If you loaned one of your children some money...

[lionfamily1999]

No it's not complicated. Your mil loaned you the funds directly, not via the trust, so the trust does not dictate your personal agreement with her. They need to mind their own business. If the loan were officially directly from the trust, paperwork would have been a legal requirement for the trustees to disperse the loan. It was not so it is not. The end. Unless the brothers are running some shady trustee goings on, in which case their crooked self can go ... Get more crooked.:)

 

Trustees manage the fund. That does not mean that your mil has no voice in how her own funds are used.

:iagree:

Okay...so...{deep breath}, I have to borrow another $4500 to pay the second semester. Mother-in-law knew this, and was fine with it. I have a credit card, I just don't use it because the interest rate is too high. I'm wondering though, instead of borrowing from mil again, is there a reason I should not just apply for a credit card that has 0% interest for the first year, pay the charges off the credit card at the same rate as I am now (within 5 months), and then I not only won't be paying interest, but I won't have the brothers involved?

I'd talk to my mil, tell her what her son is doing and then ask if it's alright with her if you borrow the money from her. She may be happy to do this and make your life easier (like Library Lover wrote, this is a pleasurable thing for many parents to do for their children, or in her case a Gramma to her grandchild).

Have you mentioned the brothers involvement to your MIL? What does she say about it? It could be that they are abusing their position as trustees and overstepping? She might actually be very angry to hear of them doing this.

 

I wouldn't want a family feud, but it really sounds like they either think you are taking advantage of her or they are. She needs to know.

 

I would avoid the credit card if possible and if you can feel okay with the clear understanding you have with MIL. In fact, you might mention to MIL and BIL that it doesn't make sense to pay her interest when you can get a credit card sans interests. You are simply trying to avoid messing with your credit.

:iagree:

[HRAAB]

It would depend on whether I was in need of the interest I was earning on that money. When I dh bought his first house, his parents loaned him $10,000. They used the interest off that amount to help with living expenses (fil had just retired). So my dh paid them interest on the loan.

 

If I didn't need the interest, or it wasn't enough to worry about, and the loan was being repaid in a relatively short amount of time, No, I wouldn't charge interest.

[Miss Sherry]

I (thru my dh) borrowed $4500 from mother-in-law to make up the shortfall for ds's college tuition. We didn't make any arrangement for how much I'd pay back each month, but I've been sending $1000 because I'd like the debt *gone*. I have $1500 left to pay, and one of my dh's brothers has now mentioned that I need to pay interest. I think it's fair for me to pay interest in theory, but since I wasn't aware the loan came with "terms", I admit to being slightly disgruntled (even though I *know I shouldn't be*). Because I don't have a credit card, and I don't borrow money under ordinary circumstances, I have no idea what is a fair amount of interest to pay. :confused:

You said you borrowed the money from your mother-in-law but your dh's brother is saying you need to pay interest. You didn't borrow the money from your dh's brother so the terms are not up to him. I think you should just continue to pay it as you have been and don't worry about interest unless your mother-in-law brings it up, since she is the one who loaned the money to you.

One more comment. In case it ever comes up that you borrowed money from your mil at a later date be sure to keep proof that you repaid it just in case some of the relatives ever try to make an issue out of it.

Edited November 15, 2010 by Miss Sherry

[Chris in VA]

I don't get the whole trust thing.

Did mil get bil involved because she only had trust money to give you, and then perhaps she thought the paperwork was his responsibility?

 

It does sound fishy, like maybe she either isn't being given access to her own money or your bil isn't doing right by the paperwork.

 

I think I'd just continue to pay your mil and then just go directly to her (do not pass Go, do not collect bil's interest! :D) for the next loan.

 

If he mentions the interest again, just tell him that was not the arrangement with your mil, and that there was no paperwork, so you know it didn't come out of the trust.

[Laurie in Life]

I agree that if the money came from non-trust assets, it's between you and your mother-in-law. FWIW, my folks loaned money (I'm not talking $20) to many of their children during adulthood and there was always a modest interest rate involved, primarily so as to avoid any issue of it being a gift in the IRS' eyes further down the line, if something happened before it could all be paid off.

