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Your Brother (or Sister or Mother) Is Asking for Money. Now What? - The New York Times

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As a financial adviser, Elyse Foster helps clients navigate tricky personal issues around managing their money. But the coronavirus has brought an extra layer of complexity — especially where family is concerned.

One client lent a newly unemployed sibling $10,000. But that good intention went awry quickly when the client later learned that his son needed money, too. “The son resented the father for not realizing” it, said Ms. Foster, chief executive of Harbor Wealth Management in Boulder, Colo.

Other gainfully employed clients who have relatives in sudden need of financial help are also confronting minefields over whether and how to lend.

“We’ve had parents who are maybe considering making loans to one child, and another child will say, ‘So he’s getting rewarded for spending too much, or not working, or making bad decisions?’ Ms Foster said. “We’ve seen families almost torn apart since the pandemic.”

As the coronavirus continues to dismantle livelihoods across the country, advisers can expect family financial dramas to keep surfacing, according to a new survey from Commonwealth, a nonprofit group that researches financial opportunities and security for the financially vulnerable.

The survey, conducted in late April, collected responses from 944 people throughout the United States with household incomes under $75,000. Among them, 16 percent of those who had been permanently laid off reported receiving more financial support from family or friends than they had before Feb. 1.

The rules for how much to lend and when, if ever, to expect repayment are being written in real time, like so much of life during the pandemic. “Twenty percent of people will call and say, ‘Can I afford to do this?’” Ms. Foster said. “But the other 80 percent are very determined and have already committed to making a loan. So we’re immediately thrown into ‘Where are you in the process, and how is the loan going to be paid back?’”

Worries that relatives will be more generous than they can afford to be may not be misplaced.

“It depends on how close the family members are, but some won’t bat an eye to lend more than they should,” said William Carrington, an adviser in Fort Lauderdale, Fla., who works with U.S. Foreign Service workers.

For example, when one of his moderate-income clients was asked to lend hundreds of dollars to a sibling in her 40s who had been laid off from a blue-collar job because of the virus, the response was an instant yes.

“There was a real expectation on the part of the sibling, like, ‘You have a steady job, so you kind of owe me,’” Mr. Carrington said. His client, also in her 40s, had been saving to send her children to college. But she immediately set that goal aside.

Mr. Carrington did not try to dissuade her. “As a certified financial planner, I’m not allowed to convince,” he said. “You just explain the consequences.” But like Ms. Foster, he would have preferred that his client tell her relative the ramifications of her loan in specific detail, to avoid misunderstandings.

Relatives “should make it known what they gave, and the effect on them of what they gave,” Ms. Foster said. “Let’s say I have six to nine months of emergency reserve money. If I gave you three months of it, I could tell you: ‘This is what I saved, and this is why I need it back. I could be in trouble without it.’ That way the recipient understands this isn’t funny money.”

Mr. Carrington recommends a tight cap on dollar amounts. “If you get a call that so-and-so can’t make rent this month, and you have $35,000 in emergency funds and the rent is $2,000, you could draw a red line where you say, ‘I can’t get below $25,000 in emergency funds, so I can afford to help you another four months if you need it, but that’s as far as I can go,’” he said. “If you have that kind of conversation, you’re not in the position where you get a call one day and you have to abruptly say, ‘I can’t help anymore.’”

Repayment plans should also be laid out before money leaves a bank account, financial professionals say. But even then, lenders should prepare for lapses.

“In this situation, with Covid specifically, reflecting on would you be OK if you never got this money back is probably a good idea,” said Mariel Beasley, co-founder of the Common Cents Lab, a financial behavior research lab at Duke University. “People tend to be over-optimistic. They plan a best-case scenario, where they say, ‘Great, they’ll be back to work in two months and they’ll be able to pay me back 50 bucks a month.’ They forget unexpected expenses and setbacks can happen.”

They may also forget that resentments can pile up alongside them. Mr. Carrington has seen clients whose relatives begrudge them their savings for a post-virus vacation.

“They’ll say, ‘Why can’t you cancel that?’” he said. “When that happens, mostly you want to calm them down and say, ‘I’m not going to let you starve.’”

