Help me think through this - loaning $$ to a sibling

[scm1011]

My older sister is heading for divorce and is in a pretty desperate situation. She married a very wealthy older man when she was 22 (she is now 48) and has never had a job aside from waitressing and babysitting in college. She has no skills, no degree, and awful credit. Her husband basically squandered all his/their money and they are deeeep in debt. Like the government seized their passports deep (PDQ). She has lived a life of privilege - mansion on the beach, decades as a lady who works out and lunches, and its all coming crashing down.

The divorce has been a long time coming but her youngest is leaving for college in January and thats when she wants to officially separate (my BIL is aware, kids are not). For reasons I won't go into, my BIL isn't going to be able to help her (he is paying 6 figures in college tuition per year for the kids however). Sister really wants to rent an apartment near her 2 daughters college for a year (Boston-adjacent) while she gets her shit together and rebuilds her life. She's smart and has lots of connections from her life as a wealthy housewife, I do think she can land on her feet. 

Today she texted me that she was on her way to my dad's to ask him if he'd be willing to rent her an apartment for a year. Our dad is wealthy and also terminally ill (but relatively healthy despite being an 80 year old with uncurable lung cancer). She figured it would essentially be an advance on our looming inheritance. To her surprise (less to mine), he said no.

I'm considering renting her an apartment for a year, with the stipulation that she will pay me back when we get our inheritance or if any money comes from the sale of their home (which is doubtful, considering their debt). I'd get this in writing. I would also need to co-sign the apartment because of her credit, and would pay the rent directly. I have a number in mind ($2500 a month / $30k) which would get her a decent 1 bed apartment but by no means anything fancy. I would not be willing to say, pay $2500 a month on a $3500 apartment and trust her to pay the remainder. This would not cause us financial hardship, but I would absolutely expect the money back and am not willing to gift it to her. We're not super close, but she's in a shitty spot and I can help. 

Thoughts? Would it make sense to go to a lawyer to draw up something if I decide to go this route? Am I dumb for even considering this? 

[mccallister84]

Personally, I would not lend money to siblings. I would gift it or not do it at all. I just feel like this kind of thing always ends badly.

[scm1011]

Oct 4, 2024 14:14:51 GMT -5 mccallister84 said:

Personally, I would not lend money to siblings. I would gift it or not do it at all. I just feel like this kind of thing always ends badly.

Ugh, I figured this would be the MM advice. I'm not willing to give her $30K, but I do want to help. I'm also not willing to co-sign an apartment and trust her to pay on her own, so its basically all or nothing. She definitely cannot get an apartment without a co-signer and if my dad is unwilling, there is no one else unless she finds a generous friend. 

[mccallister84]

Oct 4, 2024 14:19:27 GMT -5 scm1011 said:

Oct 4, 2024 14:14:51 GMT -5 mccallister84 said:

Personally, I would not lend money to siblings. I would gift it or not do it at all. I just feel like this kind of thing always ends badly.

Ugh, I figured this would be the MM advice. I'm not willing to give her $30K, but I do want to help. I'm also not willing to co-sign an apartment and trust her to pay on her own, so its basically all or nothing. She definitely cannot get an apartment without a co-signer and if my dad is unwilling, there is no one else unless she finds a generous friend. 

I don’t know all the family dynamics so I understand that this may not be an acceptable answer at all but is it worth talking to your father and asking him to reconsider? Maybe he gives half and you give half? Or is he willing to be the co-signer?

Obviously it is very much within your father’s rights to say no, but based on the information provided that seems to be the most logical solution. I know he already said no so it might not be appropriate to approach him again.

[mccallister84]

Also it’s unclear from your post but is your sister working now? It seems like now is the time for her to start getting ready to live independently from BIL.

[scm1011]

Oct 4, 2024 14:25:56 GMT -5 mccallister84 said:

Oct 4, 2024 14:19:27 GMT -5 scm1011 said:

Ugh, I figured this would be the MM advice. I'm not willing to give her $30K, but I do want to help. I'm also not willing to co-sign an apartment and trust her to pay on her own, so its basically all or nothing. She definitely cannot get an apartment without a co-signer and if my dad is unwilling, there is no one else unless she finds a generous friend. 

I don’t know all the family dynamics so I understand that this may not be an acceptable answer at all but is it worth talking to your father and asking him to reconsider? Maybe he gives half and you give half? Or is he willing to be the co-signer?

