind. And they have tax benefits with, with the Lady Bird deed, the beneficiaries get a step up in basis, so they pay taxes on the fair market value of the property upon your death rather than at the original purchase price. Disadvantages. Lady Bird deeds have limited protection against creditors during your lifetime. You know, title insurance or financing might be difficult to achieve depending on your circumstances. And obviously if you want to use them, as many people do, as a tool to qualify for Medicaid, they must be drafted correctly. You need the help of an elder law attorney and be cognizant of any changes in the law in your state as well, obviously in the states that allow these Lady Bird deeds. But yeah, they can be extremely cost effective, very flexible, and as far as legal documents go, relatively simple.
- [13:22]
Jean Chaty
Okay, so here's my question that she didn't ask. Okay, I would just sell this house. And that isn't even a question. I would just sell this house. I have been, I mean, I've seen so many different examples of you don't want the house. You, chances are pretty good if you don't want the house, your kids are not going to want the house. Invest the money and it's going to grow faster in many cases than it would if it was continually kept in the home as equity, even if you are taking an income from it. And who wants to be a landlord? I mean seriously, who wants to be a landlord? So I would just ask myself this question of why am I not selling? I understand your father wants the house that he loved in the hands of his grandchildren, but my guess is those grandchildren have no interest in this house. Right.
- [14:22]
Quentin Fottrell
And I think you're absolutely right. I think that's a great point. And I do feel like, back to our original conversation, that sometimes you can be emotionally attached to real estate and want to hang onto it at all costs, even if it's not. That may be in some cases the smartest thing to do. As you said, you can invest it in the market and over a long period of time, that could be quite.
- [14:42]
Jean Chaty
A nice nest egg for the kids as well. All right, we've got one more Quentin. We're going to take a quick break. When we come back, we're talking about inheritance. This one involves three sons, three businesses, and some very protective grandparents. Back in a sec. You know, my producer Hayley has a big goal for 2026, finally building that travel fund she has been talking about for years. Real guilt free adventure money. But like any goal, it starts with a plan. And for that she is using Monarch. Managing your money doesn't have to be a struggle this year. Monarch is the all in one personal finance tool designed to make your life easier. It brings your entire financial life, budgeting, accounts and investments, net worth and future planning together in one dashboard on your laptop or your phone. Start your new year on the right foot financially and get 50% off your monarch subscription with Code Hermoney. Achieve your financial goals for good. Monarch is the all in one tool that makes proactive money management simple all year long. Use code hermoney@monarch.com for half off your first year. That's 50% off your first year@monarch.com with code hermoney. You know, I have learned over the years that it's the small things, the ones we do every day, that make the biggest difference whether it's how we spend, save or take care of ourselves. That's why I love recommending AG1. There is no right time for better health. There's just now our chief Content officer Katherine Tuggle uses this every single day and she thinks you should try it too. She loves the berry flavor but original citrus and Tropical Tropical are all great. So pick your favorite. AG1 has over 50,000 verified 5 star reviews and comes with a 90 day money back guarantee. So go to drinkag1.comhermoney to get their best offer. For a limited time only get a free AG1 duffel bag and free AG1 welcome kit with your first subscription order only while supplies last. That's drinkag1.com hermoney drink ag1.com hermoney we are back with Quentin Fottrell aka the Money is tackling your pressing questions. This one's tricky and it comes from the moneyist community. My parents are gifting each of my three sons a laundromat. These are established income generating businesses, each worth about $500,000 if sold. My sons are adults with their own careers and this is meant to be their inheritance. The issue my parents want to ensure these assets stay separate and aren't even and aren't ever commingled with future spouses. The laundromats are self sufficient with two employees running day to day operations. What's the best way to protect this inheritance from becoming marital property? Can we talk about the legal safeguards and the emotional conversations that come when you're trying to protect family assets without creating unnecessary fights in the family?
