How can relatives confront contentious money concerns without dynamiting family ties? Because personal finance is as much personal as it is finance, we asked experts from a range of disciplines—finance, law, psychology, and even preschool education—to address common family money scenarios. Here are a couple you may have encountered with your siblings. We’ve also added our own practical advice. 

Lender Beware

You and your wife lent $6,000 to your sister-in-law three years ago when she needed emergency cash. And while she promised she’d pay it back quickly, those good intentions haven’t translated into action. You’ve mentioned it several times to your wife but she doesn’t want to bring it up with her sister. She’s asking for your patience, which is wearing thin.

A financial therapist’s take. Family loans can be fraught and can fray relationships, says Megan Ford, a financial therapist and coordinator at the ASPIRE Clinic, a counseling center at the University of Georgia in Athens. To help protect your marriage, at least, she says you could help your wife feel more comfortable about approaching her sister. Start by having a discussion about your money goals as a couple, Ford suggests, and talk about how you might be able to use the money owed to benefit your family.

If you think it will help, show that you can be flexible about when and how you get repaid. If that works, decide how to approach your in-law together. Choose a neutral location like a casual restaurant for the discussion. “You could tell her, ‘We have several goals for the future, like funding our retirement, and were hoping that the money we lent you could be put toward these goals,’” Ford offers. Suggest a repayment plan, and be willing to negotiate the terms.

A judge’s take. “A promissory note would be great to have because it puts on paper the terms of the loan,” says state district court Judge John Roach in Collin County, Texas, and co-author, with his wife, Laura, of “Divorce in Peace: Alternatives to War From a Judge and Lawyer” (Wheatmark, 2016). “But keep in mind that if the family member does not pay the money back, the person loaning the money would have to sue to enforce the promissory note."

“As a compromise, you could agree with your wife that a portion of the loan is a gift that doesn’t have to paid back,” Roach adds. But whatever you do, don’t go directly to your sister-in-law to collect what’s owed. “It puts your wife in a bad position,” he explains.

Roach adds that the money shouldn't be lent in the first place unless both spouses have agreed to do so.

CR says: A 2016 survey by iLoan, an online personal-loan originator, found that half of debts to family or friends aren’t fully reimbursed, including 14 percent that are never paid back. If you’re considering making a family loan, go to nolo.com, which sells an online, printable, do-it-yourself promissory note for $34.99. 



Roiling Real Estate Rivalry

You and your two siblings inherited the lake house where your family spent many cherished summers. But now, arranging who gets the July Fourth weekend—and whether you, your banker sister, and your struggling artist brother should pay the same amount for a new roof—makes you behave like nursery schoolers.

A nursery school teacher’s take. Having an impartial mediator can ensure that everyone feels heard and respected, says Jennifer Dawber, director of the Days of Wonder Child Care Program in Dobbs Ferry, N.Y. That’s especially true when one sibling dominates or another hangs back. “There has to be someone who’s authoritative and who understands everyone’s situation,” Dawber says. “Just as in nursery school, the person who doesn’t speak up still needs to be heard.”

Like the teachers Dawber supervises, a mediator can set the terms of the conversation and keep it on track. Hiring a professional with no ties to the family might ensure that negotiations seem fair. That said, the resolution doesn’t have to be equal to be fair, Dawber notes. One sibling could, for instance, cover this year’s property tax in return for four weeks in August. Another could be the contact for all contractors and get dibs on Memorial Day weekends.

“The teacher of my 4-year-olds has a sign in her classroom,” Dawber says. “It reads, ‘Fair isn’t everyone getting the same thing. Fair is everyone getting what they need.’ ”

A wealth manager’s take. To make sharing a piece of real estate with your siblings work well, “everything needs to be equitable in terms of sacrifices and rewards,” says Christopher White, a wealth manager based in ­Salem, N.H., and co-author of “Working With the Emotional Investor: Financial Psychology for Wealth Managers” (Praeger, 2016). “Start by talking with your siblings about who wants in and who wants out,” he says, explaining that those who want out can be paid with a lump sum or over time, using a minimum IRS-approved interest rate that allows participants to avoid the federal gift tax.

Those who still want to use the lake house have to agree to an arrangement that all believe is fair, White continues. “For instance, if one sibling’s financial investment in the house is greater, that person should have dibs on more or better vacation dates,” he explains. “Perhaps the sibling who can’t afford as much pays with their time or labor, such as by checking up on the house when it’s not occupied or painting the place. If the financial contributions are already equal but the beef is about vacation dates, agree to rotate the schedule. One family gets Fourth of July 2017, the next family gets 2018, et cetera.”

White suggests drawing up a written agreement that includes a trial period, so if someone doesn’t come through with his or her share of the maintenance or tax money, you can renegotiate.

CR says: Ask a real estate attorney to create a co-tenancy agreement among the owners (also known as tenants in common, or joint tenants). It will lay out rules of the home’s ownership and management, plus a buyout plan if one or more siblings want out. To find a family mediator, search the website directories of professional groups such as the Academy of Professional Family Mediators or the American Arbitration Association’s site, at mediation.org. Hiring a property manager to collect the money and handle the payments can save money in the long run and preserve family relationships. A real estate agent can help you find one.

Editor's Note: This article also appeared in the May 2017 issue of Consumer Reports magazine.