Probably just a crack-pot ponzi scheme

Discussion in 'Community Discussion' started by citizenzen, Oct 1, 2017.

  1. citizenzen macrumors 65816

    Joined:
    Mar 22, 2010
    #1
    But I thought of an idea that I'd like some sharpshooters to knock down.

    Scenario:
    1. I plan on working ~10 more years (60k+ a year) before retiring on a state pension (and later adding Social Security to that).

    2. My wife is retired with about $150,000 left from an inheritance (it's California. I understand that's my money too.) She'll be eligible for Social Security in one year, though it won't be a very large amount.

    3. I need to make a home repair that would require a loan. (I owe 39k on the house and should have it paid off in 4 years.)

    The idea:
    Use my wife as the source of the loan. She'll get a return on a portion of her inheritance, increasing the length that it will sustain her, and I get an instant loan without any hassles or fees. Why not pay my wife instead of a bank? What am I missing here?
     
  2. mobilehaathi macrumors G3

    mobilehaathi

    Joined:
    Aug 19, 2008
    Location:
    The Anthropocene
    #2
    So, your plan is to use money you already have to make the repair and then carefully plan to replace it plus some extra. Sounds reasonable as long as you can maintain the discipline to replace it. A bank will go after your assets, there's no such threat in this case.
     
  3. citizenzen thread starter macrumors 65816

    Joined:
    Mar 22, 2010
    #3
    I have the incentive to replace it. Since my wife is no longer working, we both want that money to last as long as it can.

    And I'd just be paying that money to a bank anyway. So why not to my wife? (or myself, as it's our money anyway)
     
  4. mobilehaathi macrumors G3

    mobilehaathi

    Joined:
    Aug 19, 2008
    Location:
    The Anthropocene
    #4
    I agree that you should pay that money "to your wife" instead of a bank. So, I really don't see a problem with the arrangement. Although you clearly treat each other's finances as separate, I presume if one of you needed some cash the other would help.

    This definitely sounds far preferable to paying a bank.
    --- Post Merged, Oct 1, 2017 ---
    I'm assume, of course, that she agrees with the scheme!
     
  5. citizenzen thread starter macrumors 65816

    Joined:
    Mar 22, 2010
    #5
    Of course.

    Though right now she's the one with the cash. My income over time will far outweigh that amount, but because I pay all of our obligations it's largely tied up. This seems like a really good way to solve this financial need while leaving her feeling as if she's making money in the transaction and isn't merely seeing her account diminished. And I absolutely will make those payments, as it will be vital to her feeling whole and happy with her financial situation.

    I just think it's a brilliant idea (pats self on back) and hoped I wasn't overlooking some small detail.
     
  6. chown33 macrumors 604

    Joined:
    Aug 9, 2009
    Location:
    betwixt
    #6
    You should talk to a tax professional, such as a CPA or a tax lawyer. There may be some limitations on intra-family loans, such as how paying back the principal and the interest should be declared.

    You should also make sure to draw up a proper contract for the whole thing, otherwise the IRS might take a dim view of a more free-wheeling approach. I mention this because giving "loans" to family members, which aren't repaid, or paid back so slowly as to be laughable, was a way to avoid things like gift taxes. This type of thing might get you increased scrutiny.
     
  7. Macky-Mac macrumors 68030

    Macky-Mac

    Joined:
    May 18, 2004
    #7
    sure your wife can loan you money, but perhaps the question is how is the IRS going to treat the situation if you want to deduct any interest you'll pay her.......so it's time to talk to a tax consultant
     
  8. Huntn macrumors P6

    Huntn

    Joined:
    May 5, 2008
    Location:
    The Misty Mountains
    #8
    Can that arrangement be deducted like a home equity loan? Just curious. My guess is she would not qualify as a loan institution that could grant that.
     

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7 October 1, 2017