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Author: joelcorley Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308519  
Subject: Re: The Plan Date: 1/27/2014 8:39 PM
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Recommendations: 6

Sorry for your loss.

Forgive me, but I'm going to leave most of your post to others to respond to. aj485 is particularly good at addressing budgeting issues.

However I do have one concern. You wrote, I have a $10k signature loan. (I bought my mother a car and gave her some money to help until my fathers will and their savings account is out of probate. He just died last month. It's a brand new loan)

First, I don't understand what your father dying has to do with your mother needing a new-to-her car? And why did it become your responsibility to acquire it for her? And if she got along without one before, why did she need one now? Assuming your mother was still married to your father (not always valid), it seems likely that things like his vehicle(s) might pass directly to your mom outside of probate. If they weren't married, was she really dependent on him anyway?

As for the need for cash, I kind of get that. A death of a spouse often creates a financial hardship for the surviving spouse - especially if they failed to make "advance arrangements". (I'm actually kind of on the fence about making them.) But why couldn't she borrow this money in her own name?

I really think its a big mistake for you to be loaning anyone money when your financial picture is less than clear. My rule of thumb with loans to friends and family: If you can't afford to give it away, you can't afford to loan it either. In this case, it seems unclear that you can afford to give that money away - mainly because you had to take out a signature loan to do it.

So is your mother going to be paying you back? I assume you're counting on that. But probate can take a while - in fact I've seen it take years. It can also suck up much of the assets the estate had - especially if your father had any debts or if there is anything complicated in his estate. (Or if he names an estate lawyer friend who's a little unethical.) In probate, your father's debts come first; the estate's expenses come second (includes court costs, legal fees and other expenses). The heirs get to split whatever is left. Whether there is anything left or worth splitting isn't always obvious at first - at least not if he wasn't clearly wealthy when he died.

- Joel
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