Obviously it is very much within your father’s rights to say no, but based on the information provided that seems to be the most logical solution. I know he already said no so it might not be appropriate to approach him again.

I am going to call my dad this weekend and try to gently broach the subject of helping her. I am much closer to my dad than she is (its complicated - he was very abusive to us growing up, but he's a different person now and he and I have built a close relationship. My sister still holds a lot of trauma and isn't there. They see each other maybe 2x a year). If he knows I'm willing to help her out he may just step up instead. 

She has been nannying 2-3 days a week for the past year. She doesn't want to look for full time work until she knows where she's going to land (she is not currently in commuting distance to Boston, where the jobs area and where she wants to be). 

[jwright]

That's so tough.

Would you dad be willing to amend his will so that it stipulates that any money you've fronted to her would be distributed back to you before you split things as otherwise stated in the will? Just thinking out loud.

[simpsongal]

Talking to your dad makes sense, maybe he’d feel differently hearing you’d have to put your money in the line bc he won’t. Like he’s teaching her a lesson but not really bc you’re stepping up. Other thought- Could she find a room in a house for less rent? That just seems like a lot.

As for the loan, you could probably write something up that is adequate. If you make the loan contingent on inheritance you may never get paid back if there is no inheritance for her. I’d just go in with the understanding that you may never see a dime. Don’t tell her that but prepare yourself.

[expatjen]

My sister and I are very close and I would be willing to help her if she was in that type of situation. However, Iʻd also have a pretty solid contract written up and witnessed to specify how much youʻre going to give her, for what purpose and the timeline of repayment.

[laterz]

What about food, utilities? Will she be able to quickly find a job that will cover her expenses, minus the rent? What happens if she can't afford her expenses? Boston isn't cheap, though put a + in the pro- column for public transport.

I'm not necessarily saying it will be a problem, but it's not clear to me if that's been thought through.

[EvieEthelGarland]

Oct 4, 2024 16:08:27 GMT -5 expatjen said:

My sister and I are very close and I would be willing to help her if she was in that type of situation. However, Iʻd also have a pretty solid contract written up and witnessed to specify how much youʻre going to give her, for what purpose and the timeline of repayment.

Same, but to add, I would only do this if I was really truly ok with it ending up being a gift.  

[dr.girlfriend]

I would not be opposed to helping since it seems that you have the means, but to me the red flags are:

1. She's not looking for full-time work now. If she's really in a desperate situation, shouldn't she be trying to build as much of an emergency fund as she can? Is she selling high-value items she might have acquired?

2. You're both counting on that future inheritance. As someone who had an abusive dad myself, even if he is different now, I would not consider inheriting his assets to be a sure thing. He could live a number of more years even with his condition, he could decide to give everything to charity, he could meet a 20-year-old blonde and remarry...

3. What is the husband's financial situation now? Even though he is deep in debt, is he still making high salary to be shelling out extensively for college? Do they have retirement that your sister might be entitled to share?

4. My concern is that this may end up causing resentment on both your parts. If she doesn't change her champagne tastes to suit her tapwater budget, which seems likely to me, you will likely get irritated about that. If she sees you very financially secure and likely to inherit even more, and yet limiting the support you give her, she might resent that.

[heygrey]

I would need to see more proactive steps on her part now before I would be willing to loan/gift that kind of money. Nannying here and there because she's not in the place she wants to be to find a permanent job isn't a good look. If she's desperate to leave, she'll do what she has to now and readjust later when she moves. There is a better chance of her finding a good full time job in her current location with her connections that can then act as a reference when she moves.

Will any of the marital debt fall on her when they divorce? If she's responsible for some or half of it, it sounds like she's not going to be in a great place to pay expensive rent + debt repayment + basic living expenses. What happens when you stop paying rent in a year and she has no place to go? Will you feel like you need to give her another 6-12 months?

I would not offer her anything at this point and just let things play out a bit more. See how much she can figure out on her own and then step in if I still wanted to contribute.

[scm1011]

Thanks everyone. These are really good thoughts and I've had many myself. I don't have a ton of info on how or why they got into this debt, but a lot of of it is in public record and its in the 6 figures.

As far as the inheritance, that I have a lot of faith in. Several of my dad's accounts are jointly held in my name, and those amount to 7 figures. He has a live in girlfriend and has for years, but he's said he will never get married again. Who knows, that could change, but I doubt it. I plan to gift her the house they live in (which is also jointly held in my and my dad's name, separate from the 7 figures I mentioned earlier but also a 7 figure house). She's wonderful and my kids favorite grandparent and I want to take care of her when the time comes.