[KidsHappen]

I wouldn't but I guarantee that if any of my younger children lent me money, they would charge me interest. :glare:

[DarlaS]

I think I'd just continue to pay your mil and then just go directly to her (do not pass Go, do not collect bil's interest! :D) for the next loan.

 

 

:iagree:

 

I would like to add that I hope you've been paying her by check or something you can keep track of and prove.

[DarlaS]

Is it possible that the money was withdrawn as a loan from some sort of investment?

 

We have borrowed against our 401k a couple of times, and had to pay it back (even though it was our own money) with interest. Maybe some other investments are set up the same way (I don't know though--just spitballin' here) It's not a lot, but sometimes that's the way it's handled.

[Tammyla]

No.

[Julie in CA]

I don't mind paying the interest. Honestly, I would have tacked it on myself when I made the last payment. I guess I'm embarrassed maybe, and somehow thought it wouldn't be something the brothers would bring up for discussion. Somehow it feels like them mentioning interest on such a small amount is slightly petty. Clearly I'm just having personal issues. :tongue_smilie: I'm going to forget the rest, and just focus on how blessed I am to have the money instantly loaned, because that is indeed *huge*, and I'm extremely thankful for it. :001_smile:

[Murphy101]

I don't mind paying the interest. Honestly, I would have tacked it on myself when I made the last payment. I guess I'm embarrassed maybe, and somehow thought it wouldn't be something the brothers would bring up for discussion. Somehow it feels like them mentioning interest on such a small amount is slightly petty. Clearly I'm just having personal issues. :tongue_smilie: I'm going to forget the rest, and just focus on how blessed I am to have the money instantly loaned, because that is indeed *huge*, and I'm extremely thankful for it. :001_smile:

 

Of course if you can and want to, no problem.

 

I agree it is not only petty, but out of line, for them to mention it to you AT ALL. It is not their money and they were not involved in the lending. They seriously need to either mind their own business OR I'd lean towards concern that they aren't handling the trust appropriately.

 

A sore spot for me having dealt with that issue before.

[NanceXToo]

Absolutely not.

[tex-mex]

Dh's parents have done this for us in past times in emergencies. And yes, they charged interest -- but % less than the bank. We'd paid them back plus interest.

 

When the ILs were newly married, MIL's mother did the same policy to them. She'd loan them money but with a written contract and interest on the loan. Our family motto is if it is a $ gift, then no repayment is needed. DH's gift from parents was his college tuition. He had to get a job to cover books, room and board. Another gift was they paid for his first car as a teen. But he was stuck with gas, license & reg fees, and insurance. ILs in turn have been very generous to us with funding their only grandchild's college education. No loan on that. They also buy his curriculum and pay for classes as a gift too. They are more generous but have also made loans to us -- why not earn interest on it? It just would sit in the bank earning interest too.

 

If it is a LOAN, it is paid back with interest. Family is more important than money -- but money can cause hurt feelings if you are not open with it either on terms and conditions. I'd do the same with son. He knows mom and dad are not ATM machines. He needs to go to college and get a good job to support his family. But in a pinch, we're there for him financially too. Some help is a gift and sometimes it is a loan. Just be honest with each other and don't use it as ammunition with family arguments.

Edited November 16, 2010 by tex-mex

[amey311]

We've loaned money to good friends, but always with a loan agreement. DH is the money manager and always includes an interest free period, usually 3 months. This way, those very short term loans work out fine for both of us: we're paid back quickly and the borrower doesn't have to pay interest. Longer than that and interest is charged.

 

If you're going to deal with the BILs for the next loan, you could write up a loan agreement with similar terms and see if they'll agree to them. Then they'll know you're not just skipping out on $4500 (or that they'll have legal recourse anyway) and you won't have to deal with them complaining about it because you have a written agreement that you're upholding.

 

Who knows - maybe they're just bent that you're accessing their "inheritance" and they want that money to play with. Maybe they're just grouchy people.

[sleepymommy]

No, I would not.

 

If I was the borrower, I would probably pay back a little extra. But I would do this of my own accord, I know my parents would never ask for interest.

