Loans from Family Members

Los Angeles family attorneyBoth assets and liabilities are a part of the marital estate in a divorce proceeding. However, loans made by relatives can make for complications in determining the value of the marital estate, particularly if it is not clear whether they are actually gifts. A family attorney can provide direction on whether to include such loans.

Loans vs. Gifts

Loans are usually easy to valuate, for the couple has a record based on their monthly statements. However, a loan from family members may not have any such paper trail. It may have been repaid with cash without receipts; indeed, a payment may not have been made at all.

A common example of such a loan is when the parents of a spouse provide a down payment on a house. This is often done as a means of helping the couple get established, but if no money is ever repaid, there is little to determine whether it was in actuality a gift or loan. Indeed, the money may have been a gift contingent upon the couple’s remaining together.

How Loans Can Be Determined

Your family attorney may suggest the following criteria to clarify whether money is a loan as opposed to gift:

  • Regular payments were made
  • A written agreement exists
  • Both spouses agree it is a debt
  • A third party is involved to manage the debt
  • Attempts at collection were made

If none of these criteria helps show the money is a loan, and therefore a debt in the estate, it may be regarded as a gift and not included.

If You Need Legal Help

Lisa Zonder is a dedicated and compassionate family attorney who will help you through this difficult time. If you are seeking a divorce or have further questions, call Zonder Family Law to arrange an appointment today at 818-309-7059.