At 28 years old and newly married, Chelsea and her hus- band Carl just bought a house. Chelsea’s dad, who was recently retired, asked to borrow $50,000 to buy several frozen yogurt franchises. He explained it would be a very short loan for only thirty days to cover a cash flow crunch. Chelsea had no hesitation lending her dad the money considering he was able to retire early from serving as the CEO of a fortune 500 company. Chelsea’s dad and step mom lived a lavish life, had an expensive home in West Palm Beach, owned a condo in Denver, and traveled often. Chelsea and her husband decided to take out a home equity loan and gave Chelsea’s dad the money without a written agreement. The Frozen Yogurt shops failed and her dad sued his business partner, but lost that lawsuit includ- ing all the money invested into the shops. Chelsea’s dad and step mom spent money frivolously on vacations and materialistic items, while Chelsea and her husband were much more frugal. It took Chelsea’s dad over two years to return the money with interest, but she experienced lost sleep and stress over the loan and disagreements with

her dad. One of his arguments was claiming that it didn’t matter if he paid her back since she would receive all of his assets when he passed away. Later, when her dad did

pass away, the family discovered the truth about his finan- cial situation. Her dad had a tremendous amount of debt, and the mansion in West Palm Beach was consumed by a $1.5 million mortgage and a home equity loan. He had also acquired five years of unpaid federal and state income taxes and numerous payroll taxes for employees were unpaid. Furthermore, he owed his brother about $100,000 Chelsea lost all respect for her father and step mom, was kept in the dark about his financial issues, and was left with nothing.

1. Which members of the family are considered the economic adults and the economic minors?

2. Do you believe Chelsea should have had a written agreement even though it was her father that she was lending the money to?

3. Was there ever a situation in your life where you can relate to this family or do you know someone that would be considered an economic minor?

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1 Generally a Male head of the family Father or Husband is considered to be economic major or Adult ... View the full answer