moral/ethical dilemma regarding trust fund spending
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Anonymous
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I am one of those lucky people who have family money. My father set up a trust for his kids a few years ago, and we are able to "borrow" (well, really take money) from it. Here is my dilemma: we currently live in suburb (similar to vienna in terms of commute to DC). I SAH (not using $$ from trust, simply on DH's salary), DH works in DC. We have 1 child, another due in the spring. Our house is great, there are certainly some things we would change about it if we could, but certainly nothing that would precipitate a move anytime soon. However, DH's commute is terrible, and with the build-up of tysons, it's just going to get worse. He is not in a job where he can telework, so he needs to travel to DC every day. With the money in the trust, we could easily afford a house in mclean or arlington, but unless we are wanting to come down pretty far from our current house, we would be spending a lot of money-over $1 million (I know there are many houses out there for less, but my point is that for what we are used to, that would be the housing range-STARTING housing range-we would be looking at).
Part of me is horrified at the mere idea of using money that I/we did not earn to buy a house in excess of $1 mil. I feel like that is the height of frivolous...we already have a pretty darn great life with what we have. On the flip side, having DH's commute lessened would be wonderful...he would love to spend more time with DD (soon to be DD and DS), I would love to see more of him, as he leaves often prior to 7 and doesn't get home until after 7 due to traffic. And what is the money there for if not to use? There will be plenty left over for college education and even private school education k-12 even if we borrow a hefty chunk for a new house. I just have a hang up that it's ridiculous, and we're looking at houses that would be bought not on our own merit (that being said, we bought our current house with my parents' help before the trust was created, but only needed a small amount to help, nothing like what we are talking about now). WWYD? |
Anonymous
| You want to borrow a million dollars from a trust fund for a house? I mean it's your money but I don't see why you need such a big house, and all paid for in cash. |
Anonymous
| Why don't you run some numbers to figure out how much you would have to take out of the trust to get a house you like with a better commute? If you sell your current house, that will help with the downpayment, too. Interest rates are really low now, so you might be able to get a larger mortgage than you think without significantly increasing your monthly expenses. You could also try to settle for a lesser house. Studies show that just about the only two "external" things that permanently affect people's happiness levels are bad commutes and chronic pain. Once you've lived in a smaller, less up-to-date house for a while, you'll be used to it. |
Anonymous
No, perhaps I wasn't clear. The list price of the houses we would be looking at would be $1 mil, we would not have to borrow anything close to that to make a down payment that help our mortgage be similar to what it is now. More like $100k-$200k. To the pp who suggested looking at lesser houses, when we bought our house 5 years ago, we looked at what we could afford in arlington and mclean, and felt we had to compromise too much on things that were dealbreakers for us. I don't know if that has changed much (I don't think prices have dropped much over the past few years), but I agree that I would rather deal with smaller rooms/crappier kitchen/etc to have DH be 20 min from his office...problem is, a lot of homes, even at the $1 mil mark (at least right now), already HAVE those inconveniences... |
Anonymous
| If you got 'em, smoke 'em. Enjoy your options that you have. |
Anonymous
| I fail to see the dilemma. It is your money and you can't take it to the grave with you. Better use it to improve your quality of life. |
Anonymous
| Use it for what it was meant for - to improve your quality of life. Enjoy this opportunity! |
Anonymous
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I agree with the PPs. Life is short and improving your family's quality of life is worthwhile. Perhaps you should consult a financial planner to see the whole picture:
-- how much would you need to "borrow" from the trust to buy a house closer to DC that works for your family. -- what your long-term needs are (college, private school?) and how much you would "need" to draw from the trust to make that possible. -- how much is in the trust? what is your family's financial situation? |
Anonymous
OK seriously, if you think a million bucks is the starting point for a decent house your standards are extremely high. There is a lot of hype about the high prices in this area, but as someone who home-searched EXHAUSTIVELY for over a year in N. Arlington/Falls Church/McLean I can assure you that you can get a perfectly nice home, with a perfectly decent kitchen and perfectly good-sized rooms, for well under a million dollars in North Arlington. Are you going to have an enormous top-of-the-line gourmet kitchen with seven bedrooms and a tennis court? No. But if you are patient and knowledgeable and ready to pounce when the right thing comes up, you can certainly get a very nice-sized 4 bedroom, 2.5 or 3 bathroom house with an updated kitchen in a great neighborhood with great schools in North Arlington for $800-850K. Yes, that's still expensive. But if you're saying you would only need to borrow $100-200K from the trust to afford a house starting at a million, that means you can afford $800K on your own. If you're holding out for a fancy McMansion, more power to you, but if you NEED that in order to be happy, something tells me you're not going to be very happy anywhere. |
Anonymous
| Well, except for saying you're "borrowing" the money (which you're not doing), it seem like it's your money to spend, $1M in McLean is by no means extravagant, and it seems like exactly the type of purchase that trust funds are meant to help (at least that's how I'd like to think our kids will spend their trust fund $ in time). |
Anonymous
| In our McLean neighborhood, you can get a nice 1960s split remodeled home on a small lot for $1.25M. But it's a great neighborhood! |
Anonymous
| OP, I would absolutely use the trust fund money for the house you want in a closer-in neighborhood. In a heartbeat, without a second thought. What's the point of that money if not to improve your life? And a shorter commute would be a big improvement to your life. As long as you're not using the kid's college money to do it (which you said you aren't), I say go for it. And I'm very conservative with my money, too, but this is a no-brainer to me. |
Anonymous
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It depends. How old are your kids? Will you need trust fund money for their education (private school or college)? Will you need that money for anything else in the foreseeable future? How much will be left after taking out 100-200k? Do you have to dip into the principle or just the interest?
Just fyi, 1.2 mil doesn't get you much in McLean/Arlington these days. |
Anonymous
| Spend it and buy a house in mclean near the gw parkway. |
Anonymous
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Is your dilemma that you'd be using the money while your father is still alive?
When my grandfather died many years ago (before I even knew my husband), he left me a much smaller amount of money. It was invested, with a financial planner, in stocks in a trust that I could not touch until age 30. Around age 30, I was also getting married. We took several of the stocks, which had grown significantly thanks to the stock market boom of the 90s, and used it to fund a down payment on our house. The only difference I see is that you are already married and have kids, already have a house, and it seems your father may still be alive. What is the point of the trust if you cannot use it? It is lovely you want to fund college educations. Were there stipulations from your father that the money be used for certain items, such as education, and not other items, such as houses or vacation??? |