Sometimes our children or close family members run into a financial bind and need to borrow money. In many cases, both the lender and the borrower assume that this money will be paid back quickly. But what happens if the person who is the lender, who is often an elderly parent, dies before the loan is repaid?
In my experience, this is when the family feud begins. The borrower will say this money was a gift to them and no repayment of this loan is required. The other beneficiaries, frequently the borrower’s siblings, will feel it is a loan that should be repaid from the borrower’s inheritance.
What can you do to avoid this devastating situation? Talk to an experienced Estate Lawyer.
If your intention is to have money provided to your children by an advancement on their inheritance, the amounts you have advanced should be clearly documented and you should have a clause in your Will saying these advancements are to be taken into consideration when the estate is divided up.
If you are going to “gift” this money to the borrower, then your estate documents should clearly indicate these funds were a gift and you may want to consider “gifting” money to your other beneficiaries to avoid hard feelings.
We understand that this is a complicated situation, which, if not handled correctly, can cause the destruction of one of your most prized possessions- your family.
If you have questions or concerns about lending or gifting money and the implications on your estate plan call our office. Our experienced estate lawyers are here to help!