Look for each provider and ask what services they can offer and what services they can`t offer before you sign an agreement. They can also work with local lawyers and companies that offer similar services. Lenders may charge a relatively low interest rate. However, if you do not calculate interest or commissions below the market rate, the IRS may consider your loan as a “gift” and you, as a lender, could be on the hook of tax on the gifted. In order for your family credit not to be considered below market, you generally have to charge the applicable federal rate (AFR). Talk to your tax advisor before you commit to a sentence. You can also choose whether debts can be incurred upon your death by creating a free will (which we can also help you prepare). Otherwise, the loan will be maintained because of your estate. A family loan, sometimes called an intra-family loan, is a family loan. It can be used by one family member to borrow money or borrow it from another, or as a means of transferring capital – the end doesn`t matter.
It is just a loan that does not use a bank, a credit union or another traditional lender that is outside the family. Before deciding whether you want to continue lending to the family or borrowing it from the family, discuss the loan in detail. If the borrower or lender is married (or in a life-long relationship), both partners must be involved in the discussion. In addition to the borrower and lender, think of all those who depend on the lender, children or other parents who, for example, are under the lender`s tutelage. You should also consider whether you want a secured or unsecured loan agreement, or, in other words, whether you want to make a mortgage or reserve on your children`s property. If your children are in a relationship or working in specific areas subject to a higher rate of neglect claims (for example. B as a business owner or surgeon) and want to make sure you get your money back, a secure credit contract is best if you want to be placed in front of other unsecured creditors waiting for repayment in the queue. While you may not think it is necessary to commit to an agreement to protect your parents` interests, remember that the agreement could protect you if you are in a relationship that could end in a family law real estate colony. Before entering into an agreement, it is strongly recommended to contact a contract lawyer. Our lawyers at Beger and Co are there to support us, so don`t hesitate to call us. If you are a lender, you can guarantee your interest in a property resulting from a loan agreement by providing either a mortgage or a reserve on the borrower`s property. A simple loan contract describes the amount borrowed, whether interest is due and what should happen if the money is not repaid.