A Guide to Lending Money to Family Members

Put the terms in writing, and take steps to avoid tax complications.

- BY ELLA VINCENT

IF your adult child or another family member asks you to lend them money—say, to pay for a wedding, a down payment on a house or some other major expense-you may be eager to assist. And with a solid plan in place, an intrafamily loan can both provide your loved one a low-cost way to borrow money and give you the satisfaction of offering a helping hand. But as you decide whether and how to extend a loan, keep in mind that there's a chance you won't get the money back-and if that happens, your relationship with the borrower may suffer. You should never lend more money than you can afford to lose.

Settle on the terms.