Rich Inlaws - Buy Us a House and Let Us Live Rent Free/Cheap?
Rich Inlaws - Buy Us a House and Let Us Live Rent Free/Cheap?
My father in law is quite wealthy. So far he's been reluctant to give any of his wealth to his two children (including my wife) -- I suppose with the thought being that he will convey his wealth to his children upon his death.
My wife and I have been working hard for the past nine years in big law firms. Although we've made very good money, and have saved quite a bit, we are both burned out from these jobs and want to spend more time with our 2-year old boy. The jobs make it difficult to manage any reasonable work-life balance.
Here are some details:
1) Net worth at $1.25 million -- probably closer to $2 million when property appreciation is accounted for
2) Age -- we're both 38
3) Own two rental properties generating decent cash flow in a high-appreciation area
4) Own a personal residence
5) $500K thousand in 401K/Roth 401K (maxed these accounts since 2009)
6) Kid's 529 is well funded
It was somewhat uncomfortable (and he still hasn't responded despite saying he'd get back to me on it -- I'm not holding my breath), but I suggested the following arrangement, with what I see as the following benefits (I did not elaborate on these benefits with him; it was not a hard sell):
1) Father in law purchases a nice house in a nice area where my wife and I would like to live. He keeps title.
2) We move into the house as renters
3) For rent, we pay the property taxes, but he doesn't charge above that. The difference between the market rental rate and the rental rate we pay (property taxes) would be a gift -- or more accurately, a series of gifts depending on the delta ($14K (annual gift exclusion) x 3 (wife, me, son) x 2 (father in law and mother in a law) = $84K max annual gift).
4) Father in law keeps the property -- just with a negligible annual return (appreciation could be significant). Wife and I maintain the property in prime condition.
5) Wife and I can stop working so hard, spend much more time with son, family and friends
6) Wife and I continue to rent the 2 rentals, and convert our current residence into a 3rd rental (adding some rental income to offset reduced employment income
7) Father in law can watch us enjoy the benefits of his gifts, as opposed to holding onto everything until his demise and not seeing us enjoy the inheritance
Does this sound reasonable to you? Does it strike you as outrageous?
My wife and I have been working hard for the past nine years in big law firms. Although we've made very good money, and have saved quite a bit, we are both burned out from these jobs and want to spend more time with our 2-year old boy. The jobs make it difficult to manage any reasonable work-life balance.
Here are some details:
1) Net worth at $1.25 million -- probably closer to $2 million when property appreciation is accounted for
2) Age -- we're both 38
3) Own two rental properties generating decent cash flow in a high-appreciation area
4) Own a personal residence
5) $500K thousand in 401K/Roth 401K (maxed these accounts since 2009)
6) Kid's 529 is well funded
It was somewhat uncomfortable (and he still hasn't responded despite saying he'd get back to me on it -- I'm not holding my breath), but I suggested the following arrangement, with what I see as the following benefits (I did not elaborate on these benefits with him; it was not a hard sell):
1) Father in law purchases a nice house in a nice area where my wife and I would like to live. He keeps title.
2) We move into the house as renters
3) For rent, we pay the property taxes, but he doesn't charge above that. The difference between the market rental rate and the rental rate we pay (property taxes) would be a gift -- or more accurately, a series of gifts depending on the delta ($14K (annual gift exclusion) x 3 (wife, me, son) x 2 (father in law and mother in a law) = $84K max annual gift).
4) Father in law keeps the property -- just with a negligible annual return (appreciation could be significant). Wife and I maintain the property in prime condition.
5) Wife and I can stop working so hard, spend much more time with son, family and friends
6) Wife and I continue to rent the 2 rentals, and convert our current residence into a 3rd rental (adding some rental income to offset reduced employment income
7) Father in law can watch us enjoy the benefits of his gifts, as opposed to holding onto everything until his demise and not seeing us enjoy the inheritance
Does this sound reasonable to you? Does it strike you as outrageous?
Re: Rich Inlaws - Buy Us a House and Let Us Live Rent Free/Cheap?
