Lend to Family for Estate Planning?



Lending money to a family member is a simple but effective estate planning method.

So says an article on jdsupra.com, which points out that the IRS often scrutinizes such transactions to make sure they are not gifts.

For that reason, it 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.



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