Hello forum, I’d like to ask your opinion please. We are 6 siblings.
2 siblings borrowed money from our elderly parents (sound mind). Our parents are very wealthy.
I have no problems with the fact that they borrowed money. No sibling is against it.
Facts:
Sibling 1 (S1) borrowed $40,000 (personal use). The agreement is that S1 should return it at some point.
Sibling 2 (S2) has a business. Our father decided to invest in the business ($250,000). This investment wasn’t done so my father hoped to make a profit. He just wanted to help out S2. The agreement is that S2 should return the $250,000 at some point.
Problem:
S2 says these two “borrowings” are completely different: S1 borrowed for personal use, S2 received an investment in his business (not for personal use).
I feel they’re exactly the same.
If anything, I feel S2 “borrowed” much more money.
Your opinion please? Are the two “borrowings” the same, or very different?
For both loans there should have been a paper trail. I ____ loan ____ the amount of 40,000 to be paid back without interest in payments of $1000 for 40 months starting (the date).
Now the 250k. If that was an investment, its not considered a loan. And you can lose or profit on an investment. If the business goes under, you get nothing back. This too should have had paperwork with it. If your parents are wealthy than they can afford a lawyer to draw up paperwork. If no paper trail its going to be hard to prove. What you may be able to do is when parents are gone, the "loans" are deducted from the 2 siblings inheritance and split between the other 2. You parents can put this in their Will too that the loans are part of their inheritance if not paid back before your parents die and can be deducted from said inheritance.
Your siblings are probably justifying themselves by saying "well Mom and Dad have it". I did skim a little and saw there are documents concerning the 250k. If so, then Dad sues #2 or like I said writes in his will that the unpaid loan gets deducted from any inheritance #2 receives. Its like he got part of his inheritance ahead of time.
:)
The problem isn’t the money borrowed (no family member has a problem with that). Nor does any family member have a problem with whether the money will be repaid ever, or when.
The only issue:
S2 said, S1 borrowing is morally bad, because S1 borrowed for personal use. S2 received money for business use.
Thanks for all your answers
Again, I just want to clarify.
The problem isn’t the money borrowed (no family member has a problem with that). Nor does any family member have a problem with whether the money will be repaid ever, or when.
The only issue:
S2 said, S1 borrowing is morally bad, because S1 borrowed for personal use. S2 received money for business use.
My parents are elderly. I understand if you feel this moral question (money for personal use vs. business use) isn’t for this forum.
I myself am very grateful for the answers, because I learned a lot.
For example, I learned I’m not the only one who feels S1 and S2 are the same, they both received financial help. It doesn’t matter that S1 had to use it for personal use.
S2 shouldn’t look down at S1, because S1 needed the money for personal use.
If it matters to one sibling then that's the problem of that sibling.
If a sibling is "looking down " on another sibling for ANY REASON, then you have siblings with sibling problems. That's called "normal" and it happens every day, even amongst us "poor folk".
It's lost forever. "Borrowing" money means it's gone for good & likely to never be seen again. Your father gave that money away for free, knowing in his heart it would never be repaid by either child.
I 'loaned' my half sister $3500 about 20 years ago, to help her out of an eviction situation. I've never seen that money again, and she's never even offered to pay me back, even in installments. I've never asked her to, either. Had I expected that loan to be repaid, I'd have asked her to sign papers to that effect, which I did not.
A 'loan' is given by a bank and repaid with interest. It's a contractual obligation.
When a family member 'loans' another family member money, they're giving it away for free with none of the obligations expected from a bank. Unless they ask for papers to be signed saying that loan will be repaid by thus-and-such a date.
This question is not one for a caregiving forum, as Becky said, and not likely to be resolved here with 'opinions', but between your family members in private.
I’m grateful for the answers, because it did help me.
But I understand your opinion.
I’m grateful in any case. I learned a lot from the answers.
