Would you co-sign or lend money to a family member?

[Anonymous]

Anonymous wrote:GIFT. Not loan.

Never, never, never. A huge lesson learned and we are recovering this year. We loaned to three people - family, employee and friend, years ago. They lived large but had problems returning the money back. We had to really beg to get the money back, and they returned it as if they were doing us a favor. We were lucky because we did not lose out a huge amount. In 10 years we were not given a single cent as interest. We also did not have any paperwork so we did not want to come down very hard.

In the end, the relationships suffered.

+1

Op, it depends. Is it someone that conveniently and often "has their hand out" or is seemingly "counting other people's pennies"? If so, absolutely not, they just want a piece of the pie, so to speak. We have seen this over the years with relatives asking us to cosign student loans or pay mortgages - and even gave one of them a high paying, over titled job for ten long and brutal years. So, I would have to say anyone other than your own children? Nope.

[Anonymous]

Anonymous wrote:Under what circumstances would you either co-sign or give/loan money to a family member (who is not your child)?

I am asking because our nanny needed me to verify her income because she is co-signing for a niece’s mortgage. I was like, ooh, are you sure you want to do that? I think she thought I was crazy to be concerned. She said she has done it before when niece needed to buy a car and it all worked out.

So, I am wondering if I am too stingy. For my own kids, I would likely co-sign or help, but probably not beyond them. I would always help family (parents, siblings, nieces/nephews) in an emergency but it would be a gift within the amount I can reasonably afford, except for life/death things. Then I would do whatever I could. But I would never co-sign for a niece’s mortgage. I have floated family members when they needed to buy and sell at the same time and they needed cash for a short amount of time until they could sell the old house.

Maybe I have a very US view of this and we are too independent? Interested to hear what others think.

HA! I know someone who went to one of the most prestigious universities in the world. Their parents, instead of being ecstatic, made the student (their child) sign a loan note with more interest than market rate - and the child paid them back early, so as to not meet their wrath. The parents were/are plenty comfortable, and lack for absolutely nothing; and paid for each of their children to go to college - only one had to pay them back.

[Anonymous]

No. We barely have enough for our children’s stuff and saving for retirement, plus have volatile pay jobs. So no we don’t backstop big loans of extended relatives nor give away money to non 501C’s.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Under what circumstances would you either co-sign or give/loan money to a family member (who is not your child)?

I am asking because our nanny needed me to verify her income because she is co-signing for a niece’s mortgage. I was like, ooh, are you sure you want to do that? I think she thought I was crazy to be concerned. She said she has done it before when niece needed to buy a car and it all worked out.

So, I am wondering if I am too stingy. For my own kids, I would likely co-sign or help, but probably not beyond them. I would always help family (parents, siblings, nieces/nephews) in an emergency but it would be a gift within the amount I can reasonably afford, except for life/death things. Then I would do whatever I could. But I would never co-sign for a niece’s mortgage. I have floated family members when they needed to buy and sell at the same time and they needed cash for a short amount of time until they could sell the old house.

Maybe I have a very US view of this and we are too independent? Interested to hear what others think.

HA! I know someone who went to one of the most prestigious universities in the world. Their parents, instead of being ecstatic, made the student (their child) sign a loan note with more interest than market rate - and the child paid them back early, so as to not meet their wrath. The parents were/are plenty comfortable, and lack for absolutely nothing; and paid for each of their children to go to college - only one had to pay them back.

Makes sense. We know families that did a one pager doc to loan their son money for a down payment or engagement ring and charged double the market interest rate so they got paid back first. And they did.

[Anonymous]

Anonymous wrote:From reading all responses it looks to me like those from immigrant families routinely help each other out, in major and minor ways financially, and no one has mentioned that anyone who did that was burned by the person who got the loan or cosign.

Americans, on the other hand, are much more cautious because it seems that it is common for those who receive the loans or co-signs might not pay the loan payments or pay back the money or might ruin the cosigners credit.

Makes me say....hmmmmm.

Most developing countries don’t have school beyond 6th grade, never heard of insurance, don’t do preventative care or wellness visits, have no stock market, and have terrible personal loan options if any.

So if you keep popping out kids, yeah, you’ll have to socialize that and home your extended family keeps sending you their cash job remittances every other week.

[Anonymous]

Anonymous wrote:I'm sure immigrant families have had people burn them, but there is also the culture of serious public shaming within most immigrant communities if someone defaults like that.

Uh, nope. Quite common within families. The public shaming we see in Resi real estate in SE Asian does a lot of public shaming. As in, if you don’t do this, I’ll call your dad. But neglecting “legal documents” is very common. They are unenforceable anyways, unlike in the U.S.

[Anonymous]

Anonymous wrote:Under what circumstances would you either co-sign or give/loan money to a family member (who is not your child)?

I am asking because our nanny needed me to verify her income because she is co-signing for a niece’s mortgage. I was like, ooh, are you sure you want to do that? I think she thought I was crazy to be concerned. She said she has done it before when niece needed to buy a car and it all worked out.

So, I am wondering if I am too stingy. For my own kids, I would likely co-sign or help, but probably not beyond them. I would always help family (parents, siblings, nieces/nephews) in an emergency but it would be a gift within the amount I can reasonably afford, except for life/death things. Then I would do whatever I could. But I would never co-sign for a niece’s mortgage. I have floated family members when they needed to buy and sell at the same time and they needed cash for a short amount of time until they could sell the old house.

Maybe I have a very US view of this and we are too independent? Interested to hear what others think.

Hope you pay your nanny on the books if you just verified her income.

We had to do the same when a former nanny of ours wanted to qualify for inexpensive medical care at Holy Cross.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Under what circumstances would you either co-sign or give/loan money to a family member (who is not your child)?

I am asking because our nanny needed me to verify her income because she is co-signing for a niece’s mortgage. I was like, ooh, are you sure you want to do that? I think she thought I was crazy to be concerned. She said she has done it before when niece needed to buy a car and it all worked out.

So, I am wondering if I am too stingy. For my own kids, I would likely co-sign or help, but probably not beyond them. I would always help family (parents, siblings, nieces/nephews) in an emergency but it would be a gift within the amount I can reasonably afford, except for life/death things. Then I would do whatever I could. But I would never co-sign for a niece’s mortgage. I have floated family members when they needed to buy and sell at the same time and they needed cash for a short amount of time until they could sell the old house.

Maybe I have a very US view of this and we are too independent? Interested to hear what others think.

Hope you pay your nanny on the books if you just verified her income.

We had to do the same when a former nanny of ours wanted to qualify for inexpensive medical care at Holy Cross.

Yes, of course. She gets a W-2, we withhold and pay our taxes.

[Anonymous]

My husband and I each come from immigrant families (mid-1930s) from different countries. Oddly each family had the same practice. Each wage earner put 1/2 (my husband's family) or 1/3 (my family) into a mutual "pot" for disbursal to family members who were less fortunate or who were experiencing financial hardships. It didn't matter if you were single living at home or if you were married with kids living out of the home, you put the stipulated fractional amount into the pot each time you got paid. The head of each family kept the funds and distributed them. This practice continued up through the 1990s for one family and the 1970s for one family.

So in answer to your question, OP, yes, my husband and I frequently give money to family members. If they insist then we frame it as a loan.

I think your housekeeper/nanny (I've forgotten which) is doing exactly what we would do with her co-sign agreement for her niece. It sounds like the niece has a pattern of upholding her agreements with her aunt and some things you need to do on trust.