Giving a relative a loan

balooney2000

I have an elderly relative who would like to a make a loan to another family member. This would just be an agreement between relatives and not involve legal documents.

If the person making the loan were to pass away what would happen to the loan - would it need to be repaid to the estate?

[Deleted User]

It depends on the terms of the agreement. If you have no terms, then no.

Arleen

Deleted_User wrote: »

It depends on the terms of the agreement. If you have no terms, then no.

What? Of course, it has to be repaid, as the loan is part of the estate, and executors of the estate will have the right to either collect it.

Of course, there is the whole thing whether anyone can prove the loan. Although my question would be different - since this is a loan, not a gift, why not sign a simple ten words long document that set terms of it? This way everyone is in the clear about what to expect.

And if it's a gift with "repay if ever able" clause then just make it so - a gift.

[Deleted User]

Arleen wrote: »

Of course, there is the whole thing whether anyone can prove the loan.

That's the bit. Without evidence, it's all 'he said, she said' and we have seen that many times on this forum. It undoubtedly 'should' be repaid, but unfortunately, it tends not to be done that way.

I would encourage some sort of formal agreement to be set up. Without it, there is nothing forcing the recipient to repay it.

oldhand

Dont believe you will find many on this forum would see much good in relatives giving loans.So many people come on here a few months later to tell how the relative who "absolutely swore their life away" would pay the loan back suddenly stops taking phone calls or just says sorry I cant pay you back.
The advice given seems to be give the loan if you are prepared and willing to never see the money back again..

GazHatesBanks

oldhand wrote: »

I lent my mother in law £5000 to take a round the world tour,shes come back now could you give her another £5000 to go elsewhere this time??:D:D

Surely you only want her to go half way round the world so £2500 would be enough? :whistle:

AnotherJoe

balooney2000 wrote: »

I have an elderly relative who would like to a make a loan to another family member. This would just be an agreement between relatives and not involve legal documents.

If the person making the loan were to pass away what would happen to the loan - would it need to be repaid to the estate?

It doesn't need to be a "legal" document. They could sign a simple set of words acknowledging its a loan, the circumstances under which it will be repaid*, and even better have a friend / neighbour witness it.

* no interest, or 5% interest, or 25 payments of £20 monthly or as and when possible but balance by by January 2024, whatever

robber2

Far better to simply call it a gift, family fall outs are then far less likely :-)

ERICS_MUM

oldhand wrote: »

I lent my mother in law £5000 to take a round the world tour,shes come back now could you give her another £5000 to go elsewhere this time??:D:D

How much would a one-way ticket to Mars cost you ?

iolanthe07

My wife 'lent' her brother £5000.00 last year. We won't ever see it again. You have to treat family loans as gifts, and if you do eventually get something back, then it is a nice surprise.