When Does an In-Law Become an Out-Law?

This is a guest post written by Alan Leader of Spectrum Continuity Planning. If you’d like to write a guest post for our blog, you can reach out to us at info@coveadvisors.com.

I read of a recent court case in the UK. A couple in their sixties loaned a few hundred thousand pounds to their daughter to buy a house. The young couple had two children and needed more space. They had jobs but needed financial help to buy their new-to-them house.

After a few years, the young woman died. Her parents fretted about the loan but didn’t want to upset the apple cart since their grandchildren lived with their former son-in-law.

After a couple more years, the former son-in-law remarried, and with the new circumstances, the seniors started feeling uneasy about the loan. They asked their son-in-law to start a repayment program, but it didn’t happen. It went to court and the court said the son-in-law must repay the loan.

Although the result will vary depending upon the specific circumstances of the case, the seniors, in this case, didn’t wish to turn up the heat and force their grandchildren into a new living situation. Due to these circumstances, the son-in-law has now created a picture for his children that the grandparents were “forcing them out of their house.”

This all could have been avoided if there was life insurance in place for the daughter to repay the loan to her parents in the event of her death.

What would that cost? I don’t want to say “it’s free”, but it’s almost free. A male age 35 can be insured for $1,000,000 on a twenty-year term for a premium of under $60 per month. Premiums for a female are even less.

I know a great number of my clients have loaned money to children. If that’s you, please get in touch to discuss a plan to make sure your in-law doesn’t become an outlaw.