With that said, I grew up poor and my Dad died with nothing to inherit, and my Mom that I'm caring for will be the same. So my viewpoint will be different from those who expect or have received inheritances.
I think it's up to your parents to choose the amounts of money they wish to give each child. It's 100% their decision, and I don't think the idea of future inheritance should matter at all. If they are alive and competent, it's their choice and nobody's business about their financial affairs and choices.
The mistake was telling the children about the gifts, or the children telling each other about the gifts. When it's a private matter between the parent(s) and child.
Each gift of money is a personal decision they made and nobody owes anybody else any reasons or excuses because it is no one else's business but the parties involved.
In my opinion, the future inheritance should not be a part of the equation, as nobody is entitled to anything.
My Mom worked for a wealthy woman years ago, and when the woman passed away - she left everything to charity and nothing to her daughter. So, one never knows about the future - nothing is guaranteed.
It's very generous of your parents to help the children. I have never know any parents who have done this. They may have believed in the business, thus giving much more to help support it. They are trying to be generous and helpful - not cause division or strife.
“If not, ask dad about structuring his will to include the assets the sibling already have received. It will come out of their share one day and is only fair to those who did no borrowing”
Only my parents can decide that.
My parents are very fair people. They will do everything right.
There is no tension about the money.
We siblings don’t like S2’s attitude.
A parent who has wealth can use it in any way that parent wishes to use it.
I think it is at the least "unwise" to spread around who got what, because..................well, because, just look.
What does it honestly matter what we think?
Why does an abundance of money make for so many problems?
What does it matter who asks for money, who gets it, and what they want to do with it? Or who sides with whom in what was give/got?
If you want some of this money to build a screened porch on the local cat shelter, then why not? Ask for it. If you don't get it I guess you aren't a "favorite". Or they hate cats. Or maybe there is some line that you failed to tow.
Or any of any number of reasons.
Just my opinion.
We siblings didn’t like S2’s attitude.
Hug!!
If I was Dad, I'd simply add a codicil to his trust saying that S1 gets his inheritance minus $40k, and S2 gets his minus $250k. That way no one has to be pressured to pay anything back. It gets done for them.
I went through this when my mom passed. I spoke at length with her accountant about the money my kids owed my mother. I said "I will pay back my sisters from my share of the estate." And he said "And yourself. You will also pay back yourself. You owe the ESTATE the money, not your sisters; once the money is paid back, you get a third of it, according to the terms of your mother's will."
I didn't split the money my kids owed in two and give each sister half; I paid back the estate and then we each took a third of that money. Or I could have given my sisters each that 1/3 amount more than I got from my share of my mother's estate.
Thanks!!
Very useful answer.
As for:
“Borrowing is borrowing, even when it is called investing, you are still asking for and using other people's money.”
Yes, this is what I think.
In any case, we siblings won’t mention it anymore.
I just wondered how others on this forum view this.
Thank you, everyone who replied!!!! Really.
I think that S2 has forgotten that those that live in glass houses, shouldn't throw stones.
He, obviously, needed to borrow money or he would have self financed his business.
Dad investing 250k means that brother will inherit 5 investors if dad's will doesn't gift him that investment. I would not be poking anyone that could make my life harder by having a vested interest in my business.
I think that any self respecting adult makes it happen without going to daddy to bail them out, with the pie in the sky payback at some unspecified future date. A specific loan with definite payback terms doesn't count as bail out. Borrowing is borrowing, even when it is called investing, you are still asking for and using other people's money. The return is the only variable.
:)
1.
It’s an investment.
Not because I so. But because the document says so.
BUT, even though something is X, the people concerned can still have their own agreement.
It’s an investment - BUT they have agreed S2 must pay back.
For this reason, we siblings said - in reality - it’s borrowing. And there’s no difference between S1 and S2.
(We don’t mind they borrowed. This isn’t the issue.)
We don’t like S2’s attitude.
