PB Law Blog... Trusts and Stuff

In this series, I’m offering a weekly Q&A to outlines some mistakes I've seen my generous clients make- along with my recommended course-correct plan of action!

Monica (age 52) & her spouse, Leti (age 60) both work demanding full-time jobs, each earning a low-six-figure salary.  They would like to retire in the next 15 years.

While each contributes to retirement savings thru 401Ks, they have some catching up to do (they had to borrow against their retirement during the recession). They own their home jointly and split household expenses (50/50).

Monica has always doted on her baby brother, Jorge (25 years).  As the oldest + youngest of a large family, Monica has often taken a maternal role- finances included. Monica paid for tuition, room, & board for Jorge to attend an in-state university; he graduated in Spring 2020 with a liberal arts degree.

Jorge didn’t find a full-time salaried job upon graduation, so he asked to live with Monica & Leti (COVID!).  Jorge now works in retail, 25-30 hrs/week (paid hourly, no salary / PTO / benefits). Monica hasn’t asked Jorge to pay rent or utilities to date, and she also supplements his lifestyle (health insurance, some groceries & personal items, and lots of other one-off “treats”).

Leti is beyond frustrated and doesn’t see a “light at the end of the tunnel”, as Jorge hasn’t shown any inclinations towards a more lucrative career path (or using his degree), let alone moving out. Plus, Monica doesn’t press the issue w/ Jorge- she’d rather have the argument with Leti, instead of upsetting her “baby bro”, who she suspects has anxiety and some signs of mild depression (both untreated / undiagnosed).

TIFFANY:  #1) As a TEAM, sit down with Jorge to ask for his plans … (1 year / 5 year / 10 year, etc.)

1. Does he have a reasonable, well-thought-out career objective / goal?

   i.e., a well-fleshed out business he wants to start (along with a WRITTEN business plan) / he’s actively saving for grad school in a field with solid income potential?

   ---or----

2. Is Jorge simply happy with the current situation, living with them at minimal cost, with negligible financial responsibility. He feels “blessed” that he doesn’t stress about finances, which frees him up to travel, spend time w/ his friends & pursue hobbies. Jorge has no long-term goals, other than “being happy” and “living his best life”.

If the answer is (A) –

• Discuss concrete, measurable benchmarks that the (3) of you, as a family, agree to;
• Follow-thru with regularly scheduled family “status check” meetings.  Put these on a family calendar and KEEP THE APPOINTMENTS.
• Outline CONSEQUENCES if Jorge fails to meet the agreed-upon benchmarks.
• Set a timeframe for all next steps, leading to move-out.

If (B) – WARNING!  This could not only derail Monica & Leti’s retirement plans but could be a breaking point in their marriage.

• Most Urgently: Monica & Leti need to address how much they need to save for retirement to “catch up” to to fund their goals.
• ASAP- meet with a reputable, licensed financial advisor for a comprehensive analysis of their retirement needs, with a solid plan to fund them.
  • Then, using this information, Leti & Monica need to agree on a course of action to address the Jorge situation, that they both can live with (and how each will deal with concessions / compromises).
  • Leti & Monica need to agree to present a united front, that Monica COMMITS TO, even if it will be hard for her to “upset” Jorge.
• Once the plan is set, they should then share the plan with Jorge, with a reasonable, concrete timeline for his move-out (and/or contributing to household expenses in the meantime).

• Monica- While you may feel like you’re helping Jorge, I see more harm than good.
  • Why? You're treating Jorge like a child!  Overtly or subconsciously, he’s gotten the message, resulting in a delayed adolescence that's not healthy for anyone in the family- especially Jorge!
  • Your well-meaning actions actually show that you don’t trust him / don’t find him worthy of respect you’d show an adult / don’t think he’s able to self-support (or thrive!).
• Another Issue: I’m also concerned about the ‘undiagnosed’ signs of anxiety / depression.
  • If this is an issue, it needs to be addressed by a mental health professional, who can not only help Jorge with his mental health & wellbeing, but also may be able to counsel the family on how to proactively set boundaries and goals (sans the co-dependency!).

By setting- and communicating- boundaries, benchmarks, and goals, involving Jorge as a decision-maker in the process, you’ll teach him vital life + financial lessons. 

Plus, you’ll demonstrate that you BELIEVE in him, in his abilities, and show he’s worthy of your respect (not pity!).

What do you think?

What advice would you offer Monica & Leti?

-- Tiffany Ballenger Floyd, Esq.

Managing Partner, Phillips Ballenger, PLLC | Estate Attorneys

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