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Dear Quentin,
I have (or, I should say, “had”) a wealthy benefactress who gave me money six years ago as a gift.
Now her financial situation has changed (she’s down to her last several million) and she texted me last week that she would like the money she “provided” (her words) back — adding that I won’t have to pay interest, “if that helps.”
My partner had five strokes
Nine years ago, I had several tough life scenarios that blindsided me. My partner broke his neck and suffered five strokes, and I became a full-time caregiver.
Additionally, my adult child developed serious, incapacitating mental illness and came to live with us, placing intense strain on me personally.
Although I operated on a tight shoestring budget, I was at the beginning of starting a new business. I actually worked two outside jobs to fund the business and carry the financial obligations of my entire household. I was getting by, but definitely not what one would call thriving.
One of the jobs I performed allowed me to work with and gain a new client who was going through a bad divorce. In getting to serve this client, and being generous and compassionate by nature, I spent extra time listening to this sad and brokenhearted person.
One day, of her own volition, and totally unexpectedly and unprompted, she let me know she wanted to help me financially. She offered to give me some of the money she had received in her divorce settlement, because she said she could afford it and she felt I had helped her in a way that was above and beyond.
In her words, she said, I “saved her life.”
‘I made it clear I was not seeking a loan’
The amount she offered was $75,000. I let her know I appreciated her kind offer, but that I’d never be able to repay that amount — or, for that matter, any amount.
In other words, I made it clear I was not seeking a loan.
She asked me to reconsider it, because it would mean so much to her to be able to help me. After discussing it with a few trusted friends and my partner, my position changed. I replied that as long as we were both clear and willing to sign an agreement that this was a gift, not a loan, and that it was not expected to be repaid, I would accept her help.
The very next day, she came to my home with a check for $75,000. We signed the letter.
There were no stipulations on how that money could be spent, nor were there ever any terms such as interest.
Her circumstances changed dramatically
For six years, the woman has never worked, and her alimony is about to stop. She has to sell her marital home, just appraised at $900,000. She is in a financial panic.
Meanwhile, my business is getting stronger. But in 2020, due to COVID-19, two-thirds of the operation had to close down for seven months.
I pivoted, decided to downsize, and am now moving out of state to save costs and revive the business post-COVID (or however the virus ends up).
So the day I am moving, I get a text from the woman stating that she needs me to repay the $75,000 she provided me, but will not charge interest.
Of course, I reminded her that this money was freely given and was never a loan, and that we signed an agreement. I added that pursuing me would be fruitless, as I own no property and have no assets and am working 12 hours a day to rebuild after the COVID setbacks of 2020.
My question is: Do I have anything to worry about in terms of owing this woman the money she gifted me, simply because she has had a change of circumstances?
The Giftee
You can email The Moneyist with any financial and ethical questions related to coronavirus at qfottrell@marketwatch.com, and follow Quentin Fottrell on Twitter.
Dear Giftee,
There is no such thing as free money.
The best response in situations such as this — where you feel torn — is to trust your gut. Your moral compass told you not to accept this $75,000, but you needed the money and she was persuasive so you accepted it. She was a client, and it’s unclear if she — even subconsciously — believed she would receive friendship in return for the money.
Given that you intended to invest the money in your business and could not guarantee its return, signing the gift letter protects you, assuming that she was of sound mind and you don’t make any imminent attempts to repay it. Gift letters are most often used in the mortgage process and they are, for better or for worse, legally binding agreements.
The circumstances of your acquaintanceship is murky. You say you spent time listening to this sad and brokenhearted person. That was your cue: She was in no place to be giving away such a large sum of money to someone she hardly knew. She too must have done some listening for you to share your own trials and tribulations with her.
I don’t doubt that you lost sleep in an attempt to keep your business afloat, but you also took the time to divulge the details and, as such, it’s hard to accept your statement that you were freer to accept this money because she offered it without any prompts. You may not have asked her for the money, but you gave her enough information to offer.
The former client will likely pay the price of $75,000 to learn a valuable lesson: Don’t act impulsively and try to save the world, especially when you are going through something as traumatic as a divorce. The price for you, I believe, is to be brutally honest about the complex circumstances leading up to the day you signed the document.
Whether or not she has worked in six years is irrelevant. The one thing she does not deserve — $75,000 gift or not — is your judgment.
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