Personally, it strikes me as outrageous to ask for a gift from your father in law like that (especially considering your combined income is probably getting close to $1mm a year with bonus). I'd be infuriated if I received such a request from a future son in law (granted my daughter is only three). I also have fairly wealthy in laws and it has never even occurred to me as appropriate to ask for a financial gift from them.lawlord wrote:My father in law is quite wealthy. So far he's been reluctant to give any of his wealth to his two children (including my wife) -- I suppose with the thought being that he will convey his wealth to his children upon his death.
My wife and I have been working hard for the past nine years in big law firms. Although we've made very good money, and have saved quite a bit, we are both burned out from these jobs and want to spend more time with our 2-year old boy. The jobs make it difficult to manage any reasonable work-life balance.
Here are some details:
1) Net worth at $1.25 million -- probably closer to $2 million when property appreciation is accounted for
2) Age -- we're both 38
3) Own two rental properties generating decent cash flow in a high-appreciation area
4) Own a personal residence
5) $500K thousand in 401K/Roth 401K (maxed these accounts since 2009)
6) Kid's 529 is well funded
It was somewhat uncomfortable (and he still hasn't responded despite saying he'd get back to me on it -- I'm not holding my breath), but I suggested the following arrangement, with what I see as the following benefits (I did not elaborate on these benefits with him; it was not a hard sell):
1) Father in law purchases a nice house in a nice area where my wife and I would like to live. He keeps title.
2) We move into the house as renters
3) For rent, we pay the property taxes, but he doesn't charge above that. The difference between the market rental rate and the rental rate we pay (property taxes) would be a gift -- or more accurately, a series of gifts depending on the delta ($14K (annual gift exclusion) x 3 (wife, me, son) x 2 (father in law and mother in a law) = $84K max annual gift).
4) Father in law keeps the property -- just with a negligible annual return (appreciation could be significant). Wife and I maintain the property in prime condition.
5) Wife and I can stop working so hard, spend much more time with son, family and friends
6) Wife and I continue to rent the 2 rentals, and convert our current residence into a 3rd rental (adding some rental income to offset reduced employment income
7) Father in law can watch us enjoy the benefits of his gifts, as opposed to holding onto everything until his demise and not seeing us enjoy the inheritance
Does this sound reasonable to you? Does it strike you as outrageous?
I'm also a big law attorney (although wife stays at home). if you want more work life balance why don't you and your wife leave big law and do something else?
Last edited by lowndes on Sun Jul 02, 2017 10:42 pm, edited 2 times in total.
- Doom&Gloom
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Re: Rich Inlaws - Buy Us a House and Let Us Live Rent Free/Cheap?
Pretty outrageous.lawlord wrote:Does this sound reasonable to you? Does it strike you as outrageous?
lawlord wrote:I suppose with the thought being that he will convey his wealth to his children upon his death.
Don't be surprised if the money is left to a charity or at least tied up in a trust where you cannot get to it.
Re: Rich Inlaws - Buy Us a House and Let Us Live Rent Free/Cheap?
My first thought is you are only 38 suck it up like the rest of us
Maybe one of you could quit working which would allow more balance in your life?
I don't see any benefit for your FIL so don't hold your breath on your proposal.
Maybe one of you could quit working which would allow more balance in your life?
I don't see any benefit for your FIL so don't hold your breath on your proposal.
Re: Rich Inlaws - Buy Us a House and Let Us Live Rent Free/Cheap?
OP,
You could achieve the same goal with your own money as long as you downsize your lifestyle. But, you choose not to. Meanwhile, you want someone else to subsidize your lifestyle.
Please read the book, "The Millionaire Next Door". Especially on the chapter regarding Economic Outpatient care.
KlangFool
You could achieve the same goal with your own money as long as you downsize your lifestyle. But, you choose not to. Meanwhile, you want someone else to subsidize your lifestyle.
Please read the book, "The Millionaire Next Door". Especially on the chapter regarding Economic Outpatient care.
