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Thread: Loaning money in the family question...

  1. #1

    Loaning money in the family question...

    Hi, hopefully someone may be able to help with some advice here, if loaning a sizeable amount of money to a family member is there a way you can protect it in case there are issues down the line? (shouldn't be but you never know)...

  2. #2
    Grand Master Chris_in_the_UK's Avatar
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    The easiest way to protect it is not to loan it in the first place - seriously.
    When you look long into an abyss, the abyss looks long into you.........

  3. #3
    Master sish101's Avatar
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    Quote Originally Posted by Chris_in_the_UK View Post
    The easiest way to protect it is not to loan it in the first place - seriously.
    ^^į this. Absolutely.

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  4. #4
    A *Wiseman once told me never lend any money your not prepared to throw down a drain, the same applies to gambling

    The wiseman was my grandfather

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  5. #5
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    Quote Originally Posted by Chris_in_the_UK View Post
    The easiest way to protect it is not to loan it in the first place - seriously.
    This, or just give it to them ...

    If you give them a loan they will end up resenting owing you money and you may end up resenting their choices with money when they don’t pay it back as expected. Never ends well regardless of the initial intentions.

  6. #6
    Master aldfort's Avatar
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    Don't do it and don't stand security either. The fact you are even asking indicates you know it'll go wrong.

  7. #7
    Quote Originally Posted by Martylaa View Post
    Hi, hopefully someone may be able to help with some advice here, if loaning a sizeable amount of money to a family member is there a way you can protect it in case there are issues down the line? (shouldn't be but you never know)...
    Promissory note, signed

  8. #8
    You can put a simple agreement in place, stating the amount and the repayment terms and any other conditions it also protects for the tax liability and other issues.

    But with most family stuff be happy to not get it back or it to be a challenge.

    Lent my sister some money did used to annoy me when they went off on holiday and other stuff, but delayed paying the money back as they were skint

  9. #9
    Master
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    Lending a sizeable sum of money to a family member would be a red line that I wouldn't want to cross.

  10. #10
    Master spuds's Avatar
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    I respectfully disagree with many of the previous answers.

    I’ve had to borrow money from my brother many years ago and in more recent years I’ve loaned money to family and friends on several occasions and it’s not gone wrong yet....

    My only caveat (which I apply to myself as well) is don’t lend money you can’t afford to lose “just in case”.

    Everyone is different but having had money issues myself in the past I simply can’t stand by with money in the bank, while those that I care about are struggling with payday loans, rent arrears or what have you (especially if it’s through no fault of their own).

  11. #11
    If a family member is asking you rather than their bank then they probably can't afford it. Definitely don't go down that road because your family will end up resenting the whole deal.

  12. #12
    Quote Originally Posted by Chris_in_the_UK View Post
    The easiest way to protect it is not to loan it in the first place - seriously.
    100%, money changes people and "things", we gave a decent size loan to a family member early this year and then covid hit, long story short we have just said to the borrower, forget the loan but please, please, please don't ask again :) and we are still best of friends.

  13. #13
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    Quote Originally Posted by Martylaa View Post
    Hi, hopefully someone may be able to help with some advice here, if loaning a sizeable amount of money to a family member is there a way you can protect it in case there are issues down the line? (shouldn't be but you never know)...
    If I could turn back the clock....
    Seriously. Donít. I was young and naive. Twice. I would have owned that house now, aged 47.

    Future/pension would have been looking rather well....

  14. #14
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    Quote Originally Posted by spuds View Post
    I respectfully disagree with many of the previous answers.

    Iíve had to borrow money from my brother many years ago and in more recent years Iíve loaned money to family and friends on several occasions and itís not gone wrong yet....

    Yes I agree with this, and I wouldn't hesitate to lend money to some of my family members. But the OP has clearly identified a risk by starting the thread in the first place and that puts the loan in question in a different category. In that context other posters are right to sound a note of caution.

  15. #15
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    Quote Originally Posted by spuds View Post
    I respectfully disagree with many of the previous answers.

    Iíve had to borrow money from my brother many years ago and in more recent years Iíve loaned money to family and friends on several occasions and itís not gone wrong yet....

    My only caveat (which I apply to myself as well) is donít lend money you canít afford to lose ďjust in caseĒ.

    Everyone is different but having had money issues myself in the past I simply canít stand by with money in the bank, while those that I care about are struggling with payday loans, rent arrears or what have you (especially if itís through no fault of their own).
    I agree with you, I/we have lent money to family members before without problems.
    But, If in any doubt do not do it. Or if you cannot afford it do not do it.

    Consider drawing up a written agreement between you and them.
    Date of loan/amount and total amount lent.
    Repayments, dates due and final payment date.
    Remember, if they to not make any re-payments before the final payment date. You may not be able to call in the debt before the agreed final payment date.

  16. #16
    Urghhh these werenít the responses i was wanting to read...

