# Need some feedback -unbiased :)



## marina628 (Dec 14, 2010)

Hi everyone ,
My brother wants me to give our sister $100,000 of his cash while he is still alive.His exact words were for me to take care of some debt and/or invest for her.My sister has credit card debt ,she has a small mortgage that she could probably put money on or pay out and also TFSA and RSP room.
In past I have paid her credit cards off for her for her birthday etc , never large balances $2000 -$5000 but each time I have done this she will go on a trip or buy new furniture.Every time I visit her she has painted her house or redecorated lol.
I know it makes sense to probably pay down debt that she is paying interest on but because I know her habits I am leaning towards making the max lump sum payment she can make on her Mortgage now and put money in her TFSA.She won't have a clue how to take it out as I currently do all her investments for her lol.
What would you guys do under these circumstances?


----------



## SpendLessEarnMore (Aug 7, 2013)

Have you told her that she's abusing your help by buying new furniture's and extravagant spending that she would otherwise not be able to afford. Yeah she'll probably say it's my life I can do whatever I want or something to that effect.

I don't think throwing money at her would help. She needs a serious talking session. And some motivation and goals in life.


----------



## MrMatt (Dec 21, 2011)

Do what you think will be the best benefit for her.

She sounds financially irresponsible, I'm not sure large chunks of cash are helping anyone out.

I'd pay off the mortgage and TFSA/RRSP it.


----------



## Butters (Apr 20, 2012)

Talk to her, ask her if you pay off her credit cards, you get to keep them/cut them up, and she has to live on pure cash / debit from now on

if she doesnt agree to that, what Matt said

she sounds pretty selfish, and you sound too helping.

you're the smartest girl on these forums Marina, you'll do whats best


----------



## andrewf (Mar 1, 2010)

What about a trust?


----------



## marina628 (Dec 14, 2010)

Our brother is dying I am not going to lecture her about money right now.She owes about $40,000 on her mortgage total and she has max $6000 credit card limits and probably $3000 owing.She has never asked me for a dime these are all gifts from me to her so don't want to seem like I am bailing her out.But I don't think letting her have this money is going to be wise.


----------



## mcoursd2006 (May 22, 2012)

Unbiased feedback. Okay.

Whether your brother is dying or not is irrelevant to the issue at hand, and I don't mean to sound insensitive. Your sister, whether or not she has asked for these gifts, is financially irresponsible. She isn't going to learn a thing by you always bailing her out of these situations, and you just end up feeling frustrated and resentful. Maybe what she needs is some tough love from you. It may not seem like it to her now, but she may thank you for it later on. It's a tough predicament to be sure. Whatever you decide, good luck.


----------



## AltaRed (Jun 8, 2009)

I agree with MrMatt and what Marina is suggesting. Make the biggest lump sum possible on the mortgage and put the rest in a TFSA (if possible) and any remaining in an RRSP.

This is an initiative from a dying brother and it is not Marina's place to make judgement, other than attempting to carry out his wishes.


----------



## humble_pie (Jun 7, 2009)

yes, certainly agree with altaRed.

it's simple, dignified, almost wordless, will do her max good in the long run, exactly what your brother wishes, it's the perfect solution for the times.


----------



## marina628 (Dec 14, 2010)

My sister is 50 years old ,she and her husband make a modest income but they do have Retirement savings and her home is worth about $450,000 with only a $40,000 mortgage but like I said she tends to carry a balance on her credit cards and when they get extras she will buy new things for her house or take trips.AltaRed is correct I am doing this for my brother since he left me in control.My sister and her husband has a Sears card with $1500 limit and a Master card with a $5000 limit that is it.Anyway after thinking about it today I am going to give her $20,000 and suggest she use it to max the Mortgage prepayment and pay off her credit cards.I will see in a while what she does with it and I am going to let her think that is all she is getting from our brother.My parents know about this and agree we should not give her such a big amount of cash at a time and she will thank us for it later I am sure.


