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 The importance of having a financial advocate (and friend): a case study

The importance of having a financial advocate (and friend): a case study

Over the last few years, I’ve worked with two brothers who received their beloved mother’s home, along with other assets, once she passed away.

However, around the same time, these two mourning brothers had other challenges thrown at them:

Brother A received a 60-day notice from his landlord to move out of their rental home because the landlord wanted to sell. This notice came abruptly and affected them deeply, since the house had been longtime home to him, his wife, kids and even housed their dog breeding business. 

Needless to say, Brother A was pretty frustrated by the prospects of having to move so suddenly, considering there were concerns with school districts, uprooting the family, and finding a new property suitable for the dog business. I’m sure you can understand, since all he wanted was a stable place for his family and business to flourish. 

Hoping to buy his first home, I introduce the brother to a trusted real estate agent who specialized in the area where he was most interested. The Realtor responded quickly, and they hustled to search for homes since they were on such a tight timeline before their rental lease ended, and Brother (A) and his family did find a home they loved!

Next, I connected the brother with a great local mortgage broker. Unfortunately, he wasn’t able to get qualified for a home loan immediately since he was self-employed, and his business had gone through some ups and downs the last couple of years. 

Facing an imminent move-out date with no place to go, he was left scratching his head and more than a little despondent. 

So, I got to work figuring out the best way for him to purchase the home. 

Ultimately, with much planning, we structured it like this:

Brother A asked Brother B to buy him out of his portion his mother’s inherited property. Brother B and Brother A agreed on a home price that was a win-win for both them. Of course, before they finalized the sale, I sat down with Brother B to pencil out the financial ramifications of refinancing his mother’s property to take cash out, compared to using assets he’d inherited for the inter-sibling purchase. 

 Brother B decided that the best way to go forward was to use a portion of assets he’d inherited to buy out his brother with the home.

However, it got even more challenging since Brother B was going through a divorce at that time. So, under California law, if he bought the property in full from his brother, it would be listed as a significant asset and would be lumped into the divorce settlement – ouch!

I recommended that both brothers sit down with estate attorney to draft an agreement to keep the property in the mother’s trust.  

But, when my clients first met with the attorney, he recommended that they take the home OUT of the trust and put it in his individual name, not knowing about the divorce! That almost cost them all gravely! Luckily, I communicated with both brothers and the attorney throughout the process and got on the phone with the lawyer to thoroughly explain the situation.

Now enlightened, he agreed that we should make an amendment to the trust until the divorce was finalized, and then put the property in Brother B’s name.

To complete the final step, I accompanied Brother B, who was trustee of the estate, to his bank, Charles Schwab, as we instructed them to wire the funds into escrow for the home purchase.

It all came together with no issues, and Brother A was ecstatic to get the keys to his new dream home- just in the nick of time!

Two months later, Brother A and his wife are thrilled with their new home in the Central Valley, where their kids are loving it and the dog breeding business is thriving. Brother B was able to move into his childhood home that was passed down from his mother (which was protected from the divorce settlement), so it was a win-win for everyone involved! 

I was happy to quarterback the whole process, and it’s a good example of why I like to get involved in my clients’ lives as an advocate, problem solver, and friend – not just a financial planner!

-Jason Matthews

Your Financial Guru