Will you get caught? This is important

Today I am presenting a very important life skill – and it’s to do with money!

And the figures I am using are to make it simple to understand.

Many years ago, after both my parents passed, their will was divided up between my brother and myself.

When I was starting off in business, I borrowed $20,000 from my parents. They said they would settle this from their will rather than me paying them back.

Let’s imagine the total will value was $100,000.

Our solicitor at the time, who owned the business, said to me, “The total value of the will is $100,000. You owe the family $20,000 …”

Let’s stop it there.

Please do this exercise: How much money do I get and how much does my brother get?

Back to the solicitor …

“… Therefore, you receive $50,000 (half the value) less the $20,000 you owe which is $30,000. Your brother receives the balance of $70,000.”

Most people agree with this. It’s appears logical.

Or is it?

Because I know a bit about maths, I challenged him.

“No, that’s incorrect. I should receive $40,000 and my brother $60,000.”

The solicitor was adamant he was right, and I was adamant I was right.

“OK” I said. “There is $100,000 to divide into two. I owe $20,000 so if I pay that back, there is now $120,000 to be divided up. Half of $120,000 is $60,000 for my brother and myself.”

If I don’t pay the money back, my brother receives $60,000 and I receive $60,000 less the $20,000 I owe which is $40,000. $60K plus $40K equals $100K.

For the solicitor to get this, I had to physically pay the $20,000 back and both my brother and I then received $60,000 each.

I’m sharing this with you because it is so easy to trust a professional and get ripped off where money has to be paid back.

This is a great skill to learn and teach family members.