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Wednesday, October 20, 2010

How to accept money from your relatives

This article in the Wall Street Journal talks about the family politics, legalities and other considerations that come into play when you accept a loan or a gift from family members. I think the author hit the nail right on the head.

One thing that I would add from an estate planning perspective is that if you are accepting money from your parents, ask them to include a statement in their Will about whether or not they expect it to be paid back. And if you're the parent lending money to a child, include this in your own will.

Including a statement doesn't mean that you must forgive the loan, in fact it can be the opposite if that is your wish. The purpose of including it is to avoid that huge debate that erupts when a parent passes away and the kids find out that one has had money from the parent. A brief sentence in the will (that doesn't even have to name the amount of money) is enough to head off the dispute.

Click here to read the article.

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