Gifts, Loans and Purchases

What is it? A gift, loan or purchase?

If you provide money to someone, you need to agree and record in writing whether that money is a gift, a loan or a contribution towards the price of an asset.

Gift

The Donee needs to get an acknowledgement from the Donor that the payment is a gift and that the Donor is not acting under duress or undue influence (especially where the Donor is old and frail and the Donee is looking after him). The Donor needs advice on Inheritance Tax consequences.

Loan

Both of you need to record the triggers for repayment (a date or future event), any time allowed to raise the money, interest rates and security (in case the Borrower goes bankrupt).

Purchase price

If the money is to go towards a purchase, then you both need to record the percentage shares, rights to force a sale and what happens on death, divorce, falling out etc.

If you do not do this, arguments about the nature of the transaction can happen later ö not necessarily between the original parties, but between one of them and the relatives (after death) or Trustee (after bankruptcy) of the other.

Call Michael Breeze on 07900 195 195 or call 0845 270 2511 to set up an appointment