    Needs must and all that Iím afraid, just wanted to be sure if thereís a document i can get written up...

  17. #17
    Master murkeywaters's Avatar
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    Depends a lot on your family set up, money does change people and within families its often like oil and water.

    My own personal experience, I was not lending money but using my skills to help semi distant family at a big reduced rate, for the day I was with them I could have doubled my fee by working for a stranger and I turned down a booking.

    The outcome was an awkward day where I felt like it was an issue I charged a fee at all, other family members mentioned how bad they felt with how I was treated, the saying you cant choose your family but you can choose your friends rings true.

  18. #18
    Grand Master Chris_in_the_UK's Avatar
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    Quote Originally Posted by Martylaa View Post
    Urghhh these werenít the responses i was wanting to read...

    Needs must and all that Iím afraid, just wanted to be sure if thereís a document i can get written up...
    Of course there will be.

    This may end up being a non-issue or it could lead to legal proceedings against a family member (and many variations in between).

    As previously stated, I would not - I would rather gift it and sleep at night.
    When you look long into an abyss, the abyss looks long into you.........

  19. #19
    Master Sinnlover's Avatar
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    Quote Originally Posted by Martylaa View Post
    Urghhh these werenít the responses i was wanting to read...

    Needs must and all that Iím afraid, just wanted to be sure if thereís a document i can get written up...
    Is there an asset you can get a lean on? Having seen my father lend money to family get get shafted I would want to get something I can sell if they fail on the debt. In my (observed) experience the debtor never appreciates what the lender has done for them either. They constantly throw it back in their face.
    Admittedly my uncle is a thick c***

  20. #20
    Master
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    Money given to a family member should always be considered a gift, never a loan, because if they donít pay you back what are you really going to do about it?

    I lend my brother money regularly, small amounts, and he pays me back. The day a loan doesnít get paid back will finish the loans. But we will remain friends.

    If itís a considerable amount of money, I wouldnít do it unless I could afford to lose the money.

  21. #21
    Grand Master MartynJC (UK)'s Avatar
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    Beware tax implications of loans. And check gift limits. Last time I looked it was £3K?

  22. #22
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    If youíre asking this question Iíd steer clear pal.

  23. #23
    Master blackal's Avatar
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    Quote Originally Posted by Martylaa View Post
    Urghhh these werenít the responses i was wanting to read...

    Needs must and all that Iím afraid, just wanted to be sure if thereís a document i can get written up...
    Then make sure, as others have advised - that you get a written agreement written up and notarised.

    BUT - be prepared to see the relationship destroyed, if the other party decides that they are more important than you.

    All very well saying ďitís familyĒ, but if the other party treats you like someone to attach to like a leach - or you suspect they will - tell them to Fc** off.

  24. #24
    Master Templogin's Avatar
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    I have done it twice. Once for £4,000 and once for £650. I never saw either sum back. Both were not inconsiderable sums for me at the time. The £650 I wasn't worried about, but the £4,000 I was, especially when I was on the bones of my *rse later in life, and could barely afford to feed myself. They claimed poverty. They have now had over twenty years to pay me something. They haven't paid a penny. I hope that they get their fair share of karma.

  25. #25
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    A very good chance of not just losing the money but the family member as well, it could even lead to a family rift.

  26. #26
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    Difficult one. When seeing a close family member in financial stress and you have the means, then of course you want to and may feel need to help.

    However, if your mind frame is already such that you are asking about written agremeents and security, either this family member is not close enough or you already know it will not be paid back. When talking about written agreements that is more commercial / arm's length, not a family deal really. If you go that route be prepared for souring of the relationship.

    We have lent money to family in the past, but not huge amounts and have just said no need to pay back. Other occasions have accepted their payback (somehow feel it may have helped their own financial discipline!?) However, the key point for us: when it was lent it was not conisdered a loan in our minds, it was conidered a gift. If someone is close enough for you to give the cash out of the goodness of your heart, can they also be someone you are happy to enforce a legal agreement upon? Only you can answer than based upon your own situation. For me, I cannot think of somoene who would fall into both categories. Either I would not lend the money or I would and not need any agreement / consider it a gift.

    Either way, don't envy your position and good luck whichever way you go.

  27. #27
    Master bigbaddes's Avatar
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    give yes loan no.

    been on both sides of this and mostly its a pain in the arse best avoided !

  28. #28
    Appreciate all the pointers, thanks all...


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  29. #29
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    Another on the either donít do it or give it as a gift side Iím afraid from bitter experience

  30. #30
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    "Family member"...a child, parent, third cousin twice removed? What is the relationship? And the sum?

    It's really frustrating when people ask questions without the context. Would I lend my sister money for a boob job? No. Would I lend my son money to keep his car on the road? Yes.

  31. #31
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    Quote Originally Posted by Linocut View Post
    "Family member"...a child, parent, third cousin twice removed? What is the relationship? And the sum?

