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Immediately tell your family and everyone involved in the wedding that the engagement is off. Likely, most costs your family and wedding party members have associated with the wedding can be recouped, to some degree, given enough notice. Although this is undoubtedly a painful and embarrassing time for the couple, that should not prevent them from being as responsible as possible.

Tell these people with as much grace as possible. Now is not the time for "trash talk". Your family and close friends will probably field questions about the broken engagement on your behalf, by giving them lots of the gory details, you are only increasing your chance of becoming gossip fodder.