MY RELATIVES ARE ASKING ME FOR CASH

Dear Coleen

I’m 84 and I desperately need some advice.

Some members of my family want me to lend them a lot of money – one wants to pay off a mortgage and the other two need a deposit for a flat.

I’m worried about where I’d stand with the taxman if I make these loans and what happens if they don’t pay the money back?

How do I prove it’s a loan and not a gift? What’s your opinion?

Coleen says

First of all, you clearly feel uncomfortable about lending this money, so listen to your gut instinct. What’s really bothering you about this? Do you think they’re taking advantage of you?

Because of your age, I think you have to be very careful to leave yourself with enough funds to cover the cost of care in the years to come, should you need it. And it can be very expensive.

Before making any decisions, I’d get legal and financial advice to see where you stand.

If you did decide to lend any money, then you can get a legal letter drawn up with terms acceptable to you, including how long it should take to pay back the loan and if it’s to be paid back monthly or annually, for example. It’s important you protect yourself.

Don’t feel pressured into lending any money to your relatives because you think you should.

Only do it if it’s something you feel you want to do and if you can afford to have that money gone from your account and still have a fund for a rainy day when you might need it.

I’d love to know how you get on.