 

If your MIL did not tell you that you had to pay back with interest then you shouldn't feel the need to unless you wanted to. I would ask your MIL directly and bypass the brothers altogether.

[Knittinfarmgirl]

I wouldn't since it's such a short term.

[ChristusG]

No, definitely not....it's what family is for. :001_smile:

[RoughCollie]

I would not charge my child interest for a loan.

[texasmama]

No, I wouldn't charge interest.

[Dandelion]

No, I wouldn't - not for that short of a period of time.

:iagree:

[LaissezFaire]

I don't believe in charging family interest. I would choose who I loan to wisely but I would never ask for interest.

[tex-mex]

I (thru my dh) borrowed $4500 from mother-in-law to make up the shortfall for ds's college tuition. We didn't make any arrangement for how much I'd pay back each month, but I've been sending $1000 because I'd like the debt *gone*. I have $1500 left to pay, and one of my dh's brothers has now mentioned that I need to pay interest. I think it's fair for me to pay interest in theory, but since I wasn't aware the loan came with "terms", I admit to being slightly disgruntled (even though I *know I shouldn't be*). Because I don't have a credit card, and I don't borrow money under ordinary circumstances, I have no idea what is a fair amount of interest to pay. :confused:

If it helps, our family policy is that it is no one else's beeswax what money dealings are between siblings and parents. We don't ask if ILs are more charitable to DH's sister, for example. It is none of our business.

 

You sound very responsible to pay off the loan promptly. Do the final payment and then allow MIL to talk to you if interest is needed. Ignore the BIL. That is just rude.

[Laurie4b]

Assuming you had plenty of money, and you loaned your adult child $4500, and they paid back $1000 a month, every month, on time, would you charge them interest? If so, how much?

 

No, I would not charge interest.

[kalanamak]

When I borrowed money to pay off my moderate interest loans (school loans), I did so IN writing, with 3% interest, from my folks. They offered it. Because of this and that, it was better for me to keep paying the 3% for a few years, and then my parents "called" the loan to help out another sib without borrowing themselves. I could and did pay it off.

 

The "in writing" part is the crux. I hope your MIL will tell them it was a verbal between you, and no interest was intended.

 

Is this a step-mother to these brothers or something?

[lionfamily1999]

I don't mind paying the interest. Honestly, I would have tacked it on myself when I made the last payment. I guess I'm embarrassed maybe, and somehow thought it wouldn't be something the brothers would bring up for discussion. Somehow it feels like them mentioning interest on such a small amount is slightly petty. Clearly I'm just having personal issues. :tongue_smilie: I'm going to forget the rest, and just focus on how blessed I am to have the money instantly loaned, because that is indeed *huge*, and I'm extremely thankful for it. :001_smile:

I think it is petty. It smacks of, "You should have come to us, we are the gatekeepers," imo.

 

I don't think you are having personal issues.

 

Focusing on blessings, though, is always a good answer :p

[ChristineW]

No it's not complicated. Your mil loaned you the funds directly, not via the trust, so the trust does not dictate your personal agreement with her. They need to mind their own business. If the loan were officially directly from the trust, paperwork would have been a legal requirement for the trustees to disperse the loan. It was not so it is not. The end. Unless the brothers are running some shady trustee goings on, in which case their crooked self can go ... Get more crooked.:)

 

Trustees manage the fund. That does not mean that your mil has no voice in how her own funds are used.

 

That's not always the case. After my dad died, his life insurance and corporate stock (he was an low level executive in a big company) was put into trust with my mom and the kids as beneficiaries. Two uncles are trustees, but my mom can take a certain amount of money from the trust without their approval. In fact, she used the trust to help pay for my wedding--she just wrote a check to us for 10k b/c it didn't exceed the limits set by the trust. The check would show up in quarterly statements so my uncles would know. If your MIL doesn't have her own income, she probably would have withdrawn it from the trust. BIL should mind his own business on such a small amount. Maybe he's mad at your Dh about other trust business.

 

Our FIL loaned us money for a down payment (the sale fell through) and he expects to be paid back with 2% interest.