S2 said, that S1 borrowing is totally different, because it’s for personal use (and that’s morally bad to borrow for such a reason).
2.
Regarding testament and future calculations - that is totally up to our parents, what they want, what debt they want to forgive.
None of this matters.
Not our business.
We are not concerned about the will. We don’t mind they borrowed.
:)
We don’t like S2’s attitude.
I posted my question, because I wondered how others feel about: borrowing for personal use vs. business investment (or in reality loan).
Do you feel they’re very different? Same?
S1 uses the money for personal things.
S2 uses the money for business things.
I feel there’s no difference. They both borrowed, and that’s fine.
:)
only you know all the facts.
my personal opinion:
borrowing is borrowing.
S2 also borrowed money (even though the document is an investment, the agreement between your father and S2 is that he must return the money).
You said S2 got $250,000.
S1 got $40,000.
Is S2 the kind of person who likes to put his other siblings down?
In that case, he might be trying to make S1 (who needs money for personal use) feel bad, and him (business) feel good.
Need for financial help can happen to anyone.
Maybe one day S2 will need to borrow money (for personal use) and he’ll see how unkind he was against S1, for trying to make S1 feel bad.
Moreover, as pointed out by sp19690, S2 actually saved a lot of money by getting $250,000.
I would ignore S2’s comments.
Sib #2 owes $250,000. $250,000 divided 6 ways is $41,666. So Sib #2 gets $41,666 less that his/her siblings."
Hmmm.
The way I would understand equitable payback is that, in re Sib 1, 40K is taken out of his/her share; that share is divided 5 ways and given to each sibling, increasing their share by 8K each.
Sib 2 has 250K taken out of his share; that 250K, divided by 5 results in each sib gaining an additional 50K over their share.
As Barb said, a loan is made with the expectation of being paid back; there are usually terms and conditions under which the money is lent: time frame to pay back, interest, etc.
An investment (unless a guaranteed investment) is a risk vs. reward scenario: "I'll invest in this house flip with you and put up half the money, and we'll split half the profits" with the understanding that, should the investment lose money, the investor will not be able to recoup their original investment amount.
If sib 2 approached dad for a loan to start a business, that's one thing; if sib 2 approached dad to invest in his business, legally, that is a very different issue.
You say dad wasn't expecting to make a profit, but has he? Does he have some sort of say in this business, or is he receiving any sort of monthly income from it? If this ends up in court, those terms are going to be key in deciding if this is a loan or an investment.
If parents are wealthy and being short this money isn't causing any sort of financial hardship, there is a simple way for dad to deal with this, and that would be to set up in his estate terms that would reconcile any owed moneys in you and your siblings' inheritances.
Sib #1 owes the estate $40,000. $40,000 divided 6 ways is $6,666. So Sib #1 gets $6,666 less that his/her other 5 siblings.
Sib #2 owes $250,000. $250,000 divided 6 ways is $41,666. So Sib #2 gets $41,666 less that his/her siblings.
My kids borrowed money from my mom for college. When she died, I added up what my kids owed, divided it by 3 (me & 2 sisters) and added that amount to each of my sister's shares of the estate. Both of my sisters told me not to worry about it, but I felt that my kids borrowed that money under the conditions they would pay it back to my mom, and since she passed before they could make restitution, I paid the estate from my share. Then I "forgave" my children the loans to me. It was fair for everyone, and this way I was assured that this (relatively) small amount of money wouldn't be a bone of contention in the future.
When I "invest" in stock, I have no expectation of being returned my money.
When I buy bonds, I am lending a company money and expect it back with interest.
Investing is speculation.
Lending is a surety.
According to the signed document, from a legal perspective, this is an investment.
But —
in reality, their agreement is that S2 must return the money. My father doesn’t want any profit.
For this reason, we said S1 and S2 are the same. They’re both borrowing money.
(I repeat, we don’t mind.)
