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Family Finances

Should I Lend $50,000 to My Brother-In-Law?

Is it possible to lend money to family without it affecting the relationship for the worst? Plus, what to do in case of a banking error in your favor.

My brother-in-law got laid off, and his job search isn't going well. He has approached me for a $50,000 loan to help his family get by (they have almost no savings). I am well off and can afford it, but I'm worried about how this might affect our relationship, especially if he can't repay it. My wife and I feel for his wife and kids and want to help. Any advice?


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More Ethical Advice from Knight Kiplinger

Helping a relative in this way is compassionate, but it will indeed affect your relationship if the loan sours (and even if it doesn't). There should be a written agreement on repayment, which should start when your brother-in-law has income again. If you fear that he won't manage a lump sum wisely, you could advance him and his wife the money gradually -- perhaps a monthly amount that would cover their home and car payments and some other essentials.

Another approach: Make gifts instead of loans. You and your wife can each give to each of his family members up to $13,000 a year with no tax consequences on either side. Tell him you have no expectation of repayment. You might be surprised that he gives some of the money back to you when he's able, out of pride and gratitude.

May I keep it?

My bank made a $1,000 error in my favor, which I brought to their attention -- twice -- and offered to repay. They said they'd look into it and debit my account, but it's never happened. May I keep the money?


Yes. You made an honest attempt to correct the error, and the bank dropped the ball. You needn't keep trying. I trust that you have a record of whom you talked to and when, just in case the bank discovers the error and tries to say you did something wrong.

After some time has passed, consider doing something creative with this windfall that isn't really yours, like giving it to a favorite charity -- without taking the tax deduction.

Have a money-and-ethics question you'd like answered in this column? Write to editor in chief Knight Kiplinger at