[katemary63]

No, I wouldn't - not for that short of a period of time.

 

:iagree: Longer, maybe. That short, no.

[cindergretta]

It sounds like you have come to a good resolution. But I do think the whole thing sounds off & boundary-less. :glare:

 

My father and my mil have loaned us money on occasion throughout our marriage. We make the payments on the loans. But every. single. time. they have each *reduced* what we owe to allow part of it (as much as they could) to be a gift. We never expect that and are happy to pay back the entire amount. But they are also happy to help us out. :001_smile: The money that passes around between mil and us and mil and bils OR dad and me and dad and my sister is always private. No one else ever knows about monetary gifts or loans.

 

(I think both my dad and my mil would have a heart attack if the idea of charging interest were floated! :lol: )

[Catwoman]

You sound very responsible to pay off the loan promptly. Do the final payment and then allow MIL to talk to you if interest is needed. Ignore the BIL. That is just rude.

 

:iagree::iagree::iagree:

 

Sounds like your BIL has some jealousy issues...

 

You borrowed the money and are repaying it promptly. Your MIL never mentioned interest, so I don't think you need to mention it. Perhaps you could buy her a lovely thank you gift to include with your final payment to her, but I don't think anything more is necessary.

 

If your BIL mentions anything about it again, tell him it's none of his concern, because it isn't, and if he has a problem, he needs to discuss it with his mother, not with you.

 

Cat

[tex-mex]

Perhaps you could buy her a lovely thank you gift to include with your final payment to her, but I don't think anything more is necessary.

 

 

That is a wonderful idea! I know my MIL would be thrilled to have a gift or card added to the final payment as a token of thanks.

[nd293]

If the loan was to help the child resolve a problem that resulted from irresponsible behavior, I may charge interest at below market rates and I may put the loan in writing.

 

If the loan is for a major purchase (car) or school for a person who otherwise has been very responsible with money then I might not charge interest at all.

 

 

 

:iagree:Although if the amount is being paid back so rapidly, then even if there was some initial irresponsible behavior I'd have to assume a lesson was learned. In other words, this case - no interest. In general - depends on what the money is needed for.

[OrganicAnn]

I would not charge interest because of the rapid repayment.

 

If they were going to pay over a longer period, I would charge 5% interest (nice round number and similar to what bank interest rates are). So for $4,500 the interest for the first month would be about $19 and would decrease each month based on the principal.

[nono]

nice round number and similar to what bank interest rates are

 

For an unsecured loan? Where? I want in!!!!

[RanchGirl]

Since she made the loan without mentioning interest and you are paying it off so quickly, I wouldn't worry about interest. When you make the final payment, I would take her out to lunch or send her a thank you gift.

 

Before the next loan, I would ask for clarification *from her* if she wants interest or not. Or, just go elsewhere if BIL is making any kind of stink about it.

[kalanamak]

 

Sounds like your BIL has some jealousy issues...

 

 

Cat

 

OR: BIL is trying to protect MIL from yet another BIL who will seize on this to take advantage. OR: BIL is trying to make sure everything is absolutely by the book fair for all, and so decrease the "well HE got this, so I get that" mentality after MIL dies.

 

My whole family was delighted my brother-who-would-gnaw-his-arm-off-before-being-unfair-or-breach-his-fiduciary-duty was made executor of my mother's estate.

 

What does your hubby say??

[PygmyShrew]

My dad loaned me $5000 when I was just out of college. He didn't mention interest but I insisted on paying him 7%. Figured it was the least I could do for him helping me like that. I kept nagging him about accepting the interest and told him I'd either pay him it or buy him a $350 gift. Since he knew i'd buy him the gift, he relented and finally agreed to the 350$ cash.

[melissel]

I think it is petty. It smacks of, "You should have come to us, we are the gatekeepers," imo.

 

I don't think you are having personal issues.