We mind this:
S2 saying that it’s totally different. S1 borrowing for personal use is morally bad.
Hence I wondered what others on the forum think about: personal use vs. business.
Thanks for all your answers, help!! :)
I’m replying to Countrymouse here.
“The issue seems to be that S2 is vocally looking down on S1 because S2's borrowing (in S2's view anyway) is of a different nature from that of S1 and, worse, S2 is perhaps demanding that everyone agree with him?”
——This is exactly right.
“You can't just tell him you don't want to hear another word about it?”
Here the issue is, that we siblings tried to point out the two borrowings are the same.
Meanwhile, we’ll definitely stop talking about it.
But I posted my question, because I wondered what others think: is it the same or different? How do people feel about such things…borrowing for personal use vs. business investment.
Without said loan his business may have gone under or he would have had to get a loan from the bank.
If he had gotten a loan from the bank he would have had to pay it back with interest. So dad saved him thousands of dollars in interest by being the bank for him.
Dad specifically said the money was to be paid back. Brother agreed to this and should honor his agreement with dad.
Now the question remains has other sibling paid or started paying back the 40,000 that was loaned?
By the way, it is not a loan. Legally, the document is an investment. But — they agreed, S2 must pay back.
S1 has not been able to pay back yet. S1 is working on it.
I would just say "hmmm" when S2 rants. Excuse yourself from the room or the house if needs be.
Look, I recently lent D1 30k as a short term float when she was buying a house. No signing, no interest, no discussion. Her siblings don't know about it, unless she told them. She paid me back.
My Son in law approached me about being a guarantor for a loan for $7500. last month. I said yes. Paperwork completed, they are behind on rent due to COVID-related job loss. No discussion with other siblings. He is starting a secure civil service job this week, so I don't expect a default. If they default, I still won't share.
This is the ONLY way to mix family and money--with complete privacy for all concerned.
My opinion only.
It sounds like you have one of those boundary-less families. Very bad for your mental health.
There is a lovely book called Boundries by Townsend and Cloud. Read it.
I see what you mean.
My father wanted to be transparent in the money he lent.
We don’t mind they borrowed.
Everyone can go through financial trouble.
We mind S2’s attitude.
Is there something else going on here? Are the 6 of you equal heirs to your parents' estate/trust? (You stated they are very wealthy.)
Is there caregiving involved (after all, this is a caregiver forum)? When your parents need help (maybe they already do?), what is the situation or future plan? Are you doing the caregiving, and your "bad siblings" don't help at all? And so this money borrowing is getting you upset?
Please tell us more.
I help out (unpaid). I don’t live with my parents. Siblings don’t help. We have hired caregivers. But this is irrelevant here in this topic.
I am not upset at all about the borrowing. No one is.
The issue is: S2 says S1 borrowing is morally bad.
My parents are very wealthy. Future care is taken care of.
Yes we are equal heirs.
We don’t mind S1 and S2 borrowed.
We mind S2’s comments.
You can't just tell him you don't want to hear another word about it?
Morally? I don't think that is your business to judge whether the purpose of the loan is moral at all.
Is S2 paying interest on the loan?
What did your father receive in return for the money? - is he a shareholder, entitled to dividends, for example?
What is the formal agreement for the money to be paid back?
If none of the above applies, and there is nothing else in writing about it either, then it isn't a business loan. It's a personal loan, your father lending money to his child for the child to do with whatever he thinks best, and there is no difference at all.
And in that case, S2's criticisms of S1 are nothing more than self-justification, and if it really makes him feel better about himself then he is a thumping hypocrite. All the same, I should leave him to it - unless there is any particular need to comment?
S2 feels S1 (borrowed money for personal use, and that’s a morally bad reason).
Regarding S2:
it is not a loan.
It’s a formal investment.
Lawyer, documents.
But -
in reality it is like a loan. Their agreement is that he must return it (father doesn’t want any of the profit, if ever there’s a profit).
