Sister Wants to Borrow Money from Mom's Nest Egg

WARNING!!! Yes, you've been put in a tough situation, but better quit while you're ahead. Do you want to maintain a good relationship with your sister? Then DO NOT loan her the money. She has already proven her financial irresponsibility, and I almost guarantee you'll be hounding her to repay the loan long after it's due. Then where will your mother be? YOU'LL be the one footing all the bills, because sis sure won't be in a position to help.

I've been in the money-lending situation a few times, and it's ALWAYS turned out poorly. My new stance is that if I loan somoene money, I privately consiter it a gift. If I get repaid, it's a bonus. I only loan as much as I can afford to lose. Maybe you can offer your sister a smaller loan, and think of it in these terms.

Also, tell her about Prosper.com. It's an online loaning community. People sign up and ask for loans, and private parties loan it to them. It's been around for years, and seems to really work. I'd say this is her best option, especially if she's willing to pay higher interest.

Good luck...I really feel for you.

3 moms found this helpful

Oh Wow, this one raises the hackles on my neck.....

If I hear you straight, the sister & her husband have been irresponsible & it may cost them everything, & your mom has planned well, and they want her to bail them out??? I don't think so.

Let me say as emphatically as I can in type. YOUR GUT REACTION IS CORRECT!!!!! IF YOUR MOM HAD MILLIONS, & COULD STAND TO LOOSE SOME, THEN THE RISK MIGHT BE WORTH IT. From your description, this is not the case.

you are not being unloving, as she will likely imply, you are just in the role of applying tough love. she will not learn until she suffers her own consequences.

If, there had been a terrible accident, out of their control, & they had done everything they possibly could have, then they would have demonstrated the kind of character, that would lead you to believe the loan would get paid back.

This reminds me of the passage in the bible, where 10 maidens were to be waiting for the bridegroom to arrive. 5 had enough oil. The other 5 did not. They were running out & wanted to borrow from the first, who said no, go find your own. When they were gone, the bridegroom came. The moral of the story is be prepared & be responsible. You have been, your mother has been, but the sis has not. I am sorry you are caught in the middle, but stand your ground. She will find another way to resolve her problem.

A.

2 moms found this helpful

Are you in a position to offer some (any?) assistance without going into your mom's savings? If so, perhaps you can offer that instead. Although I agree with what another person said in earlier response. If you're going to loan money to friends and/or family, consider it a gift. That way there won't be an opportunity for disputes later on if it doesn't get paid back.

For the time, I don't know if you can "keep the peace". It is likely your sister will feel that you aren't being supportive since there is money available but you aren't readily handing it over. Your refusal will likely add to the stress she probably already feels in her situation. (That's not your fault, though. It's her own predicament.) Try to be there for her in other ways. Can you offer her some space at your place until she finds her own home? Do you already have a storage unit in which she could store some of her things, etc. Of course, this all depends on how much you truly want to help and how good of a relationship you had with her before she got into trouble.

Good luck.

2 moms found this helpful

Hello R.,

What a great daughter you are being the caregiver for your mother. It's very sad to see your mother's health deteriorate. Being a caregiver alone can be extremly stressful and now the financial issues. That's a hard one to deal with. I think you are doing the right thing by standing up for your mother. She's the person that suffers and in the end you will too. Loaning money is a risk no matter how secure it is. If you do decide to loan it make sure there's a lean on any money she gets and it's paid back - check to make sure she doesn't have any leans already and how much money would come back. I definitly would use an attorney,

I feel for you and cannot believe your sister is asking such. I am a caregiver for my Alzeimer's father and I know how hard it is. Luckily my sister and I both take care of the financial side. As hard as it is...you will be rewarded for your goodness...stay healthy and happy during this difficult time - don't loose you and make time for you!!! Sincerly, M.

2 moms found this helpful

Don't do it! Your mother needs her "nest egg". Your right that it won't last for ever, and even if your sister did set up a "legal" loan, she could still defalt on it. I know that you are in a diffcult situation that is very unconfortable for you and will cause distention between you and your sister "money matters" always do. Hold your ground! and don't give in! Your sisters troubles may be heartbreaking and you can give her support in other ways that are not finacinal. I hate to say it but your sister made her bed with living beyond her means. What's up with "Maid services" she needs to cut that out along with all other non essentials. I'm sorry to hear about your sisters plight, but I have a feeling that if your approve her a loan, the money would be misspent and not solve her problems. With the housing market the way it is. If the price is right someone will buy their house/property. So if they don't get what they want for it, how badly does she want to get out of this relationship? Maybe she should cut her loses and get on with her life.
Good luck to you, stick to your guns!

2 moms found this helpful

R.,
I completely see your situation and understand what you are going through. My husband and I are in a similar situation with his dad and so far my husbands brother hasn't asked for money.
I feel that since you already said no to one sister that you should make it fair by saying no to the other. Her circumstances are heart wrenching, but morally you have an obligation to uphold and that is to take care of your mom. Technically the money is your mom's and I feel that it's wrong to give it out, even for your sister's situation. Others might feel that my thinking is wrong, but the money is for taking care of your mom, not your sister.

Although my husband and I love his brother to tears, we would let him sink before we gave him any of their dad's money. Once their dad passes away the money will be divided as he has requested and the brother can do with his share as he pleases. Until then, their dad doesn't want anyone touching it except to take care of him.
If you were your mom, wouldn't you want it that way for you too?

Best of luck.

2 moms found this helpful

Sounds like a bad idea! I think you are gonna have to just tell your sister you are not comfortable with the idea, and that she is going to have to find another way. Even if your mother was well and able to give your sister a loan, it is never a good idea to borrow that much money from a family member. I think if they got themselves into this situation, they are gonna have to figure a way to get out! Life is hard, but I am sure there is another way!

