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Ask Yourself These 4 Questions Before You Loan Money to Family

Research shows that boomers are getting squeezed from both ends — 93 percent have provided financial support to their adult children, and almost 60 percent have helped aging parents financially. In addition, a great many aging parents have allowed their adult children to move back in with them rent-free.

Most boomers are failing to realize the impact all this financial support is having on their retirement goals, with only 10 percent reporting that helping parents has slowed down their retirement savings and 34 percent saying the same for helping adult children.

Ask yourself these four questions before providing financial support to a family member:

  1. Is this a want or a need? When it comes to living expenses, there is an important difference between a true need and a perceived need. If the expense isn’t a basic need, or if you’ve assisted with the same expense in the past, ask yourself if you are enabling irresponsible financial behavior.
  2. Is this a loan or a gift? Consider whether your family member’s circumstances or past behavior indicate that they’ll actually be able to repay you. Also ask yourself whether you’ll be okay – financially and emotionally – if they don’t.
  3. What are my motivations and expectations? Consider your own feelings and ask yourself if you’ll resent your decision – or your family member – in the future. If your expectations aren’t met, will you be disappointed? If so, it may be better to say “no” than risk damaging your relationship.
  4. Will this affect my own financial well-being? It’s crucial to take a look at your short- and long-term goals and ask yourself if you can really afford to help. It’s natural to want to provide support, but don’t let a struggling family member jeopardize your own financial security, especially if you’re approaching retirement. By prioritizing your own financial goals and stability, you may even have the ability to comfortably help family members in the future.

The Dorcey Law Firm, PLC, focuses on estate planning and asset protection for Florida residents. Contact our Fort Myers law firm for your free consultation.

Categories: Asset Protection
dorcey law firm
The Dorcey Law Firm, PLC - Fort Myers Attorney
Located at 10181 Six Mile Cypress Pkwy, Suite C, Fort Myers, FL 33966
Phone: (239) 330-6674
Local Phone: (239) 418-0169
Website: http://www.dorceylaw.com
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