KlangFool
30% VWENX | 16% VFWAX/VTIAX | 14.5% VTSAX | 19.5% VBTLX | 10% VSIAX/VTMSX/VSMAX | 10% VSIGX| 30% Wellington 50% 3-funds 20% Mini-Larry
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Re: Rich Inlaws - Buy Us a House and Let Us Live Rent Free/Cheap?
Maybe if daughter had asked bec SHE wants to be home more with child.....
I would never mention it again in your shoes and might even go so far as to say never mind that idea don't know what I was thinking just tired.
I would never mention it again in your shoes and might even go so far as to say never mind that idea don't know what I was thinking just tired.
Re: Rich Inlaws - Buy Us a House and Let Us Live Rent Free/Cheap?
If your father in law wanted to gift you money, I think he wouldn't need you to explain how to do it. I don't intend to sound harsh, but what you're doing is begging for a handout. If you want to spend more time with your son and less time working (a noble goal), why not move to a place where cost of living is lower so you could enjoy a higher quality of life?
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Re: Rich Inlaws - Buy Us a House and Let Us Live Rent Free/Cheap?
In 2013 you wrote that you want to end a business partnership with your father in law because you didn't want to give up upside in a potential condo to him and wanted to capture all of it to yourself. (viewtopic.php?f=2&t=122935&p=1799963#p1799963)
Now you want your father in law to effectively supplement you wanting to work less hours rather than simplifying your lifestyle to spend more time with your kid?
Big law is brutal, but this seems like looking for an easy way out.
Oi....
You say you own your house. Is it debt free? If it is, why not sell, take the equity, and rent? If it has a mortgage (presumably an expensive one which requires both of you to keep working?) , Why not do the same - sell and rent.
Now you want your father in law to effectively supplement you wanting to work less hours rather than simplifying your lifestyle to spend more time with your kid?
Big law is brutal, but this seems like looking for an easy way out.
Oi....
You say you own your house. Is it debt free? If it is, why not sell, take the equity, and rent? If it has a mortgage (presumably an expensive one which requires both of you to keep working?) , Why not do the same - sell and rent.
Last edited by playtothebeat on Sun Jul 02, 2017 11:08 pm, edited 1 time in total.
Re: Rich Inlaws - Buy Us a House and Let Us Live Rent Free/Cheap?
I think this raises audacity to a zen art form.
catdude |
|
All generalizations are false, including this one.
Re: Rich Inlaws - Buy Us a House and Let Us Live Rent Free/Cheap?
Ok, ok. Unanimous verdict. I am looking for an easy way to get off this hamster wheel. But this is not the answer.
I will take one of the posters suggestions and never raise it again.
Thanks to all for the direct and honest assessments.
I will take one of the posters suggestions and never raise it again.
Thanks to all for the direct and honest assessments.
Re: Rich Inlaws - Buy Us a House and Let Us Live Rent Free/Cheap?
In addition to all the other comments, if FIL makes such a large gift to you, what about your wife's sibling? Certainly he/she would be entitled to an equal gift. There are a lot of "moving parts" here.
- Christine_NM
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Re: Rich Inlaws - Buy Us a House and Let Us Live Rent Free/Cheap?
OP - thanks for the chuckle.
16% cash 49% stock 35% bond. Retired, w/d rate 2.5%
Re: Rich Inlaws - Buy Us a House and Let Us Live Rent Free/Cheap?
Good point. While there is plenty to go around here, the scenario does present a number of moving parts.sport wrote:In addition to all the other comments, if FIL makes such a large gift to you, what about your wife's sibling? Certainly he/she would be entitled to an equal gift. There are a lot of "moving parts" here.
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Re: Rich Inlaws - Buy Us a House and Let Us Live Rent Free/Cheap?
As the father-in-law, I'd be radically unimpressed with a son-in-law who 1) already wants to quit working, and 2) wants me to subsidize his poor career choice. I'd now be analyzing all the things I did wrong in raising a daughter who'd choose such a dishonorable mate. I'd also be watching my back whenever the two of you are anywhere near me, and would be henceforth minimizing my contact with you. I'd also see to it that you know that my daughter has been disowned.
