Case study lending money to family
Gwen lends her son $80,000
68, has lived by herself since her husband passed away. Her son,
Joe, recently asked her to lend him $80,000 so he could set up his
Gwen is worried about lending Joe the money, but she has
retirement savings and wants to help him. She contacted the
Centrelink Financial Information Service (FIS) for free advice, and
the FIS officer made an appointment for her to see a local welfare
agency for financial counselling.
Gwen met with the financial counsellor, who helped her work out
how long her reduced retirement savings money would last. The
counsellor advised that, if Gwen still wanted to lend Joe the
money, she and Joe should both sign a written agreement.
The agreement would have to be checked by a legal professional.
It would have to detail whether Gwen needed to be repaid, by when,
and if interest was to be paid. This would prevent any
disagreements about the loan in the future.
Gwen decided to go ahead with the loan, and contacted the FIS
again to see how the change to her finances would affect her
'My husband took care of our finances until he passed away, so
it was quite stressful having to arrange this loan for Joe,' Gwen
said. 'But I think it will help get Joe's business off the ground,
and with his second child on the way, I thought he could really do
with a helping hand.'
Last updated: 12 Aug 2015