    It's really frustrating when people ask questions without the context. Would I lend my sister money for a boob job? No. Would I lend my son money to keep his car on the road? Yes.
    True! Without context the thread responses are far less relevant. But OP may not want to disclose such intimate detail which is also fine.

  32. #32
    Grand Master Raffe's Avatar
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    Never again.
    #plantpot

  33. #33
    Master Templogin's Avatar
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    Rhetorical question. If you want to help, why don't you let them take a bank loan, and you pay the interest monthly as a gift? You can stop if their situation changes.
    Last edited by Templogin; 13th December 2020 at 21:52. Reason: Addition of monthly

  34. #34
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    If you want to lose someone as a friend, acquaintance or relative lend them money.


    Greek philosphers et al


    B

  35. #35
    Craftsman T1ckT0ck's Avatar
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    Quote Originally Posted by Templogin View Post
    Rhetorical question. If you want to help, why don't you let them take a bank loan, and you pay the interest monthly as a gift? You can stop if their situation changes.
    Perhaps not eligible for commercial lending for numerous reasons and thatís why they are asking family. That in itself is perhaps a warning.


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  36. #36
    Wow Iím surprised by some of the comments on this. I have and would happily lend my brothers and parents (immediate family) whenever they needed it with no hard feelings. And vice versa. Look after your own if you can.


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  37. #37
    Grand Master oldoakknives's Avatar
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    Quote Originally Posted by Brian View Post
    If you want to lose someone as a friend, acquaintance or relative lend them money.


    Greek philosphers et al


    B
    This.
    ďThe more I learn about people, the more I like my dog.Ē

  38. #38
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    Quote Originally Posted by Martylaa View Post
    Appreciate all the pointers, thanks all...


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    Can you give us all a bit of information as who and why etc.
    A bit about there background and why you have your doubts and we will decide for you.

  39. #39
    Grand Master Raffe's Avatar
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    Quote Originally Posted by Rob Leeds View Post
    Can you give us all a bit of information as who and why etc.
    A bit about there background and why you have your doubts and we will decide for you.
    Great idea.

    Maybe also their name, address and date of birth?

  40. #40
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    Quote Originally Posted by Raffe View Post
    Great idea.

    Maybe also their name, address and date of birth?
    Well, he has asked so it would be interesting to know a little background information.
    Wouldn't it?

  41. #41
    Grand Master Chris_in_the_UK's Avatar
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    Quote Originally Posted by Rob Leeds View Post
    Well, he has asked so it would be interesting to know a little background information.
    Wouldn't it?
    No, none of anybodies business beyond the basic question - which has been answered comprehensively IMO.
    When you look long into an abyss, the abyss looks long into you.........

  42. #42
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    Quote Originally Posted by Chris_in_the_UK View Post
    No, none of anybodies business beyond the basic question - which has been answered comprehensively IMO.
    No names just circumstances.
    It could save him a few quid.

  43. #43
    Quote Originally Posted by Rob Leeds View Post
    No names just circumstances.
    It could save him a few quid.
    You asked a perfectly reasonable question to be honest.


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  44. #44
    Master Chukas's Avatar
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    My old man lent his brother 18k, never seen a penny back and they havenít spoken since.
    Id say donít do it unless youíre 100 % sure youíll get it back.
    Me personally, Iíd lend my brother or sisters whatever they needed as I feel I know them and are quite close.
    Judging by asking, Iíd say youíre not too sure.....

  45. #45
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    Haven't seen my uncle in 10 years since he disappeared leaving a £250k debt owed to my father and zero assets to show for it. Other cousins and their kids were out of pocket, people lost cars etc.

    His wife was pretty pissed off when it turned out their house had been remortgaged and was in arrears, it was repossessed soon after.

    Life is full of surprises and not everyone is who you think they are.

  46. #46
    Master blackal's Avatar
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    Quote Originally Posted by Rob Leeds View Post
    No names just circumstances.
    It could save him a few quid.
    And Ďwe will decide for youí ................

    Wow!

  47. #47
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    Quote Originally Posted by blackal View Post
    And Ďwe will decide for youí ................

    Wow!
    Let's face it, many have decided already.

  48. #48
    The answer is, yes you can put a legal document in place, but what is it worth? We don't know the relationships or the sum involved, but are you going to take legal action on the basis of the agreement if they don't pay? The repercussions, should you do so are probably the complete breakdown of the relationship. And if you're not prepared to do that. what's the point.

  49. #49
    Grand Master Chris_in_the_UK's Avatar
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    Quote Originally Posted by Rob Leeds View Post
    Let's face it, many have decided already.
    No, people have advised.
    When you look long into an abyss, the abyss looks long into you.........

  50. #50
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    Quote Originally Posted by Chris_in_the_UK View Post
    No, people have advised.
    I would say a firm yes or no is more of a mind made up than just advice.
    Maybe we could have a poll.

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