"Often the remedy causes the disease. It is by no means the least of life's rules: to let things alone." |
Baltasar Gracián, S.J., The Art of Worldly Wisdom, Maxim 121
Re: Rich Inlaws - Buy Us a House and Let Us Live Rent Free/Cheap?
Well, I had a lot of thoughts; many along the lines of what others have said. But this one said it best!Doom&Gloom wrote:WOW!!
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.
Re: Rich Inlaws - Buy Us a House and Let Us Live Rent Free/Cheap?
As your son-in-law, I'd be dismayed to have a FIL with such a quick judgment trigger, who forms strident opinions based on limited information, and who spends his time evaluating my honor. -- particularly when doing so based on one data point. In light of those attributes, it's doubtful my wife and I would want to be anywhere near you. So we'd be good there.DomDangelina wrote:As the father-in-law, I'd be radically unimpressed with a son-in-law who 1) already wants to quit working, and 2) wants me to subsidize his poor career choice. I'd now be analyzing all the things I did wrong in raising a daughter who'd choose such a dishonorable mate. I'd also be watching my back whenever the two of you are anywhere near me.
Look, I asked an honest question, got honest and direct answers, and appreciated them. It may feel good to pile on, but I didn't think that's what this site is about.
Re: Rich Inlaws - Buy Us a House and Let Us Live Rent Free/Cheap?
Well, at least you now know what your FIL really means when he says he'll get back to you.
If I am stupid I will pay.
Re: Rich Inlaws - Buy Us a House and Let Us Live Rent Free/Cheap?
I suspect this thread will likely get locked soon, but to throw my 2 cents in I have to ask why would you expect any of FIL's money? You stated he's been reluctant to give any of his wealth to his kids? Why should he? Clearly he's managed to raise an intelligent daughter that did well enough in law school to get and be successful in big law. That's enough. What he earned and has is his to keep.My father in law is quite wealthy. So far he's been reluctant to give any of his wealth to his two children (including my wife) -- I suppose with the thought being that he will convey his wealth to his children upon his death.
Your apparent eagerness to get at that money is likely a turnoff and will probably result in a unfavorable (To u and spouse) distribution after his death. I wonder too if it has the potential to alienate your wife as well.
Re: Rich Inlaws - Buy Us a House and Let Us Live Rent Free/Cheap?
When you're already in a hole, quit digging.lawlord wrote:As your son-in-law, I'd be dismayed to have a FIL with such a quick judgment trigger, who forms strident opinions based on limited information, and who spends his time evaluating my honor. -- particularly when doing so based on one data point. In light of those attributes, it's doubtful my wife and I would want to be anywhere near you. So we'd be good there.DomDangelina wrote:As the father-in-law, I'd be radically unimpressed with a son-in-law who 1) already wants to quit working, and 2) wants me to subsidize his poor career choice. I'd now be analyzing all the things I did wrong in raising a daughter who'd choose such a dishonorable mate. I'd also be watching my back whenever the two of you are anywhere near me.
Look, I asked an honest question, got honest and direct answers, and appreciated them. It may feel good to pile on, but I didn't think that's what this site is about.
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.
Re: Rich Inlaws - Buy Us a House and Let Us Live Rent Free/Cheap?
This whole thread makes me LOL
OP, if your goal is to work less and spend more time with your son, why don't you make that happen yourself instead of involving any one else's money?
Sell the rentals, downsize your lifestyle, downsize or sell your residence and rent, get out of big law and make less money for less work. With a $2M portfolio and a 4% SWR you could live off 80K a year and spend every waking hour with your son because you wouldn't be working at all (exaggerating a little but you get the point)
OP, if your goal is to work less and spend more time with your son, why don't you make that happen yourself instead of involving any one else's money?
Sell the rentals, downsize your lifestyle, downsize or sell your residence and rent, get out of big law and make less money for less work. With a $2M portfolio and a 4% SWR you could live off 80K a year and spend every waking hour with your son because you wouldn't be working at all (exaggerating a little but you get the point)
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Re: Rich Inlaws - Buy Us a House and Let Us Live Rent Free/Cheap?