----------



## MoreMiles (Apr 20, 2011)

Does your sister have any young child? Your brother may wish to sponsor his nephew / niece's education instead, as it leaves a better legacy. Or your brother can set up a non-redeemable 5 year GIC ladder for your sister so she only gets a portion of it every year. She will be 55 when she gets everything out.


----------



## sags (May 15, 2010)

Is your sister to be left money in your brother's will? 

Are you the executor of his will?

I believe that giving money now would be considered a "gift", and would not diminish any future inheritance in the will, unless specified in the will.


----------



## Four Pillars (Apr 5, 2009)

marina628 said:


> I am leaning towards making the max lump sum payment she can make on her Mortgage now and put money in her TFSA.


I think your idea is very good. At the end of the day, she can stil mess up her finances regardless of how you give her the $$, but at least with your idea - it sounds like it might have a longer financial impact than paying off her debts (since apparently that doesn't help her at all).


----------



## marina628 (Dec 14, 2010)

sags said:


> Is your sister to be left money in your brother's will?
> 
> Are you the executor of his will?
> 
> I believe that giving money now would be considered a "gift", and would not diminish any future inheritance in the will, unless specified in the will.


My sister has no kids and she is not named in the will nor am I the executor.


----------



## Just a Guy (Mar 27, 2012)

Perhaps your money would be better spent buying drugs for drug addicts. 

She may be your sister, but all you and your brother are doing is enabling her addiction. She may need to hit bottom before she realizes the problem she has. It doesn't sound that serious, but most addicts start out as casual users. 

You're not doing her a favour by giving her money. Teach the woman to fish. If she doesn't want to learn maybe she needs to starve for a while. 

While I hate to admit it, getting injured and losing my income may have been the best thing for me financially.


----------



## marina628 (Dec 14, 2010)

Just a Guy said:


> Perhaps your money would be better spent buying drugs for drug addicts.
> 
> She may be your sister, but all you and your brother are doing is enabling her addiction. She may need to hit bottom before she realizes the problem she has. It doesn't sound that serious, but most addicts start out as casual users.
> 
> ...


Mods should have a close thread button because now things are just getting stupid...


----------



## MoreMiles (Apr 20, 2011)

Just a Guy said:


> Perhaps your money would be better spent buying drugs for drug addicts.
> 
> She may be your sister, but all you and your brother are doing is enabling her addiction. She may need to hit bottom before she realizes the problem she has. It doesn't sound that serious, but most addicts start out as casual users.
> 
> ...


Can you please re-read the message? The OP is not asking for "why"... she is asking for "how". She is a very experienced poster here, with a message count well above yours. She does not need your lecture.

I don't know her story. But it appears that her brother is ill and may not live much longer. So he would like to create a legacy. He can either donate his money to strangers or to his family members. There is nothing wrong on how you choose to spread your wealth. Even if he donates it to charity, does it mean that charity would not waste money on administrative fee or even fraud from government corruption like many charity missions in under-developed countries? So who cares about how the receiving end will spend that donation... this is not for us to judge. Only the donating source (ie, OP's brother) has the right to decide on it.


----------



## MoreMiles (Apr 20, 2011)

marina628, our prayers are with you. Please do not let some a-holes ruin your day.


----------



## Guban (Jul 5, 2011)

I am very sorry to hear about your brother, and wish your entire family peace during this hard time.

To me, and many other posters here it would seem, credit card debt is the worst kind. Very expensive, and very avoidable. Many Canadians, however, don't think like this, and it seems that your sister is one of them. She has other things to occupy her time and thoughts, and I'm guessing that she doesn't read the CMF much! It doesn't sound like she is doing that bad of a job with her money in the grand scheme of things. While she has credit card balances that she carries, she (or the lending institution) is smart enough to keep the limit relatively low. She also sounds like she is doing relatively well, considering that her house is pretty much paid off well before 65. Many Canadians would love to be in her shoes.

Finally, it sounds to me like she has shown good judgement in letting a caring and capable sister look after her financially. Your choice of limiting your brothers gift sounds prudent to me.


