How to Transfer a Loan to Parents

When it comes to talking money with family, a child reaching out to parents for financial support may seem awkward but expected. Flip the script, however, and it can be fraught with discussion.

While it may be more socially acceptable to give money to your adult children , Kathleen Burns Kingsbury, an expert in wealth psychology, says that in fact, children quite often help their people financially as they age, especially if they are not in their best health. But it’s a deal that can often be associated with shame. “No parent wants to [get older] and be financially dependent on their children,” says Kingsbury.

This is especially true if your parents are older people who may not be used to talking about money or needs. This is why it is important to approach the situation with empathy and tact.

Let go of your emotions

“It’s important to try to get rid of your emotions or get a feel for what you’re going to feel before starting a conversation,” says Kingsbury.

If you ask your parents to help them, think about what you want to say and offer specific examples of why you would like to help them. For example, you might say that you’ve noticed a stack of unpaid bills or that they are cutting back on certain activities they used to enjoy. Ask if they need your help.

“You want to make sure that you allow them to feel in control, to maintain some dignity,” she says. “Sometimes you ask your parents and they are really relieved and you talk.”

Here’s how Kingsbury suggests approaching the situation, as described in her book Breaking the Monetary Silence :

  • First, feel your feelings . “We can have all sorts of emotions about our parents getting older, so you can talk to a friend or counselor and, having done that first, by the time you approach your parent, you’ll think it over.”
  • Then lead with loving intent . “Let’s say you’re upset and scared, you walk in and you’re not ready – no one will be receptive,” she says. “So plan … tell them that you are starting to worry and would like to help them.”
  • Finally, give them time and time to make a decision . “You may have been thinking about this for three months, but this may be new to our parents,” she says. “Sometimes parents just need a little time to think about it.”

Explain that you just want everyone in the family to be in the best possible financial position and ready to help them during difficult times, just as they were probably there to help you in the past.

Plan as much as possible for the future

If you haven’t reached the crisis stage yet, then you have time to start these conversations before the situation gets dire. Discuss with your spouse what your plan will be if your parents need help, then broach the topic with your parents.

“It’s not always convenient, but it gets less awkward over time,” says Kingsbury. Then, when an emergency strikes, you will be ready.

Set your terms ahead of time

Kingsbury says this is a situation that might be like a child asking for money – you want to be open and transparent and set ground rules – except that it’s more of a cash gift than a loan. But if it’s a loan, set specific rules for where the money goes and when it gets paid back to you.

“Proper transaction processing will help you better get over the embarrassment of applying for a loan and make sure you do everything you can to mitigate the potential disadvantages that borrowing and lending with family and friends often lead to,” says Carla Deering, CEO Sum180. , financial wellness online service.

The last thing you need to do is turn help into controversial things in your family. Fortunately, according to Kingsbury, this can often lead to a closer bond between parent and child.

“People feel closer to the other person, it can often be really pleasant, intimate,” says Kingsbury. “You just have to be careful to meet everyone’s needs.”

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