As others have pointed out this might not have been a well thought out plan of action by you. I am also an attorney and work with a lot of high net worth people and by and large, no matter how wealthy they are, they don't feel they can have assets not making a good return. They generally want to maximize the rate of return on all their money. Maybe that's why they are wealthy!? Of course this is a generalization but I have a lot of clients so speak with some level of knowledge and experience.
You could pay them rent at 8% return and MAYBE they will do the deal but they might not want the risk of buying another property!? Last I checked there is no guarantee that real estate will always go up and even in places like NYC/SF/LA prices plummeted in 2007-2010. It can happen anywhere and a lot of wealthy people don't want that risk. Again, that's why they are wealthy. On that point it would help if they like real estate. I personally like real estate better than equities so it seems less risky to me but not everybody agrees.
I also have heard numerous times, during my years, of concerns over the son/daughter in-law. No matter how nice they act toward you they might be skeptical of you. Money is often at the heart of that skepticism. I thus probably would have let your wife do the asking. I believe it is best for you to stay out of THEIR business. At most your daughter could make the ask but, even then, don't be surprise if they are offended. Money, and especially asking for money, is not generally well received.
The reality also is you don't know if your wife will ever inherit a penny. I have seen a lot of people give to charity, new spouses, long term care, etc.... You just don't know. Life is long.... Plus, unless you have seen their balance sheet AND know how much they spend every year you really do not "know" what they have. It has amazed me, talking to the kids after a parent dies, and how clueless they often are of their parent's actual wealth. They usually way over estimate their parent's wealth in my experience.
Maybe look into other careers. Being a lawyer is crappy work. Some of us make a lot of money but most don't and it's sucky work generally. Dealing with over-bearing client, opposing counsel, etc.... For many it's all adversarial and that's not fun 10-12 hours a day! Maybe get a job as a state worker and downsize your life!? I have a lot of law school friends who left firms and went to work for courts or other state agencies. A lot of kush jobs there. You make less but a ton less stress! Or leave the profession altogether!?
The older generation didn't have long maternity leave, any paternity leave, leaving work early to watch your kid get his 100th participation trophy. Generally they worked hard and expect you to work hard. So keep working hard and maybe one day your in-laws will have the idea of helping you guys out but until then you should plan that you are paying for everything now and plan that your wife will inherit nothing.
Good luck!
You could pay them rent at 8% return and MAYBE they will do the deal but they might not want the risk of buying another property!? Last I checked there is no guarantee that real estate will always go up and even in places like NYC/SF/LA prices plummeted in 2007-2010. It can happen anywhere and a lot of wealthy people don't want that risk. Again, that's why they are wealthy. On that point it would help if they like real estate. I personally like real estate better than equities so it seems less risky to me but not everybody agrees.
I also have heard numerous times, during my years, of concerns over the son/daughter in-law. No matter how nice they act toward you they might be skeptical of you. Money is often at the heart of that skepticism. I thus probably would have let your wife do the asking. I believe it is best for you to stay out of THEIR business. At most your daughter could make the ask but, even then, don't be surprise if they are offended. Money, and especially asking for money, is not generally well received.
The reality also is you don't know if your wife will ever inherit a penny. I have seen a lot of people give to charity, new spouses, long term care, etc.... You just don't know. Life is long.... Plus, unless you have seen their balance sheet AND know how much they spend every year you really do not "know" what they have. It has amazed me, talking to the kids after a parent dies, and how clueless they often are of their parent's actual wealth. They usually way over estimate their parent's wealth in my experience.
Maybe look into other careers. Being a lawyer is crappy work. Some of us make a lot of money but most don't and it's sucky work generally. Dealing with over-bearing client, opposing counsel, etc.... For many it's all adversarial and that's not fun 10-12 hours a day! Maybe get a job as a state worker and downsize your life!? I have a lot of law school friends who left firms and went to work for courts or other state agencies. A lot of kush jobs there. You make less but a ton less stress! Or leave the profession altogether!?