I do worry about how my sister will pay utilties and such. That would be a conversation for sure. And this would absolutely 100% be a one time deal. If she can't figure out her shit after 12 months I'm out.

I spoke to DH today about it after work and he's willing to help her out but asked I sit on it for a few weeks. He'd like her to try and figure it out herself before we offer anything up. I agreed that's a good idea.

[hazelden]

Could she be a live-in nanny in Boston? That would solve the job and housing situation. I'd think she could also try to get a part-time job or offer hourly babysitting for other families.

[wanderingback]

If the money really is no hardship for you and you won’t resent her if she doesn’t pay you back then yes I would loan her the money. I don’t have siblings but people loan money in my family and in my partner’s family with no problems.

[bee20]

I'm glad you are thinking of your total budget and timeline. I do also wonder about utilities and other budget items if she is truly destitute.

The "Loan not a gift" part is tricky. Are you thinking this because she's been better off than you this whole time, so you don't really want to gift large sums to her when she didn't when the tables were turned? Or is this more specific, like you could float her the $30k but need it back in time for your kid to go to college themselves? I would only do this if it's the former. If that's the case though, would you be upset if the inheritance didn't come for 15 years, but your sibling was back on her feet and living a nice life between now and then?

And finally, if you go forward with this make sure the lease is clear that your co-signing only applies to the original lease term. I saw this bite a friend who cosigned for a sibling, sibling stopped paying 2 years later, and she's on the hook indefinitely.

[livinitup]

I would wonder if your father has a reason to say no other than the broken relationship. I’d really ask. And then listen. He might have an insight that you are not aware.

On the surface, sure, it seems like there is enough money to get her on her feet for a year without being much of a hardship for you. I will add that I have been shocked that people who are bad with money (saving/spending) stay bad with money for a long, long time. And in strange ways I could not anticipate. Really strange.

I would wonder about her timeline. Her last child is leaving in January so she also wants to leave in January? Or is there a coinciding financial cliff that is also going to hit in January? Is there a reason (other than wanting to) that she has to leave in January before she builds a savings cushion? Would it all just go to her debt? Why isn’t her earnings in January (and after) not go to the same debt. I’ve noticed that debt management doesn’t usually result in the people in the management structure become homeless. Can she stay?

And I hope this isn’t mean to suggest, but if you don’t trust her to pay rent (so you will pay directly for a year), why do think she can do it after 12 months? I know **I** would feel like I hit rock bottom if my sister was paying my rent for a year and get **my** shit together, but why do we think she will? Why not just give her $30K and say good luck, sign your own lease, build your credit, the well is dry after this is gone? It’s the same thing and less messy. The sooner she has to face not being wealthy, the sooner she actually faces it, no? I get wanting to monitor it and maybe teach her, but does she want that oversight from you, welcome it, not spend stupidity anyway? And drive you crazy that she is relying on your generosity too much, spending too much?

Heck, you can loan her $15K for 6 mos and then $15K for another 6 months, right? Make it a low interest loan (or 0% interest) with really long/generous repayment terms. But terms you can enforce if you feel like you want to enforce it.

[konapoppy]

1. I would not expect to see a dime repaid. So I would move forward with that in mind.
2. Do none of her wealthy housewife friends have second homes or guest houses or guest rooms that she can stay in for a month or two until she finds a job?

I personally would struggle with finding too much sympathy in this situation after over two decades of a lavish, easy lifestyle with mismanagement.

Extending yourself for a one year lease seems like a LOT, especially when she has no clue what work she will get where. Maybe find a place that will do 6 months if you really want to?

[jobae1234]

She is not in a financial position to choose to move to the Boston area right now. She needs to pick somewhere cheaper. She’s still thinking like a rich person, making decisions based on what will be best emotionally without considering finances.

Also, there’s no way she’s gonna go from deep in debt with no skills, to making enough to afford $2500/mo rent in a year. So this 30k you’re spending is just kicking the can down the road.

I personally wouldn’t offer, and I’d see how it all shakes out.

Is her husband abusive? I’d be more proactive if he is, obviously.

I would 100% loan or gift my sibling that kind of money if I found their plan to be reasonable and I could give it freely, without caring how they spend money moving forward.

[sadlebred]

What happens when she can't pay her rent in 12 months? Do you just drop it and expect her to find a place to live or she becomes homeless? At that point caan she come live with you? If the answer is no...don't give her the money.