----------



## marina628 (Dec 14, 2010)

Thanks Miles but this is what happens on forums when people do not know full situations and I didn't feel I needed to go through every single thing.My sister and her husband no longer work ,her husband is 57 and receiving a pension from his work so I guess their lifestyle is carefree compared to most but in no way are they in danger of financial ruin.Maybe because he has a pension they don't worry much now about saving much and their expenses are very low probably $20,000 a year .In any case I visited my brother tonight told him my idea and he said he agrees with my decision and then he told me invest the rest for her and forget about it for 5 years.My brother has had a fun life too , he has worked very hard and also played hard .Best thing that happened to him financially was his 4 years in Afghanistan as he banked all his money and could spend very little.My brother is dying of cancer and has been in the hospital for 5 weeks now but he seems to be holding steady ,I took him the paper on Friday so he could go through the grocery flyers and he made the shopping list for me.He has been doing this since he moved in with us 18 months ago.


----------



## Daniel A. (Mar 20, 2011)

I know her habits I am leaning towards making the max lump sum payment she can make on her Mortgage now and put money in her TFSA.She won't have a clue how to take it out as I currently do all her investments for her lol.

That's what I would do have his legacy benefit her future. 

Dan


----------



## Just a Guy (Mar 27, 2012)

Sorry marina, missed a few details and the situation hit a little close to home. 

My sister has been doing something similar for her brother-in-law for years. While noble, the problem is he is a drug addict.


----------



## kcowan (Jul 1, 2010)

One potential problem with paying down the mortgage is that it will increase the credit available for other stuff like credit cards.

I would max the TFSA and RRSPs and then set up the rest to pay her a small amount every year until the money runs out. Maybe $5000/year?

Glad to hear that your brother is somewhat stable.


----------



## wendi1 (Oct 2, 2013)

Marina:

At the risk of going too far outside the box, may I ask you to consider it from your sister's point of view.

No matter how out-of-control her spending, some miracle always seems to save her. Either her sister shows up with a lump sum (how do I get on your Christmas list), or her brother leaves her a large inheritance. Everything is fine, and there is no need to change. Who would deny her these innocent pleasures?

Until all your brother's money runs out. There she is with a house full of impulse buys, and no money to pay the bills.

I would reconsider the trust if it were up to me. She might need this money when she gets old. And you can choose trustees that don't love her. 

Also, if it were up to me, I would stop paying off her credit cards. She is old enough to pay her own bills.


----------



## Charlie (May 20, 2011)

I think we're being too hard on the sis. She's almost paid off her mortgage at age 50 (no HELOC reupping), is in good financial shape, low living expenses, and has not asked for money. She views credit cards differently then most here -- but at a $5K to $8K o/s balance she's hardly out of control. Maybe she 'wastes' $1K per yr more interest then she should. But that's her choice, and within her means.

I'd be tempted to just pay off the cc's and then invest/paydown the mtg balance. (Probably TFSA's, Mtg, then RRSP/or unreg depending on circumstance). Maybe she gets a trip, or home exp out of it as she reups the cc's...but that's just her. On a $100K gift for someone who doesn't really need it I don't think that's too irresponsible. She seems to be doing OK. It's never healthy to judge a family member by your standards for spending if they're getting along just fine.


----------



## humble_pie (Jun 7, 2009)

people always seem to forget that trusts cost a huge number of $$ in trustee fees.

trustees are bound by hundreds of years of common law jurisprudence to make nothing but "prudent" investments for their beneficiaries. In today's climate this means conservative, interest-bearing paper. Perhaps a few preferred shares. Very little (perhaps 10-20%) common shares & even those will have to be conservative large caps.

what this will mean is that the trust income from 100k in trust will probably not even be sufficient to pay the high minimum fees that professional trustees will charge. To pay their fees, the trustees will start invading the capital (no, wait, that's what mutual fund managers do.)

in practical terms, this will mean zero income for the sister plus, in time, the trust assets themselves will shrink.

it is possible to get a family member to act as trustee for free, but then the situation is immediately open to year upon year upon year of neverending niggly little family arguments about The Money.

one can see how, in this particular circumstance, the parties with experience & knowledge are easily standing out in front with their excellent suggestions. Marina perhaps you could close the thread to all but altaRed, kcowan & charlie? they will be the golden trio & your brother will have the very best advice in all the land, thanks to the internet!

for their part, perhaps altaRed, kcowan & charlie can close ranks & come up with a common strategy? they are already not far apart at all.