The older generation didn't have long maternity leave, any paternity leave, leaving work early to watch your kid get his 100th participation trophy. Generally they worked hard and expect you to work hard. So keep working hard and maybe one day your in-laws will have the idea of helping you guys out but until then you should plan that you are paying for everything now and plan that your wife will inherit nothing.
Good luck!
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Re: Rich Inlaws - Buy Us a House and Let Us Live Rent Free/Cheap?
So this is not a hypothetical question? You already went through with the plan?
FIL is probably busy altering his will.
FIL is probably busy altering his will.
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Re: Rich Inlaws - Buy Us a House and Let Us Live Rent Free/Cheap?
Is this some kind of entitled rich person syndrome.
Dude, seruously get a grip. Your request seems almost sociopathic.
Back in the real world, you probably could retire if you downsized your lifestyle.
I don't even want to know what your outgoings are but I guess extremely high
Dude, seruously get a grip. Your request seems almost sociopathic.
Back in the real world, you probably could retire if you downsized your lifestyle.
I don't even want to know what your outgoings are but I guess extremely high
Re: Rich Inlaws - Buy Us a House and Let Us Live Rent Free/Cheap?
It can be a judgmental crowd here. Sorry someone had to kick and spit on you when you were already down.lawlord wrote:As your son-in-law, I'd be dismayed to have a FIL with such a quick judgment trigger, who forms strident opinions based on limited information, and who spends his time evaluating my honor. -- particularly when doing so based on one data point. In light of those attributes, it's doubtful my wife and I would want to be anywhere near you. So we'd be good there.DomDangelina wrote:As the father-in-law, I'd be radically unimpressed with a son-in-law who 1) already wants to quit working, and 2) wants me to subsidize his poor career choice. I'd now be analyzing all the things I did wrong in raising a daughter who'd choose such a dishonorable mate. I'd also be watching my back whenever the two of you are anywhere near me.
Look, I asked an honest question, got honest and direct answers, and appreciated them. It may feel good to pile on, but I didn't think that's what this site is about.
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Re: Rich Inlaws - Buy Us a House and Let Us Live Rent Free/Cheap?
Did you clear this with your wife before having the discussion with your FIL? Was your wife part of the discussion? Was your MIL part of the discussion?
You say the discussion was uncomfortable. I don't doubt it. What was your wife's reaction to an uncomfortable discussion with her parent(s)? How will you try to make the relationship more comfortable again?
You say the discussion was uncomfortable. I don't doubt it. What was your wife's reaction to an uncomfortable discussion with her parent(s)? How will you try to make the relationship more comfortable again?
I get the FI part but not the RE part of FIRE.
Re: Rich Inlaws - Buy Us a House and Let Us Live Rent Free/Cheap?
Isn't the OP proposal essential identical to "FIL buys us a house in a nice area where we like to live" ? The fact that he would keep the title in his name is basically irrelevant since OP assumes his wife will inherit at FIL time of death.
Also, I'm not sure why collecting income from one more rental property would allow the OP to let go and spend more time with children.
From a financial point of view, instead, it seems to me that his assets are already too much concentrated in the RE sector and his plan would add to that concentration.
Also, I'm not sure why collecting income from one more rental property would allow the OP to let go and spend more time with children.
From a financial point of view, instead, it seems to me that his assets are already too much concentrated in the RE sector and his plan would add to that concentration.
Re: Rich Inlaws - Buy Us a House and Let Us Live Rent Free/Cheap?
Welcome to America!!!lawlord wrote: My wife and I have been working hard for the past nine years in <fill in the blank>. Although we've made very good money, and have saved quite a bit, we are both burned out from these jobs and want to spend more time with our 2-year old boy. The jobs make it difficult to manage any reasonable work-life balance.
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.
Re: Rich Inlaws - Buy Us a House and Let Us Live Rent Free/Cheap?
Topic is locked (topic exhausted).