 

Focusing on blessings, though, is always a good answer :p

 

:iagree: Ew! to what BIL did. But I do think you're facing your feelings well about this, and yes, focusing on blessings is always good :D

 

 

Okay...so...{deep breath}, I have to borrow another $4500 to pay the second semester. Mother-in-law knew this, and was fine with it. I have a credit card, I just don't use it because the interest rate is too high. I'm wondering though, instead of borrowing from mil again, is there a reason I should not just apply for a credit card that has 0% interest for the first year, pay the charges off the credit card at the same rate as I am now (within 5 months), and then I not only won't be paying interest, but I won't have the brothers involved?

 

I'll be frank, though. I'd rather do what you described here than take the chance on any bad feelings cropping up among family members. It sounds like this BIL has a power thing going on, and that would tick me off. I know myself, and I know plenty of people with power issues, and I just wouldn't want to mess with it if there was another option. If I could pay the tuition using the credit directly, I'd probably go with that. However, if you can't do that and would have to take money from the card as a cash advance (which typically results in big fees), then no, I'd have to deal with the family finance dynamics as best I could. Just for whatever that's worth to you!

[Julie in CA]

What does your hubby say??

Dh is fine with it all, but he always thinks the best of family, and doesn't seem to notice the small, cutting remarks that are sometimes exchanged among other family members. I will, no doubt, be the talk of the sisters-in-law for a small while. S'okay. I'm a big girl, and ds's education is worth a bit of discomfort. I should have anticipated the expense years ago and planned accordingly. We figured on State U, but ds ended up at a small Christian liberal arts university instead.

 

I wish the brothers-in-law had not mentioned it, and that they would have assumed the best of me, knowing that I am one of those people who'd rather gnaw their own arm off than be unfair. Some of dh's brothers would be delighted to get a loan from mom and not pay any interest, and they are probably projecting that on me a bit, making sure I know they're watching, kwim?

[missesd]

I would never charge interest of any kind, no matter when (or if) they paid it back. Family is family, no if's, and's, or but's about it.

[StephanieF]

Personally I think that the fact you are using it for ds's education and not a holiday is enough reason for no interest to be charged!

Stephanie

[eternalknot]

If I had plenty to give, I'd do just that - give. No loan, no interest.

 

Having read your second post, I'd probably offer it (knowing she'd likely decline). I'd be vague when asking, and leave it up to her to determine the amount (if any): "I'm making my final payment. Should I include anything for interest above and beyond the original loan amount?"

 

The BIL is taking a lot of heat here. I don't know him from Adam, but my first thought was that he was That Child that was always a bit uptight about the details and whatnot. Type A. The perfect personality to make sure the trust remains, uh ... trustworthy :) He's not concerned with being everyone's friend, just being the best executor (or whatever they're called) he can be - even if that means tactless inquiry into the activities persued on behalf of the trust. You'd know better than we, though.

 

Sometimes I think people who didn't grow up with big families aren't familiar with the dynamics of them. It's not always as easy to chuck people off or dismiss them, and this is especially true of larger sibling sets -- particularly when has spent a lifetime being an older sibling with certain expectations and behaviors outlined for them. Those tendencies don't magically disappear once all siblings become "equal" once they've all reached adulthood!

[jld]

No, I wouldn't charge interest.

 

When I was in college, I borrowed $600 from my sister to go to counseling (I saw her counselor). A year and a half later, I paid her back the $600. She told me I was the only person in our family who had ever paid her back money she had lent them. I never thought the money was a gift, but a loan, and wouldn't have considered not paying her back. I also never thought I needed to pay her interest, until reading this thread just now.

 

We lent my other sister $1500 to pay her rent 17 years ago, and I told dh then that we should only lend it if we were willing to not be repaid. She actually did pay us back, plus the $20 I gave her for diapers. She asked us what interest we wanted, and I told her nothing (I was shocked she even asked).

 

I don't believe in interest on loans to friends and family, either. But I do think the money should be paid back.

[nono]

Sometimes I think people who didn't grow up with big families aren't familiar with the dynamics of them. It's not always as easy to chuck people off or dismiss them, and this is especially true of larger sibling sets -- particularly when has spent a lifetime being an older sibling with certain expectations and behaviors outlined for them. Those tendencies don't magically disappear once all siblings become "equal" once they've all reached adulthood!

