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More people are dealing with financial disparity amongst siblings.

Yes. A lot of middle-aged adults are familiar with the  “sandwich generation” conundrum—partially supporting both their kids and their parents, but what about when the turkey in the sandwich wants some cheese?  In addition to getting hit up from the younger and older generations, some people find themselves managing financial requests from siblings.

Experts say that the struggling economy has led to more brotherly/sisterly loan requests in the baby boomer generation. Lost jobs, housing troubles and divorce are all hitting just as boomers’ prime earnings years are coming to a close.

Of course, we all know the old adage, “charity starts at home,” and many of us are more than happy to help a brother or sister in need. But what is reasonable? And how do you set limits and boundaries so you don’t feel your sibling is taking advantage of you? The trick is to manage expectations on both sides to avoid frustration and resentment. Money gets complicated when it gets emotional.

Can you offer some basic guidelines when dealing with a request for financial assistance from a sibling?

Absolutely. First of all, if you don’t want to assist your sibling or feel you are not in a position to do so, simply be honest about it. A firm, “I’m sorry, but no” is hard to argue with. And never lend more money than you are comfortable losing. You need to protect your own financial well being first. Never sacrifice your retirement.

If you do wish to help, the first rule is to be clear. A cash gift is just that—a gift. Unless you specify exactly what that money should pay for, you cannot expect to control how it is spent, so that means you have to keep it to yourself when your sister goes to the Bahamas on your dime. A loan is a different matter. A small loan is less likely to be repaid and you might as well consider it a gift or ask for a favor from your sibling in return. Maybe they can help you with a household project.

What about larger sums of money?

When it comes to more substantial loans, a pinky swear is not going to cut it. Always put an agreement in writing, for everyone’s protection. If you have a written record that specifies amounts and dates, you will be less likely to face issues in the future. Be clear and professional. Siblings know exactly how to push our buttons, and a black and white business agreement helps everyone resist the urge to make passive aggressive or sideways comments. The last thing you need is a conversation about money that devolves to name-calling and the airing of decades-old resentments.

You can outsource the “nag factor” as well. There are a handful of lending firms that have helped facilitate hundreds of millions of dollars’ worth of deals between family, friends and even strangers who want to pay lower interest rates. One example, National Family Mortgage, says its sibling-to-sibling refinance deals have more than doubled since 2009. This type of peer-to-peer company provides paperwork and loan scheduling and helps lenders formalize the deal, avoid bank fees and sidestep potential gift-tax pitfalls.

The limit is $13,000 per donee for 2012, so if your brother has a wife and kids, you could give him more without triggering the gift tax, as you could give $13,000 to each individual. And if you are married, double that, as you and your spouse can give each person $26,000.

What if you’re financially comfortable and you want to help a sibling—for instance, with their child’s education—but they are resistant to accepting it?

All you can do is offer. Write a nice letter (so the offer is on the record) saying how much pleasure it would give you to contribute to little Suzie’s education. Mail it, and then let it go.  One benefit of your generosity: If you pay the tuition directly to the institution, the gift tax is not applicable. The same goes for medical expenses paid directly to health care providers.