Yehuda Stern celebrated his bar mitzvah. In addition to sefarim, he received cash gifts and checks from relatives and friends.
“What should I do with the checks?” Yehuda asked his father. “I don’t have a bank account of my own.”
“We can deposit the checks into my account,” said Mr. Stern. “I’ll hold the money for you until you’re old enough to warrant your own account.”
Yehuda signed all the checks written in his name, and his father deposited them into his account. “The checks come to $4,250,” Mr. Stern told Yehuda.
Years passed by. As Yehuda finished high school and turned 18, he wanted to open his own account.
“Do you remember that you have my bar mitzvah money?” Yehuda asked his father.
“I certainly do,” replied Mr. Stern. “I’ve been holding it for you. Some was also invested.”
“How much was it?” asked Yehuda.
“I don’t remember offhand,” replied Mr. Stern. “It’s been five years, but I wrote it down.”
Mr. Stern checked his records. “I found it,” he told Yehuda. “The checks came to $4,250.”
“You said that some of the money was invested for me?” asked Yehuda. “I assume that money appreciated.”
“Yes, but I can’t tell you for sure how much,” said Mr. Stern. “It’s not that I kept your money separate. I’ll give you 6% per year on what you deposited in my account.”
“Excuse me for asking,” said Yehuda. “But is that okay? It sounds a little like ribbis to me.”
“That’s a good point,” acknowledged Mr. Stern. “I wasn’t thinking of that. On the other hand, although we deposited your money in my account, I wouldn’t quite say that I borrowed it from you. I’ll have to check.”
Mr. Stern called Rabbi Dayan and asked:
“Can I return the money to Yehuda with an additional amount?”
“The prohibition of ribbis applies even to loans between relatives,” replied Rabbi Dayan. “However, the question here is whether you deposited the bar mitzvah money for your own use meanwhile, to repay when Yehuda matured, in which case it is like a loan, or intended to hold Yehuda’s money in your account and invest it on his behalf, in which case it is like a pikadon (entrusted money).
“If you ‘borrowed’ the money, you cannot add payment when returning it. Although no interest was stipulated initially, so that it would not entail ribbis d’Oraysa, Chazal prohibited adding interest or giving a gift when returning a loan, even when not stipulated initially, and even when offered by the borrower in acknowledgment for the loan. This is called ribbis me’ucheres (post-facto interest) (Y.D. 160: 4, 6).
“However, if you held the money on Yehuda’s behalf as a pikadon and invested it for him in your accounts, his money justly earned the amount that the investments appreciated.
“When it is unclear whether the money was given as a ‘loan’ or as a ‘pikadon,’ there is room to be lenient, since when a person is unsure how much he owes, he can pay the larger amount if he wishes. It is not considered interest since he is doing this to fulfill his possible obligation” (Raavad in Temim De’im #60; Bris Yehuda 5:10).
“Nonetheless, it is preferable to give the additional amount some time after returning the principal, without stating that it’s for the money you held,” concluded Rabbi Dayan. “Chazal prohibited ribbis me’ucheres only when there is a link between the repayment of the loan and the additional amount, either verbally or through context. However, when two parties have a pre-established relationship, so that you might grant Yehuda a gift unrelated to any loan, it is permitted to add not in proximity to the repayment. Shach (Y.D. 160:10) writes that if the additional amount is substantial, we would correspondingly require that a significant time pass” (see Bris Pinchas, #13,79).
Verdict: If the parent intended to invest the money for the child rather than borrow his money, he can add a realistic return, but is better to add later as a separate, unspecified gift.
