When you are down on your luck often times the first place you will turn to for a little financial help is the Bank of Mommy and Daddy. Especially for those little to absolutely zero interest rates. But don't fool yourself into thinking that loan is a gift that doesn't need to be paid back because it could come back to haunt you later on.
Sure, most of us would like to think that our parents would give us some money when we need it without any strings attached. And that there is no expectation to repay that money. However, and unfortunately, a lot of family members will take advantage of another member with more money and just say; 'Hey, they've got plenty, they'll never miss this x amount they've 'loaned' to me.' But don't ever think for a second that just because a parent doesn't hassle you to return the money that they have forgotten about it. Be aware of the possibility that they may include you as a creditee of their estate when they pass away. If this happens, be prepared they will offset any amount owed to the estate from any gifts made to you as a beneficiary. It could even happen that you end up owing the estate after all assets have been distributed.
If you do have a child or relative that might be in need of financial assistance, and you are willing to help them out, consult with a Trust Attorney about the possibility of setting up a trust to loan or to outright gift assets to family members.
*This blog entry was not written by an Attorney and should not be constituted as professional legal advice.