My parents want to give me money to do some dire repairs on my home. I feel uncomfortable in taking the money just like that, considering they have one other son. I would prefer to have it as a loan for 5 years, interest free, to be paid back in monthly installments, with supporting paperwork. This way if anything happens, it is known what is already in my possession, etc.

One of my neighbors has had their lawyer, another family member, write something up and I was wondering if I should do the same.

I contacted a lawyer and he basically said that if I have a good relationship with my parents all I need a handshake or write it on a napkin and would not need a promissory note.

What are your thoughts and the tax/financial obligations?

If your parents want to give you a gift, and you express a wish to return the gift at some time in the future, a handshake and a grin is fine. In all other agreements involving money, especially between close friends and relatives, everything should be formalized in writing. This will prevent misunderstandings, and help to preserve relationships. Your lawyer friend should know better than to offer such poor advice. Should you default on that debt and go BK, I believe that the paperwork could substatiate your parents claim for a "bad debt" tax write off.

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Originally Posted by vinny65

My parents want to give me money to do some dire repairs on my home. I feel uncomfortable in taking the money just like that, considering they have one other son. I would prefer to have it as a loan for 5 years, interest free, to be paid back in monthly installments, with supporting paperwork. This way if anything happens, it is known what is already in my possession, etc.

One of my neighbors has had their lawyer, another family member, write something up and I was wondering if I should do the same.

I contacted a lawyer and he basically said that if I have a good relationship with my parents all I need a handshake or write it on a napkin and would not need a promissory note.

What are your thoughts and the tax/financial obligations?

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Go to a good stationery store and ask for a Promissory Note blank. They should have a blank form where you can fill in the amount, interest rate and the parties to the loan.

Always do it in writing, things that are good today can turn very bad very fast. Hopefully it never will but it can.

Next it also protects the money from being considered a gift ( thus falling under the gift tax laws, and income, falling under the income tax laws)

As stated you don't need any lawyer, any office supply store like staples and the such have them with fill in the blank, or even better computer disk with 100's of legal forms for personal use.