- [18:06]
Quentin Fottrell
Yeah, I mean it's a tough one, especially when you have daughters and sons in law. This letter did appear as a moneyist. It was very popular. I don't know what it is about laundromats. I think people love to read about laundromats. But yeah, I mean look, these kids are very fortunate to have such generous parents for a start, I mean these are worth $500,000 a piece if sold. But I do also feel Jean that there's only so much control that parents can exercise over their children, especially after they're gone. The best kind of gifts don't come with strings attached. You know, all inheritance is treated as separate property unless their sons sell the businesses, put them in a joint bank account or commingle the money. So obviously commingling it can sneak up in you when you least expect it. If one of their sons spouses for example, contributed to the business or if income from the business was used to purchase marital assets, a divorce or appropriate court might rule that a share of the laundromat is now marital property. Prenuptial agreements would help ring fence these assets. Trusts, particularly irrevocable trusts are another way to handle gifts with an iron glove and keep assets in the family. I mean this is an awful lot of trouble they're going to in order to make sure that these laundromats stay in their kids hands. But yeah, I feel like you know, if these parents are going to give their sons the laundromats while they're still alive and they had bought these businesses for a lot less than obviously I can see why they would like them to inherit these businesses on a rail of the step up in basis. What's your take Jean?
- [19:51]
Jean Chaty
Yeah, I think in a situation like this a Prenup. I mean, any situation where people are coming into a marriage with considerable assets, with property, with children, or responsibilities from prior relationships. I'm a prenup fan. I have one. I'm in my second marriage. My mother got married for the second time when she was single, 70. She got one. I just think that they're not a big deal. You do them, you sign them, you put them in a drawer. They exist, they protect you in death as well as in divorce. And so I would go that route. I would suggest that your kids do a prenup or if they're already married, maybe a postnup. And I also think, just talking about what is a marital asset? How does an asset become a marital asset? What does it mean to co mingle can be a helpful conversation because often it's when people don't understand the rules that things get jumbled and mixed up and we create a mess of things.
- [20:57]
Quentin Fottrell
Right. I agree with that too. And I absolutely. I think we're both in agreement on the prenup. I have a friend who has considerable assets and she recently met like an old boyfriend from 20 years ago. And yeah, and I sort of said to her, you know, marriage isn't a retirement plan, you know, so maybe don't sign any documents. And funnily enough, she didn't at first think I was talking about a marriage document. But people feel that marriage documents are romantic documents, while going into business with somebody is a business document. But marriage documents are also financial documents. And you need to be very careful before you sign them. If you do sign them, you need to be, as you said, extremely clear about what remains yours, ours and mine.
- [21:49]
Jean Chaty
Mm, exactly. All right. Before we let you go, you have spent so many years untangling the most complex dilemmas that people face around money. If you had one universal piece of advice for people trying to navigate these tricky conversations, maybe it's around their estate, but maybe not. What would it be?
- [22:13]
Quentin Fottrell
Well, I would have to say maybe don't leave anything to chance. Put everything in writing with the help of a lawyer. That's for married couples. For inheritances, you don't owe your children anything except your love. And an inheritance is only an inheritance when it's sitting in your bank account. So until the day that that happens, it's other people's money. Because I get so many questions from children, adult children who feel entitled to their parents assets. And really the only assets you're really entitled to are your own.
- [22:48]
Jean Chaty
I love that answer. For anyone listening, if you've got a money question whether it's about estate planning, investing or how to spend. Split the bill at dinner. Send it our way@mailbaghermoney.com you might hear it on a future episode. Quentin, this has been a pleasure. I have wanted to meet you for a very, very long time. I appreciate you spending time with us.
- [23:07]
Quentin Fottrell
Today and I have wanted to meet you. Thank you so much for having me on. What a pleasure.
- [23:12]
Jean Chaty
Pleasure. Thank you. Thanks everybody. See you later.
- [23:15]
Quentin Fottrell
Bye.
- [23:16]
Jean Chaty
If you love today's episode, please take a moment to leave us a five star review on Apple Podcast. Your feedback means the world to me. If listening to this episode has you thinking, all right, I am ready to get serious about growing my money, but I still don't feel a hundred percent confident about investing. I want to personally invite you to check out our Investing Fix program. It's a live weekly investing club designed for women by women, where we break down what's happening in the markets, explain how different investment works, and give you all the tools that you need to build your own confident long term strategy. And now is a great time to start while the markets are still showing strength and interest rates are shifting. So if you want to make 2026 the year you finally feel in control of your investments, go to investing fixed.com that's fix with two X's. I'd love to see you there. Her Money is produced by Haley Pascalides and our music is provided by Video Helper. Thanks so much for listening and we'll talk soon.