Should I Pay Off My Kids Debt?

Should I Pay Off My Kid’s Debt?

Susi’s weather susie’s in california hi suzie how are you hi dave it’s great to talk to you you’re taking my call sure so i have $400,000 in a money market account and i would like to help my kids get out of their debt because i’m kind of wrapped into it with them my oldest daughter and her husband we bought property with two houses on it and we owe 380,000 and i

Kind of like to pay that off and then you know i was happy just to do that and not have them pay me back but they said the only way they’d agree to do it is if i would let them pay half of it back to me so how old are you i’m 61 are you living in one of the houses i am yes and they’re living in the other one that’s correct on 10 acres okay cool and how many other

Children do you have i have another daughter who i am a cosigner on her student loan for eighteen thousand five hundred and i would like to pay that off and have her pay me back at a lower interest i would never put someone that i love in debt to me so no i’m not i would not have her bring you back i would either right i would either leave her alone or i’d write

A check and pay off the eighteen thousand that’s real easy i probably just pay off the eighteen thousand because it’s a debt you’ve got to you’re the cosigner on it and i’d probably just remove that check as far as the as far as the farm deal goes it’s not fair to the other daughter if your estate is diminished by $400,000 oh the second daughter yeah yeah what do

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You mean how does she get her share of the estate when it’s tied up in farm that has to prop two houses on it one of which she has no desire to live in well i have a million dollars in a portfolio that if you know something happened to me it goes to both of them so be easy enough to be easy enough for the child with the farm to take their a portion of their portion

As the farm and you’re just advancing you’re just advancing them you’re in heather your inheritance right right and actually that’s written in the trust that they have they have the first i don’t know what it’s called but they they can pay it off with their amount and then it goes into what’s left over that date they devoxx exactly you can do that and that that’s

The way they don’t need to pay you back so that you can give it to them again when you die i know we see that okay you know well you’re gonna get the money when i die anyway and so all i’m doing is giving it to you before i die yeah that’s the reality so yeah if you since you’ve got you you’ve done very well and you have a really nice net worth and you got a lot of

Liquidity so we’ve got the daughter with the student loan taking care we write that check she’s done and she’s gonna get her half out of that million the kids are gonna get their half partially out of the million and other kids and partially out of the the farm that you paid off in advance and so what you do is you reduce the kids that are on the farm you reduce

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What they’re going to receive as an inheritance by the amount that you used to pay this off and you don’t worry about gift tax because you’re one of the owners of the farm so you can pay off your own farm anytime you want there’s no gift tax issue on this estate but you do want to say the four hundred thousand or the two hundred thousand or whatever it works out

To be the proper amount of their inheritance is reduced by that and they got they just got it before you died that’s all and no i don’t want to put either one of them in debt to you know i don’t want an interest rate no i don’t payments from either one of them to you you’ve got plenty of money you’re gonna be sitting there on a debt-free property next door to your

Kids life is good and and you’ve still got a million dollars plus in other assets so you’re in fine shape that’s exactly what i did right check pay off all these debts and no i wouldn’t let any of them repay you know it’s you just it just becomes a dog chasing its tail and you don’t want to have payments going back and forth and a family it just creates all kinds of problems

Transcribed from video
Should I Pay Off My Kid's Debt? By The Ramsey Show – Highlights