Putting Family Loans in Writing for Estate Planning Purposes
Every individual is happy to assist a family member when they need it the most and it often times comes in the form of a money loan. Although it may seem uncaring to have the terms of the loan put on paper, it can prevent a major feud from occurring amongst your heirs upon your death.
An estate accounts for all of the assets that have been accumulated over your lifetime. An undocumented loan could result in chaos when it comes time to make disbursements to your heirs, as it can significantly reduce each individual's share. A written loan allows each of your heirs to receive their proportionate share, with the borrower-heir receiving less than his pre-determined share, after taking into account their loan balance. This is the most fair and honest approach to any family loan.
A family loan that is given on your behalf should state all of the terms including the amount loaned, any applicable interest rate and the repayment period. An estate planner will also need to be advised of any family loans so that your estate can be properly administered. For estate planning to be effective, your current financial picture, including changes to your assets such as family loans, need to be disclosed to the planner.
If the estate is not aware of a family loan, it would be up to the courts to decide the circumstances and facts of the advance. A family loan that is not in writing can be destructive to a family unit when the loan is brought into question. The loan's existence and terms can become debatable. A family member could end up saying that they owe much less than what is actually due, or they may change the repayment terms to make the loan more favorable to them. This can cause ill-will and undue friction among family relationships, which could have been easily avoided had a written loan agreement been established.
When you loan a family member money, it is advisable that the terms are stated in writing to prevent any issues in the future. It may be difficult for both parties to do so, but it is much more difficult to ascertain what actually occurred when one of the parties dies.
Be Sure to Set Up Long-Term Care Arrangements for Your Pet
Recently the Taco Bell chihuahua passed away. Remember him? Or I should say her as it was a female like most of the animal advertising icons. Take Spuds McKenzie for example. Old Spuds was kicked off the air because they said that she was so lovable that she encouraged young children to drink.
And the Taco Bell chihuahua was kicked off because of ethnic insensitivity when some Hispanics complained that he was a stereotype. Seems like animal spokesmen always get into trouble. I'm just waiting for something to happen with the Geico gecko.
But with all of the money that she made, I'll bet that the chihuahua had quite a bit of a little trust fund going for her. Unfortunately dogs that earn a lot of money on TV can't determine how it will be spent. Since they are not people, (despite what some people think), they can't earn any money.
A lot of people also leave their non-famous pets a lot of money when they die. They feel that they can trust the dog being in their will, but not the family. Therefore other arrangements must be made. A famous example is that of Leona Helmsley.
The press eagerly reported that she had left most of her substantial fortune to her dog. Not true. She may have wanted to, but the law would have prevented any of the money going directly to the pooch.
Instead she would have had to set up a trust fund just like an underage child, only when the child grows up he can collect the money, but not in the case of the dog.
According to St. Louis Pet Tails Magazine, a pet is considered to be a piece of property. They recommend that you not only set up short term verbal arrangements for the care of your pet in case you become ill or die, but also formal written instructions. If you don't the pet just may be euthanized when you die or become incapacitated.
You should have at least two people who are willing to take care of your pet. Wills can take six months to go through probate court and there will be no funds allocated during that time period to provide for the care of your pet.
So just putting your pet in your will is not enough. A separate trust must be established to take long term care for your pet out of the long legal process. Within the trust you can also specify how you want your pet to be cared for: food, medications, living requirements, housing, and training can all be specified specifically in the trust.