Lending money to a family member is a simple but effective estate planning strategy.
So says a story on jdsupra.com, which says the IRS often scrutinizes such transactions to make sure they are not gifts.
For that reason, the story says, it is important to treat the loan just like an arm’s-length transaction between unrelated parties.
That means charging an interest rate at or higher than the applicable federal rate, executing a promissory note and taking steps to collect payments.
The move allows high-net worth parents to move assets out of their estate
If you have questions about estate planning, feel free to contact us for a consultation at (626) 696-3145.