----------



## My Own Advisor (Sep 24, 2012)

I'm with MrMatt and AltaRed. Kill mortgage, kill credit debt, then TFSA, then RRSP. No doubt she will thank you in time.


----------



## heyjude (May 16, 2009)

My suggestion is to buy her a series of counselling sessions with Gail Vaz Oxlade on how to get out of debt and stay there.


----------



## marina628 (Dec 14, 2010)

humble_pie said:


> people always seem to forget that trusts cost a huge number of $$ in trustee fees.
> 
> trustees are bound by hundreds of years of common law jurisprudence to make nothing but "prudent" investments for their beneficiaries. In today's climate this means conservative, interest-bearing paper. Perhaps a few preferred shares. Very little (perhaps 10-20%) common shares & even those will have to be conservative large caps.
> 
> ...


I would kill mortgage but that will take about 15 months to do to avoid the penalty but we will do that.Just need time to do some TFSA but don't make sense to do RSP as she does not have much of a income right now ,he has a GM pension.Paid cc off today but did not tell her .


----------



## donald (Apr 18, 2011)

I don't understand the secrecy marina,why don't you ask your brother to speak openly and honest(with you also there)to your sister,even if its at the bedside.
I'm bewildered why your brother doesn't want to speak with his own sister(ESP if he is dying)Also you mentioned she is not in the will(not sure of the reason,nobody's business but your brothers)but IMO if your brother has the strength I would encourage a family meeting(obviously your brother cares for your sister,at least financially otherwise this post wouldn't be written)
I think in these matters given the chance your brother should speak with your sister.
I know for myself(my family)money would be so non important in these circumstances-but anyways that is my take.
why does your brother not want to talk to his sister while he is alive about this?
A true financial gift shouldn't come with terms and conditions IMO.if ones gives to someone,one is allowing the person receiving to do what one wants regardless if its right or wrong.


----------



## newfoundlander61 (Feb 6, 2011)

When dealing with family and money my advice is to accompany them to the bank etc and do the payout directly there. Just handing over that amount is not the best way to handle it, this way its paid off and done with.


----------



## MoneyGal (Apr 24, 2009)

I read this whole thread and then went back and re-read the opening post! 

A few comments (although most stuff has already been beaten around in this thread):

First, for what it's worth, marina's brother isn't giving the money to marina's sister. He's giving it to marina...with the hope and expectation that she will use it for the financial benefit of her sister. 

So, in that way, it is already established as an informal trust with marina as the trustee. In this way, marina's situation can benefit from the advantages of a trust, without any of the restrictions of a trust (as pointed out by humble), including the cost to establish and maintain a trust (i.e., trust tax returns). 

(As an aside, I am often colloquially made aware of people setting up very small trusts for children or grandchildren, i.e., trusts with $20 - $25K. I always wonder what motivates the formation of these very small trusts, which will not retain value for the object/beneficiary of the trust over the lifespan of the trust...and yet the trustor seems to feel like Scrooge McDuck...!)

Another possible alternative use for the money would be the purchase of a life annuity. I do not think this would be the financially optimal choice, but it would "spend" all the money in exchange for an income stream over time. 

If the purpose of the money is to "make sister's life easier and provide something for later," I can't think of a use for the funds that would be *better* than paying off the mortgage and loading up the TFSA. 

All this to say, I think you are on the right track, marina!


