How do we prepare for the unexpected?

Last week I received a text from the guy who used to share a flat with Tom31, asking if he could call me. Although Tom31 left the flat on bad terms with this guy, it’s been over a year since that all happened, Tom31 now has his own place and they have friends in common. They now have a civil relationship. Let’s call him Fergus.

I also knew that Fergus had unexpectedly lost his Mum a few days before. Fergus and his Mum were close and she also had a great relationship with my son. She did the conveyancing on his property and only charged him ‘mates rates’ and they always got along like a house on fire.

Of course, I took his call.

What followed was heart-aching.

Fergus was still reeling over his mother’s death. He called me because he really wanted to keep his Mum’s house and he wanted some unbiased advice. He has two siblings who want to sell it and split the proceeds equally.

“How much is your Mum’s place worth, roughly? Is there a mortgage on it?’ I asked.

“It’s worth around 1.2M and she paid it off,” he said.

“What assets do you own?” I asked.

“I have around $500 in the bank,” he said.

I sighed. “I’m sorry Fergus, but no bank will lend you that much money if you have nothing to offer as collateral. You’ll have to let the house go.”

He sighed as well and said that he thought so, but he wanted to hear it from someone who wasn’t out to make something from the sale.

He’d said earlier that the house was like a refuge for him – that when he’d had a rough day, he’d “get off at her station, go around there and we’d solve the world’s problems over a bucket of wine. “

I gently said, “You know how you talked about her house as being like a refuge? It wasn’t the house; it was the person. I suggest that you go around there on your own one day, walk around and quietly say your goodbyes. Then once the house is sold, you can move forward with whatever money you get from it as her legacy.”

“That’s the problem,” he said. “I don’t know what to do with it. I’ve already had people making suggestions about investments, but I feel so confused.” He added bitterly, “Her body isn’t even cold yet and people are already picking at what she left.”

Yikes. It was a few days before the funeral, so I totally got what he was saying.

What could I say? I’m not a numbers person. But then I thought: what advice would I want someone to give one of my boys if I suddenly popped my clogs? I’d want them to be given advice that was safe, conservative, and would be easy to implement when they were still grieving and not able to think clearly. Advice that would allow the dust to settle before any life-changing decisions were made.

It also had to fit in with the stage of life Fergus is in.

He’s not in a relationship. He’s not starting a family and looking to put down roots in a house that will suck up all of his money and shackle him into a mortgage for the next two decades. (This is the position one of his siblings is in – they’ll be using the money as a house deposit for their young family.)

Fergus is still studying. Once that’s done, he’ll be putting his efforts into establishing his new career. Who knows? He may decide that he wants to spend that money on buying into a law firm somewhere. He may choose to relocate to another city or country. His options are wide open. He probably needs that pool of money to be safely waiting for him.

Yes, he might make a few extra dollars if he put it into shares, but I still think that on balance, safety trumps a little profit. Besides, the way the share market has been bouncing around? A little profit isn’t exactly a certain bet in the short term.

I decided to go with the term deposit route. Luckily for him, interest rates are better on savings accounts than they have been for a long time.

My advice was to put 90% of whatever money he received from his Mum’s estate into a term deposit and to leave it there for 12 months.

“The other 10%? Spend it. Go on a big holiday, buy some clothes, furniture… whatever you want. She’d want you to enjoy it. But DON’T spend any more than that. Respect her legacy and only deploy it for something that’s going to establish your way in the world – whatever that turns out to be.”

I then added, “And for God’s sake don’t put any of it into crypto!”

He laughed ruefully. “I’ve already been burned by that,” he said.

“Hey, how lucky is it that you learned that lesson when you didn’t have a lot of money to lose?” I said. “Don’t beat yourself up over it; just be glad that you’re not going to make the same mistake with your Mum’s money.”

“I definitely won’t! he said.

“If you do what I’m saying, it gives you time to move through your grief and not risk making big decisions when you’re not thinking clearly. Then, when the dust has settled and you have a clearer idea of what you want to do, then you can make decisions that aren’t going to be based on raw emotion. Besides, speaking as a single mother myself, it’s hard to pay off a house on your own. You don’t want to waste her final legacy for you.”

‘You’re absolutely right,” he said. “That’s the last thing I want to do.”

At the end of the call he thanked me, saying that he felt at peace for the first time since all of this stuff started to come up.

“I think I’ll do what you suggest,” he said. “It sounds really sensible and it gives me time to breathe. Is it ok if I call you again when it comes closer to the time?”

Of course I said yes.

But this conversation really gave me food for thought.

We all expect to live till we’re old. My own parents are both in their 80’s, still living together at home and although they’ve slowed down, they’re still going strong. I don’t know about you, but any thoughts I’ve had of my children inheriting my estate have them all as grey-haired old men, with decades more life experience behind them than they have now.

But what if a similar thing happens to us? Fergus’s Mum was only in her late 60’s.

How would the boys make these huge financial decisions if I suddenly wasn’t here?

It’s a big responsibility to suddenly have a large sum of money given to you at any age. Not many people in their 20’s and 30’s have a rock-solid plan in their minds of what they’d do with a cash windfall of a few hundred thousand dollars. (And if any of my sons did, I’d be a bit worried that they’d decide that I was worth more to them dead than alive…)

I don’t know what the answer is. Do we write a letter “to be opened in the case of my unfortunate demise” to be read aloud, giving our advice? Do we hope that older, wiser people will take our loved ones under their wings and give them excellent advice? What if there’s no one around our kids who is good with money?

It’s a conundrum.

At the end of the day, I gave Fergus the same advice, given his situation, that I’d hope that someone else would give my kids if we were in the same situation. I can’t do any better than that. It was heartbreaking though, seeing a young man almost shell-shocked with grief and yet being forced to grapple with uncharted financial waters like this.

It made me hope that my boys will never be in a position like this. At least, not until they’re grey-haired old men! But if that doesn’t turn out to be the case, I hope that they have access to someone who will give them sound, unbiased advice to give them time to come to terms with their new reality and that they’ll be able to make unrushed, sensible decisions.

Anyway, this is the sort of stuff that I haven’t given much thought to until now. When they were small, I worried more about who would look after them if I suddenly died, rather than worry about inheritances. Once they grew up, I didn’t think about this stuff because, as I said at the start, I probably believed that I was immortal.

I’ll be doing a bit more thinking about this…

Dad joke of the day:

My wife told me to stop singing “I’m a Believer” or she’d kill me. I thought she was kidding..

… but then I saw her face.