1 mom found this helpful

Is there any formal description of your responsibilities to your mother and her money? I would imagine that if you were a court-appointed personal representative that you could hide behind specific guidelines that you have to follow.

Consult any financial advisers that you have about what impact a loan would make because I imagine that if her money is invested well it may make more than she would pay in interest.

Otherwise, you should just tell her that you'd love to help, but it isn't in the best interest of your mother and you can't, in good conscience help her. If the banks don't think she's a good bet for paying the money back, why should you? It'll be tough for her in the short run, but plenty of people have gotten by with less. She can get through it by changing their standard of living. Heck, it could even be a very positive experience for them if they let it.

1 mom found this helpful

My opinion is to not let her borrow the money. It seems that she has created the mess she's in and if they have to sell for less and take a hit that way too then so be it. You can be very supportive without loaning her the money. Help with her kids, help with the fixing up, etc.
If you are thinking of loaning her the money, I suggest talking to Tim Nay first. You can even go there with your sister. He is a lawyer in Portland who specializes in elder care, estate planning, elder abuse and working with families to handle estates. We spent a couple hundred dollars to meet with him and he helped us a great deal and I really felt that we got a bargain. He has a masters in social work also and really knows the ins and outs of exactly what you are talking about. He's the one to draft up a contract with your sister if you are going to move forward.
And how do you know that your sister's soon-to-be-ex will pay you back?

Good luck.

1 mom found this helpful

Oh honey - you ARE put between a rock and a hard place. Obviously, without knowing the particulars at all, I don't think it's a good idea to loan the money to someone that has already proven that they're not good with it.

There is a reason you were chosen to take care of her affairs I'm sure. What are you going to do if she can't pay it back with a high interest loan and lawyer or not? Forclose on your sister? Your mother needs that money to live as much of a quality of life that is afforded to her.

No, no, no, no, no, no.

1 mom found this helpful

I do no believe in borrowing money from family or friends. My husband and I have always been more of the give it and not expect to be paid back. I would tell your sister no that your mom is not in a position to give any money. I do have a question are you totally in charge of the money or does your mom have some say? I hope your sis does not ask your mom!

1 mom found this helpful

Let me tell you how this worked when my grandfather "loaned" my father money to start a business. It created animosity in our family for years. My father couldn't pay it back. My grandfather said to just consider it your inheritance when I'm gone. My father's brother resented what had happened for the rest of his life which was probably another 30 years. Even tho he received an inheritance equal to or more than the amount my father "borrowed" he did not think it was fair. The two families had hard feelings for 30 or so years. Fortunately the children have not carried the anger after the deaths of the brothers.

Do not loan your sister money! I'm guessing your mother made you her money manager because she felt she could trust you to use her money wisely. Loaning money to a friend or relative is rarely a good idea. It is never a good idea to loan money to someone whose credit rating is so low they can't borrow money any place else.

Yes, your sister is in a difficult place. You can sympathize with her. In reality she doesn't actually need your mother's money. They can sell their house as is. Yes, they may not make any money. They may not be able to sell the house for the amount they still owe. But they can sell the house. If they borrow from Mother they'll owe her money. If they sell house as is they'll owe the balance on the mortage. Either way they owe money. As I see it the only advantage to borrowing from Mother is that they won't be forced to pay her back if this new life doesn't work as they want it too.

And I understand that divorces have the potential of being easier if there are no or only a few debts. They can be divorced. The court will divide up the debts between the two of them.

Your sister needs money to move out with her boys. That is her responsibility, too. Is she working? If she's doesn't have job skills, is she working on getting them? Is the boys' father working? Won't he be paying child support? She is asking for money now. Does she have a plan for making a living once she's out?

My mother as were the mothers of other friends was worried that she would outlive their money. She fretted about it for 25 years or so. I would guess that your mother would also be worried if she knew that she wouldn't have that money. She and/or her husband saved and invested so that she would have money for her last years. An inheritance is just that. It's available only after the person dies.

I'm guessing that there may be hard feelings on your sister's part if you don't give her the money. How she feels is her responsibility. Your responsibility is to preserve your mother's assets for as long as she is alive.

One way to put the responsibility back on them is to ask them how they plan to pay the money back? They are not financially solvent now and have not been for many years. "Future behavior is best predicted by past behavior." A quote from the world of psychiatrists. How can they prove to you that they will be able to pay your mother back? Since their credit rating is in ruins what can they show you to back up their ability to repay the loan?

Money is not a family matter. It's a business matter. You would be remiss if you didn't protect your mother's nest egg.

1 mom found this helpful

I have the same opinion(s) that the other responders have given you.

I will only add one thing, from the flip side of the coin: IF you decide to loan the money, you can alter your mother's will to specify that this sister owes that amount of money to your mother's estate. Basically, she would be a creditor and if there is money left after your mother dies, your sister's share will be reduced by what she owes. If, as you say, there is no money left when your mother dies, then your sister is a debtor to the estate and would be obligated to pay up or declare bankruptcy. If she pays up, that money can be used to settle any other debts your mother has when she dies (such as money owed to the Alzheimer's facility).

This is certainly not ideal, and would obviously set you up for bigger issues when the time comes, but if somehow you cannot say "no" to a loan to your sister, this would be a way to structure it. Make sure to do it under the guidance of an estate attorney.

1 mom found this helpful

I'm glad your talk with your sister went well.

You can't fix money problems with money.

Hard as it is, your sister needs to pick herself up.

1 mom found this helpful