----------



## marina628 (Dec 14, 2010)

I have both the medical and financial power of attorney for my brother's affairs .My brother wrote his will this summer and he left everything to me but he is giving everyone else gifts while living which explains why my sister(s) are not in his will nor is anyone else.He gave our parents $100,000 cash and he is trusting me to take care of his daughter and he wants $100,000 used for our sister but he agrees no point to give her $100,000 in a lump sum.My two kids are his only nieces as he is divorced and our two sisters have no kids.He gave my daughter (oldest) $50,000 for her and her sister with max in her TFSA and I invested rest for her .My daughter is a student with lower income so better she pay taxes on her sister's money than we do. Our oldest sister has a very good job , $340,000+ last time I read her salary in the newspaper(she is high profile person ).He sent her and her husband on a $20,000 trip in June and he replaced her 4 year old car for her this year as well and paid for a new deck on her home.
My brother's estate when he dies will consist of his life policies and death benefits from Canadian Forces about $350,000 and I will be responsible for paying out the small amount of debt he has which will be just a funeral and final tax filing.
I have considered buying a house in cash for my sister and niece's name and just have the monthly rent go to them equally.In fact I own a house in Bowmanville that i paid $265,000 that we rent for $1750 a month, the house would sell for $320,000 but I considered just transferring it for the amount we paid .I am consciously aware that him giving me the $200,000 + in cash to invest for my niece and sister will be sending all the tax bills to me and that don't make sense when my niece and sister both make only $10,000 -$15,000 a year.
I am just venting today but it helps me write my thoughts .


----------



## MoneyGal (Apr 24, 2009)

If you want to get rid of the tax bills, life annuities are one way to go. You could buy a deferred life annuity (payments start later).


----------



## marina628 (Dec 14, 2010)

newfoundlander61 said:


> When dealing with family and money my advice is to accompany them to the bank etc and do the payout directly there. Just handing over that amount is not the best way to handle it, this way its paid off and done with.


I have my sister's login for her TD account so I went to the bank and deposited the $20,000 then came home and paid off the two credit cards and read her mortgage statement and got the max prepayment amount and paid it. She only has $8000 available in TFSA so I transferred that today .I helped my sister and husband set up Self Directed RSP and TFSA about 3 years ago as they had all mutual funds from the branch so I have her logins and his as well ,they save $650 a month between the various accounts but my sister still has about $57,000 in RSP room .I don't really see the point for her to put RSP in ,last year she put in $1800 and the accountant said she should carry it forward as she made less than basic exemption.


----------



## marina628 (Dec 14, 2010)

MoneyGal said:


> If you want to get rid of the tax bills, life annuities are one way to go. You could buy a deferred life annuity (payments start later).


I want it taxed in their hands but not to lock it up long time especially my niece , she will have a need for her money or part of it in next 5-10 years.My sister that would fit the bill probably but in next 15 months (to January 2015) with $40,000 going to retire debt and $19,000 in TFSA it will only leave $40,000 .


----------



## Charlie (May 20, 2011)

I don't see why you can't have it taxed in their hands. Set up the accounts as theirs and have them give you trading authority. Possibly there's attribution between dad and daughter (your niece) but even so....his rate will be lower then yours. 

Check it with your accountant. This isn't your money and you shouldn't be taxed on it. Gotta be a way.


----------



## DavidJD (Sep 27, 2009)

Can you be my sister?


----------



## marina628 (Dec 14, 2010)

Sorry that position is taken lol.I would consider adopting a sister if you loved poker and could manage a month in Vegas and would not whine at 4am that you wanted to go to bed lol


----------



## underemployedactor (Oct 22, 2011)

A month in Vegas, playing poker til 4am? Hell, I wanna be your husband!


----------



## randomthoughts (May 23, 2010)

It sounds like there's an admirable amount of cooperation and trust in your family with regard to finances.

That's an interesting contrast to my family - we're all doing fine to various degrees, but we don't intermix our finances. I think we trust each others' intentions, but not their intelligence


----------

