My Estranged Sister Wants To Borrow Money From Me — But I Don’t Feel Comfortable With That. What Should I Do?

Christy Bieber   Sun, August 11, 2024 Moneywise

Estrangement among family members is hardly uncommon — and money matters can often make the situation worse.

According to research cited by the American Psychology Association (APA), 27% of Americans over age 18 are currently estranged from a relative. Of that cohort, 10% reported an active estranged from a parent or sibling.

Coping with these consequences can be difficult under the best of circumstances. But what happens when your estranged relative — for example, a sister who is in dire financial straits — reaches out and asks you for help? An already tense situation can become even messier.

If you find yourself in a similar situation, there are a few things to consider before giving a response.

Put your financial security first

While offering financial help to an estranged relative may mend the rift, the more likely outcome could just spell more trouble.

In fact, a LendingTree study of more than 1,000 American adults found that nearly a third of respondents who lent or borrowed money from a family member reported negative consequences.

If you aren't close with your sibling, as an example, this rift in your relationship will likely only increase the odds that they won't live up to their end of the deal. You could find yourself losing money in the long run or encounter damaged credit if you co-sign for them.

In fact, more than a third of the lenders in the study have not been paid back, with 24% regretting their decision to loan money to their relative or friend.

Unless you're in a healthy financial position and have a genuine desire to provide a gift outright with no expectation of payback, avoid entangling your finances with an estranged relation.

Even if you do decide a gift is the right move, you may want to consider the reasons for their monetary request and whether you'll end up resentful about the interaction at a later date.

If they have a tendency to mismanage their money and are likely to be struggling financially again within a short amount of time, you’re likely going to be feeling worse about the situation than if the estranged relative had experienced an unexpected income loss, for example.

Because the stakes are high, proceed with caution when making your decision.

Offering to help in other ways

https://finance.yahoo.com/news/estranged-sister-wants-borrow-money-110900300.html