I'm sure S2 sees his borrowing as an action that will result in greater output in the business, while he feels that S1 is simply a financial failure.
He needs to distance himself from that "failure" and see himself as the good son.
His statements are driven by his psychological needs, not by reality.
Money has no moral valence.
Keep in mind, my father doesn’t want any profit. He just wants the money back at some point.
None of us know if the business already failed. It doesn’t matter to us siblings: we don’t mind he “borrowed”.
What we don’t like is that he shuts down any conversation, about the fact that it wasn’t a gift (we brought it up twice. We won’t bring it up again).
— And what we don’t like, is that he repeatedly, without us bringing up the money topic at all, says S1 (morally bad borrowing), S2 (morally OK.)
I'd pat his hand and murmur sympathetic noises in his direction.
Borrowing is borrowing.
Indeed, I feel the two borrowings are exactly the same.
You can call it an “investment”, but the reality is that S2 must return the money at some point, and our father doesn’t want any profit.
I feel S2 borrowed much more. (which is totally ok).
I feel it’s wrong of S2 to say:
S1 borrowing bad (because personal use)
S2 “investment”/borrowing, morally OK.
I think you would do well to follow this advice that you have given to another poster:
"First, I don’t spend any time with people I don’t like. That includes thinking about them."
You say that your elderly parents are of sound mind and very wealthy.
For your own sanity, the "borrowings" are exactly the same. Not your business.
I would say not your business unless you are concerned your parents are being exploited and there are 4 other siblings waiting in line for their handouts.
I don’t feel my parents are being exploited.
You are right, I don’t think about my siblings.
But -
S2 repeatedly says “S1 borrowing” (personal use) is morally bad. His (S2) borrowing is morally OK.
So I wondered what other people think.
Are the two borrowings the same?
You all shouldn't be discussing this at all.
Money is money. It has no moral valence. Stop fussing about it, or just be happy that you have no need to borrow from anyone.
If dad tries to bring this up, tell him he needs to talk to the borrower, not you.
I'm not sure why you siblings were told about this at all. I recently acted as guarantor on a loan for one of my kids. It is not a matter for family discussion. I will not divulge this to my kids, not even to my kid who is my POA.
I have no problem with the fact that they borrowed.
My question is rather:
what other people think (for example on this forum) :
are the two borrowings the same or different?
S2 repeatedly says “S1 borrowing” (personal use) is morally bad. His (S2) borrowing is morally OK.
What are the terms of the loan agreements that your father and your siblings signed?
When we siblings bring up the topic that it wasn’t a gift, and he must return, he shuts down the conversation.
I myself have not seen the document. None of us siblings mind that S2 received an investment.
Father told us siblings:
S2 must repay the money at some point. Father doesn’t want any profit.
S2 just keeps saying:
the two borrowings are very different: S1 personal use (that’s morally bad that S1 received financial help for food, rent, etc.). S2 business investment (not morally bad).
I feel they both borrowed. And if anything, S2 borrowed much more. I’m not against the borrowing.
What does your father say? Having pointed out the above: if the business has failed and he really is content to write off his investment then so should the rest of the family be. But if the business is thriving and your father is a shareholder, then his shareholding will form part of his estate when (may he live forever) he passes on.
S2 has all the documentation.
“if the business has failed and he really is content to write off his investment then so should the rest of the family be.”
On the contrary, the agreement was/is that S2 must pay back.
It’s not a gift of $250,000.
“But if the business is thriving and your father is a shareholder, then his shareholding will form part of his estate”
This is true.
But - our father doesn’t want any profit. He just wants the $250,000 back when possible.
“when (may he live forever) he passes on”
Very sweet of you to write that.
—————
So you see, I feel the two borrowings are the same.
In both cases, the money must be returned. But S2 “borrowed” much more. I’m not against the investment/“borrowing”, at all. I just think S2 borrowed more. I’m also not against that.