[origami]

Why a full year? Just curious. Why not just a few months?

[jobae1234]

Oct 5, 2024 23:12:23 GMT -5 origami said:

Why a full year? Just curious. Why not just a few months?

I assume it’s because she will cosign the lease for a year. Her sister can’t get a lease alone, so she needs a co-signer, and she won’t put herself in the dumb position of co-signing a lease she’s not prepared to pay.

OP I think the act of actually evicting your sister when she can’t pay in a year will be a lot tougher than you’re giving it credit for.

[origami]

Oct 6, 2024 8:29:53 GMT -5 jobae1234 said:

Oct 5, 2024 23:12:23 GMT -5 origami said:

Why a full year? Just curious. Why not just a few months?

I assume it’s because she will cosign the lease for a year. Her sister can’t get a lease alone, so she needs a co-signer, and she won’t put herself in the dumb position of co-signing a lease she’s not prepared to pay.

OP I think the act of actually evicting your sister when she can’t pay in a year will be a lot tougher than you’re giving it credit for.

are there no month-to-month places? (I wouldn’t co-sign anything I’m not prepared to pay either)

[brooke77]

This is such a tough situation. I help my older siblings financially, but $30K would give me pause.

- Has she met with a divorce atty? Is there truly zero expectation that her ex will provide temporary spousal support or alimony?
- This may be an unpopular opinion, but I don’t think the family should be paying for higher education if your sister doesn’t even have money for rent.
-Would your dad consider setting up a trust for her solely for living expenses? This would come from her portion of inheritance.
-If all else fails, I would try to write the contract you propose, but also have a heart-to-heart with her about all the extras (food/cable/internet/hair/nails/shopping). Her spending is going to have to majorly change, even if rent is covered for a year. And $2500 for a 1 bed in Boston seems low if anything. Rent is insane!

[RockNVoll]

I'm sure you've already thought of this but you have to go into this being OK with the fact that you might never see the money back. I agree with everyone saying she should be finding a job now, not waiting until things settle. If nothing else, it's a sign of good faith.

Hopefully your talk with your dad is productive, but assuming you do move forward how Boston-adjacent does she really need to be? I admittedly don't keep up with the rental prices around here but would something with a longer commute into Boston be cheaper (e.g. along one of the commuter rail lines)? There's no real reason she needs to be super close to her kids' colleges, is there?

[sadlebred]

Oct 6, 2024 13:59:48 GMT -5 RockNVoll said:

I'm sure you've already thought of this but you have to go into this being OK with the fact that you might never see the money back. I agree with everyone saying she should be finding a job now, not waiting until things settle. If nothing else, it's a sign of good faith.

Hopefully your talk with your dad is productive, but assuming you do move forward how Boston-adjacent does she really need to be? I admittedly don't keep up with the rental prices around here but would something with a longer commute into Boston be cheaper (e.g. along one of the commuter rail lines)? There's no real reason she needs to be super close to her kids' colleges, is there?

Also, are you ok going into this knowing you may never get out of it?

[scm1011]

Thanks again for the thoughts, everyone. I had a eye opening discussion with my dad this weekend and have decided against making this offer. When she came to him last week he asked her a lot of the same questions you all did here and her answers were...not great. It seems she is looking for a life raft without considering many of these hard truths. Also, my dad said he co-signed a car lease for her about a decade ago and she stopped paying and never told him. He ended up having to pay out the lease and never saw the money back. He advised her to go hard after child support and alimony while also securing a full time job ASAP. She is very hesitant to do the former because she doesn't want things to turn ugly for the kids sake (our parents divorce was very very messy), but I guess sometimes you need to make hard choices. BIL is a nice guy and I'll miss him but a lot of this mess is his doing so can't say I disagree with this advice. 

So, I'm just going to keep mum and let her figure it out. Thanks for pushing me to think of this from many angles.

[heygrey]

scm1011, I'm glad you got more perspective on the situation. I had a suspicion there was a lot more to the story, because there almost always is. You're a good sister for being willing to help her in the first place.

[wise_rita]

This is FASCINATING! She should sell her life story to Hallmark or something to make the cash she needs.

That said, a 48 year old woman with zero real work experience is not in a great place earnings-wise moving forward. I don't think her rich friends from her housewife days would be fruitful job connections.

Oof, what an absolute mess this woman is in. I can't tell if I feel sorry for her or not.