Lending money to family is usually done with good intentions. A prime example is when parents help their kids buy their first home in a competitive and expensive market. However just because they’re family, that doesn’t mean they can, or intend to, pay it back. When lending money to family, proceed with caution.
There are numerous media stories about the perils of lending to family. In extreme cases, families end up opposing each other in court. This happened to Marian and Trevor Warin, who sued their daughter, Colleen, over an unpaid loan of more than $360,000 in 2017. As is all too common, the terms of the loan were never formally documented, and the parties expectations regarding the funds were clearly unaligned.