The Sibling Sinkhole: How showing a little brotherly love can be an expensive proposition
hen Greig Detering left behind his comfortable life as a telecom engineer and set out to do missionary work abroad, he had a powerful calling — but not a lot of financial firepower. While he owned a home in Phoenix, he says, he lost most of his nest egg in 2002 when his employer’s stock dropped from $83 to (ouch) $2 a share. Fortunately, after his own resources ran dry, Detering’s fledgling ministry found a steadfast benefactor who kicked in $5,000 to $20,000 annually for several crucial years — to help support his evangelistic efforts across more than a dozen countries. And when Detering, now 54, began looking for a “transportation and communications hub” for his South American operations, the same supporter kicked in $120,000 to purchase a Buenos Aires condo in a deluxe residential tower, complete with a pool, a fitness center and conference rooms. It wasn’t the larger option on the higher floor that Detering had originally proposed — but, hey, a kid sister has to set some limits.
It didn’t hurt that the sister in question, 53-year-old Diane Paddison, had been chief operating officer of two Fortune 500 companies and, Detering admits, had done a better job of managing (read: diversifying) her nest egg. It also helped that she and her husband, Chris, a management consultant, found Detering’s missionary work in keeping with their largely faith-based philanthropy. Then there was the fact that they “learned to take care of each other,” Diane says, when they were growing up on the family farm. But while Detering says the property has appreciated 25 percent in value since 2007, owning real estate overseas turned out to be a huge administrative hassle; in fact, much of that gain was offset by the $20,000 cost of officially transferring the title to his ministry. Ultimately, says Detering, “it was really just them helping me out.”
Say, Brother, can you spare a…few thousand bucks? We’ve all heard about the so-called sandwich generation, anxiously watching as its retirement savings are chipped away by the needs of aging parents on one side and boomerang kids on the other. But financial planners say that few people factor in the impact of other family members — that is, financially challenged siblings — who might sheepishly slip in a loan request while helping dry the holiday dinner dishes. Sometimes — like when the contributing sibling can afford to provide the help, as with Detering and Paddison — the arrangement can work out well. (Bonus points when the borrower’s needs align with the lender’s charitable values, and when the receiving sibling isn’t addicted to gambling, controlled substances or daytime TV.) But experts say that in this unforgiving economy, baby boomers in particular, many of whom grew up in fairly large broods, are seeing a bump in financial requests from close kin who lost a job, ended a marriage or — sounding familiar yet? — got caught in the housing bubble. According to a recent MetLife study, nearly half of Americans say they gave money to a family member in the prior year to help pay bills. And as boomers move beyond their prime earning years, experts say, requests will likely accelerate. Forecasts of historic wealth-transfer windfalls (aka inheritance) for boomers in the coming years are overstated, reports AARP’s Public Policy Institute. What’s more, the Employee Benefit Research Institute predicts that nearly half of Americans ages 36 to 62 may not be able to afford even basic living expenses in retirement.