  • Frequently Asked Questions and Advice

    Updated June 22, 2020

    • Is it harder to exercise while wearing a mask?

      A commentary published this month on the website of the British Journal of Sports Medicine points out that covering your face during exercise “comes with issues of potential breathing restriction and discomfort” and requires “balancing benefits versus possible adverse events.” Masks do alter exercise, says Cedric X. Bryant, the president and chief science officer of the American Council on Exercise, a nonprofit organization that funds exercise research and certifies fitness professionals. “In my personal experience,” he says, “heart rates are higher at the same relative intensity when you wear a mask.” Some people also could experience lightheadedness during familiar workouts while masked, says Len Kravitz, a professor of exercise science at the University of New Mexico.

    • I’ve heard about a treatment called dexamethasone. Does it work?

      The steroid, dexamethasone, is the first treatment shown to reduce mortality in severely ill patients, according to scientists in Britain. The drug appears to reduce inflammation caused by the immune system, protecting the tissues. In the study, dexamethasone reduced deaths of patients on ventilators by one-third, and deaths of patients on oxygen by one-fifth.

    • What is pandemic paid leave?

      The coronavirus emergency relief package gives many American workers paid leave if they need to take time off because of the virus. It gives qualified workers two weeks of paid sick leave if they are ill, quarantined or seeking diagnosis or preventive care for coronavirus, or if they are caring for sick family members. It gives 12 weeks of paid leave to people caring for children whose schools are closed or whose child care provider is unavailable because of the coronavirus. It is the first time the United States has had widespread federally mandated paid leave, and includes people who don’t typically get such benefits, like part-time and gig economy workers. But the measure excludes at least half of private-sector workers, including those at the country’s largest employers, and gives small employers significant leeway to deny leave.

    • Does asymptomatic transmission of Covid-19 happen?

      So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement.

    • What’s the risk of catching coronavirus from a surface?

      Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks.

    • How does blood type influence coronavirus?

      A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study.

    • How many people have lost their jobs due to coronavirus in the U.S.?

      The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April.

    • My state is reopening. Is it safe to go out?

      States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people.

    • What are the symptoms of coronavirus?

      Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days.

    • How can I protect myself while flying?

      If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.)

    • What should I do if I feel sick?

      If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.


Self-scrutiny, Ms. Foster said, can go a long way toward preserving relationships tested by newly rocky financial ground.

“Before you make the loan, think about what your intent is,” she said. “Is it a gift, or is it a loan?” If it’s a loan, she advises writing a formal note about the terms and filing it with a third party. “And then let it go. Don’t bring it up at holiday dinners. Don’t give reminders. If you can’t do that, we suggest you not make the loan at all.”

A sliding scale of expectations may be key to keeping the peace, she added. When a client recently asked her to transfer $10,000 to his stepchildren, who had agreed to a loan with interest attached, he told her that he didn’t expect the stepchildren to comply.

“He said he thinks he isn’t ever going to get the money back,” she said. “And I bet he’s right. With familial lending, oftentimes it doesn’t.”

Still, Ms. Beasley said people financially hobbled by the virus should borrow from family if they could.

“If the person lending is going to be OK if that money doesn’t get paid back, I say by all means, that is a better loan option for people than going through a formal financial institution, which won’t provide as much flexibility,” she said.

As the Covid recession deepens and Americans turn to whatever resources they can tap to pay bills, they may find that relatives’ flexibility is cushioned with greater compassion.

“What’s unique about this financial crisis is its cause — a virus beyond any individual’s control,” said Melissa Gopnik, senior vice president at Commonwealth, the organization that found the uptick in borrowing among laid-off workers. “It appears to be bringing people around to the idea that everyone has a role to play in people’s financial challenges, including the government, employers and financial institutions.”

Despite what Mr. Carrington predicted would be years of hurt feelings within families, especially if one relative is perceived to have more money than the rest, Ms. Gopnik sees a silver lining. “I think this crisis has brought us to a moment of collective empathy,” she said.

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