With the rise in families helping finance younger generations into their first home or to buy a business, the need for family members to sensibly document the financial transactions between them has also increased. This is especially important to consider when it comes to a person’s estate planning desires, so that there is clear documentation as to what moneys different family members may owe each other and the terms of those advances. It is always sensible to, at a minimum, enter into an acknowledgment of debt between the family members so that there is at least a written and signed record of the financial transaction taking place. Where the amounts of money are more substantial, or where the family member(s) lending the funds require some form of assurances they will get their funds back, the use of formal loan documents and mortgage documents provide an even better level of protection for the lender than a basic acknowledgement of debt. Care needs to be taken when entering into these types of arrangements, and Prudentia Law is here is assist to ensure appropriate documentation is in place for such family arrangements.
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