Intra-family loans are a tool that parents (and grandparents) can use to boost the status of future generations. Interest rates on these types of loans have been low for a long time and intra-family loans have been one of the interest-rate sensitive techniques used by estate planners to help wealthy clients transfer assets to the next generation. The low interest rates will be good until December, and there is currently a sense of urgency because the Federal Reserve is thinking about raising interest rates. When making loans to your children it is important for the terms to be clearly documented. One strategy that is discussed in this article involves combining an intra-family loan with an existing multi-generational family trust. It is important to speak with an experienced estate planning professional before making a decision about intra-family loans.
See Ashlea Ebeling, Tax-Free Transfer: Intra-Family Loans Are A Steal Now, Forbes, December 9, 2015.
Special thanks to Jim Hillhouse for bringing this article to my attention.
