Can You Loan Money to Family Without Regret?
How to Mix Family and Money Successfully
The Wall Street Journal, October 14, 2013
Everyone knows that mixing finances and family will, in most cases, end up seeming like a bad idea. Ironically, it seems that whenever someone needs money and the bank cannot help them, family members are who they will turn to first. This could be for anything from a small amount to help someone make their rent or a car payment, to larger amount for things like funeral expenses for the death of a loved one. And it isn’t always the children asking their parents for money; it could be for a sibling, an in-law, or even the parents having to ask their children for a financial favor.
When entering a financial contract with a relative, most have a pretty good idea that they won’t be seeing this money back anytime soon, if ever. That being said, how do you know how much you can afford to “loan” without it causing excess financial hardship for you? And what about the IRS? Loans over a certain dollar figure, even when being given to a family member, can become a tax problem. There is much more to loaning family money than many people realize. Read the article at the link below to learn more about these potential risks to the borrower, and lender, of what many would consider to be a “family affair”.