I got a call at the top of the show from a woman who wondered if she should use the $70,000 her kids inherited to pay off her investment property. She’d create a 15-year mortgage and would pay her kids back monthly for 15 years. She figures it’s better to pay back her kids at a guaranteed rate of return than to pay a bank.

I agreed. But I suggested that she get a real estate attorney to draw up the documents, record them and said that because the kids are below the age of majority, she might need a trust to actually hold the mortgage document.

Do you agree? Here’s what one Clark Howard listener says:

From Frank: 12/22/2008
Inheritance: that was terrible advice. The kids’ inheritance should not be used to pay the parent’s debt and substituted with a promise.

I don’t agree with Frank. 529 College Savings plans have lost the same amount as the stock market: 30 to 40 percent. This is a smarter way to use money.

What do you think?

December 22, 2008