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Lending cash to family members can make things awkward, breed resentment, and even destroy relationships if they struggle to make payments or take the money and run.
Kevin O'Leary has a strict rule that lets him be generous with his wealth and help relatives — but stops them returning for more, and spares him from becoming their creditor or business partner.
The "Shark Tank" star recently shared his personal policy in a video clip posted across his social media channels. In it, he describes a member of his extended family hypothetically asking him for $150,000 to open a restaurant, but O'Leary doesn't want to partner with them as "that really ruins Thanksgiving dinner."
"So what I say to them is: 'Look, you've never asked me for money before, I'm going to give you, in that case, $50,000. It's not a loan, it's a gift. I never want it back from you on one condition and one condition only: you never ask me for money again — ever, ever. You never come to me again for money and we never talk about this again, ever."
O'Leary, whose nickname is "Mr. Wonderful," has taken a similar approach for years. He explained why in a clip posted to Instagram last fall.
"Money destroys families sometimes when there's too much of it; it just does," he said.
While family members should care for each other, "that doesn't extend to, 'Oh, I want to open a disco, I need $100,000,'" he noted.
"Well, no, I don't want to be in the disco business, and in the bar business, and the restaurant business — those are businesses I don't want to invest in."
"I've faced that in our own family and I've decided no loans, gift, never ask again," he added.
O'Leary told Business Insider last fall that expecting repayment can be problematic as loading people up with debt can worsen their financial troubles. He added that wealthy people can't take care of everyone, entitlement saps motivation, and he wants to spend his time as he likes instead of trying to make an ill-fated family business work.
