Take Out A $2,000,000 Loan To Buy Out My Siblings?

Brought to you by the EveryDollar app. Start budgeting for free today. How do I save for a large amount of money? I will need to pay when my parents pass. Oh, tell us more. So we own a business together. I will inherit current value. It will be worth 3.8. I will need to pay my siblings for a different part of it, which current value would be right at $2 million. So do I do life insurance on my parents? Do I put money in a stock or a CD? What's the best way going about saving for that when that time comes? Are they going to leave this business to you with the expectation that you disburse it equally among the siblings? Are they going to leave it, the worst case scenario is they leave it to, quote unquote, the kids? No. The will is written. Current values. Um, so it's land or farmers. What my part of that is current value is 3.8, but I need to purchase the rest for my siblings. Yeah. Why do you have to buy them out? Um, because he doesn't, they don't have enough cash on hand to pay them closer to equal. If that happened today, But it's locked inside of the land. It's not like, you know, can you pay them out of the profits of the business until they get there? Yeah, over 10 years? Are they going to be the kind of siblings that are banging on your door saying, I want my money right now? So here's, let me mention this, and then I'll see if I can answer it. If I was unable to come up with the $2 million to pay them, if I sold it, current value today, it's worth $3.7. Okay. Um, so I, it's a farm. I would like to keep it together. I know this expense is coming. Um, but I don't know how to, what, what's the best way to plan for that time? Well, what are the, what are the profits generating from the farm? Cause I, I, I had this conversation with some regularity now because of, especially in farming communities. Um, and I've lived in two different farming communities. The land value has far exceeded the actual operating capital, the operating revenue of these farms. Don't wait for the interest rate to be perfect before buying or refinancing a home. Talk to Churchill Mortgage. Smart buyers buy the home they can afford now and then refinance later if rates improve. Churchill helps you make decisions with confidence instead of guessing. And Churchill Mortgage has a webpage with special offers just for our audience. Go to churchillmortgage.com slash Ramsey offer. This is a paid advertisement. NMLS ID 1591. NMLS consumeraccess.org. Equal housing lender. And it just takes one kid to come bang on the door and say, I want my money now. Or what I've seen is it's a spouse or an ex-spouse that says, I want my... cash now. So it forces everybody's hand to either sell the property or come up with some tricky loans or mess. How much on these two properties, like $6 million worth of farming land, how much money are you making every year? Do you, let me put it this way. Do you have the money to save up $2 million as a buyout over the next five, 10 years, however long your parents Ten years, probably, yes. If I just put it away, did not make any. I mean, I don't see another way around it. So you think they'll keep the money, like, working for you? I'd put it in a high-yield savings account, because you have a, you have, well, it depends on when your parents are going to pass. Are they in good health? Okay. And how old are they? They are 72. So they could go to 92 plus at this point. If they're in good health, it's 72. Yep. Which means, does that mean your portion you have to pay out increases as the land appreciates? Yes. And as the business grows? What I pay is based on the assessor evaluation on the land. So what if you owe them $10 million? Right. I don't know. You might not be able to save your way there. And even if you got life insurance, it's going to be a moving target over time. If you got $2 million today and it's worth $10 million later on, so I would just have them restructure what's in the will so that you're not on the hook for this day one. Well, it sounds like you're on the hook because you don't want your siblings to sell that plot of land, right? No, I do not. Okay. It's part of the business that we help run. Right. Pretty much what my parents thought was if I was given something valued at $3.8, I could get a loan easily for $2 million, but that's a loan if I could... And that's a good way to lose both plots. True. Yeah, let's take debt off the table as an option and explore some other ones. And that might mean you structure it differently. Even if you do owe them this money, maybe it's not day one. Maybe it's, hey, we're going to pay this over five years after they pass. I'll pay this out in equal installments. The earlier you structure that and have it written down so that they know, that way there's not somebody banging on your door year two, like, give me my money, and everybody's already, like, it's in the will, like, this is going to get paid out over time off of earnings, not off of borrowed money. I'll tell you, I have an ingrained in me. My experience of talking to an aging farmer who wept in front of me, and you know what a big deal that is to have an old West Texas farmer crying in front of me because of the debt load, because of the conversation he had with a banker saying, you have to do this and this and this to keep this property. And he realized he'd signed his soul away. I'll never forget that. And I know that debt just is crushing American farmers. We tell people to sell their car and everything. I'm just, deeper roots than that. Please don't go into debt over a future potential maybe situation. And this has got enough zeros on it. I wouldn't trust two goobers on a podcast. I would contact an estate attorney that has experience with agricultural and have them drop a structure that makes sense, that's fair to everybody. Because currently, this is not fair to you to just owe that all of a sudden without being able to liquidate anything in the business. And flip it around, would you borrow, if this plot just happened to be next to your farm, would you borrow $2 million and buy it? She loves this land, John. I'm not going to tear it out of her hands. Yeah. So, I mean, you're going to do what you're going to do. I just hate the thought. How leveraged are you on your property? Um, My part of the business is paid off. Okay. Are you asking my current net worth? Well, you're free and clear on your $3 point whatever million portion of this business, right? Okay, cool. So that is the part he would be giving me at that time. What I currently have of my own, me and my husband, is 3.3. Okay. So if I'm in your situation, I mean, it sounds, George and I, George gave me this analogy off air about something else, but y'all, well, the Titanic sank. So you're in a boat and you see an iceberg coming. And right now that iceberg's evaluated at $2 million. You don't know when you're going to hit it, but you know, it's coming at some point. You're debt-free. You're operating your site as business debt-free. I would. Just choosing reality. This thing's coming at us. I'm going to frantically save so that if and when the day comes, I can write each of my siblings a check, and now we've just expanded our entire operation. We've doubled our operation, and it's ours. It's free and clear, and it's ours. Have you talked to your siblings about this? Yes, we had a family meeting about it and what to expect. Thank you. And they're just like, hey, yeah, day one when mom and dad pass, we're going to get our share of this. That was the expectation. Everyone agreed, including you. So from the date of the last passing parent, I have nine months to say yes or no, I don't want this. If I don't want this, it just goes to my siblings. If I do want this. I currently owe the two, but it's worth the 3.7. Hmm. So even if I had to sell it, I need to make that purchase. Well, you can invest your way there and attempt that based on your income, but you might want to have a plan B in case you don't have all the money in full. And in case this thing appreciates, I would look at it from all the angles and talk to an estate planning attorney to help you structure that. Create your free every dollar budget today. The simplest way to budget for your life.