 

:iagree: We're all over the place with answers, but the question changed as more info was given.

 

I'm esp. intrigued by the last post by Julie, which indicates that other brothers might not get an interest-free loan from their Mother, so then why should your husband be the favored child and get one? Seems like your MIL may be the root cause of this problem by not giving everyone a clear set of rules. (This is where people say "Money causes problems in families," but it isn't money causing the problem but people not having clear terms.)

 

Maybe your MIL gives the first loan at no interest. Maybe one of the brothers has borrowed many times, and therefore MIL started charging him interest. But by not making it clear to all what her parameters are, it can cause a lot of hurts among the siblings.

 

Oh, and does your husband have some inkling about how it is supposed to go, via family history and nuance, that you, as the money manager for your family, aren't understanding? I think I'd take my lead from my husband on this one, as he may not even be able to articulate to you all the ins and outs and whys...

 

Anyway, :grouphug:, and bottom line, I'd approach it like this:

1. Leave the first one as is. Pay no interest.

2. Since you have the second loan coming up, talk! "I appreciate the first one interest-free, but let's set up an official loan with a bit of interest for this second one. I think it's best for the family if we are all clear on the terms."

3. Since you will already have a history of good repayment, expect a good, "family" rate of interest. Way back in my first post on this, I mentioned 5%. I think for a short term loan, this is extraordinarily fair to the lender, since a 6 month CD yields 1% right now.

 

I'm very much in favor of intra-family loans, as I think it's insane that the average unsecured loan from a bank right now is at 12%. It can really work out, if everyone is clear on the parameters. And paper trails are very nice in that regard. :)

 

Good luck!!!

Edited November 16, 2010 by nono

[Ester Maria]

Hmmmm. I don't know if your hope should die a bit. I know entire networks of individuals who further their businesses and personal interests by private loans, outside the banking system. They only involve family and close friends, because who else can we verify would be that reliable, as you note?

 

They are win/win situations as the lender gets better rates than a bank would give, and the borrower gets better rates than a bank would give. Both sides benefit. And if someone is in a dire situation, well the lender can always simply forgive an existing loan or offer a gift. I've seen that happen several times in my life so far.

I get what you're saying, I really do, but it still sounds deeply wrong to me. It's probably a cultural thing, after all; many people here wouldn't see a problem in what, to my eyes, equals robbery of your own kin and would think I exaggerate.

 

I just can't fathom seeking personal gain when it comes to family / close friends. Of course, a gift is also an option, but then we enter the complex net of personal pride, people being possibly even insulted if you offer one and if bigger amounts of money are involved (again, this might be a cultural thing too), etc. To sum it up, I like "short reckonings make long friends" system: lend/borrow, give/get back as soon as possible, no interest, no mention, all on bona fide. That's what we practice. :)

[jld]

I don't think it's cultural, but individual. That's my opinion, anyway.

[Ester Maria]

I don't think it's cultural, but individual. That's my opinion, anyway.

I didn't mean cultural as in Italian in this instance (though I bet most of them don't do it either), I meant cultural as in Jewish. ;) It's actually forbidden, by the religious law, to take an interest in some cases (which have historically basically fit "family and close friends" description, even if today it gets more tough with all the assimilation), and I guess that even those of us who opted not to be religious were way too indoctrinated with that way of putting things so even nowadays we cannot step out of it. (I'm not a religious person, I don't operate with the concept of "sin", but if there are a few things which "embody" the concept for me, one of those things is certainly profitting out of your own kin's troubles.)

Edited November 16, 2010 by Ester Maria

[Sahamamama]

Assuming you had plenty of money, and you loaned your adult child $4500, and they paid back $1000 a month, every month, on time, would you charge them interest? If so, how much?

 

No, not for that length of time and that amount of money.

[Trish]

What would be the purpose in charging the interest?

[mom2denj]

No. If they are paying it back on time, then they are doing good. Think of it as a no interest loan for a few months.

[hsmom]

I would not charge interest whether it took them a short amount of time or a long time. They are my children not a business transaction. If they needed money loaned to them they would get it loaned to them and they would pay me back when they could.