Promissory Note For Loan To Family Member

Promissory Note For Loan To Family Member Template for Ireland

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Key Requirements PROMPT example:

"I need a Promissory Note For Loan To Family Member to document a €50,000 interest-free loan to my son for his house deposit, with monthly repayments starting March 2025 and a provision for loan forgiveness if I pass away."

Document background

The Promissory Note For Loan To Family Member is a crucial document used in Ireland when family members wish to formalize a lending arrangement. It serves multiple purposes: establishing clear terms for the loan, protecting both parties' interests, and ensuring compliance with Irish tax and civil law requirements. This document is particularly important for distinguishing loans from gifts in the eyes of tax authorities and providing legal recourse if repayment issues arise. It should be used whenever a significant sum is being lent between family members, especially when the loan amount exceeds annual gift tax thresholds. The document typically includes detailed repayment terms, interest provisions (if any), default conditions, and may also address circumstances such as early repayment or borrower hardship. For Irish tax compliance, it's essential that the document clearly demonstrates the intention for repayment.

Suggested Sections

1. 1. Parties: Identification of the Lender and Borrower with full legal names and addresses

2. 2. Background: Brief context of the family loan arrangement and confirmation that this is intended as a loan, not a gift

3. 3. Definitions: Key terms used in the document including 'Principal Sum', 'Interest Rate' (if applicable), 'Payment Date', and 'Default'

4. 4. Promise to Pay: Clear statement of the borrower's promise to repay the specified amount

5. 5. Loan Amount and Payment Terms: Details of the principal sum, payment schedule, and method of payment

6. 6. Interest: Specification of whether interest applies, and if so, the rate and calculation method

7. 7. Prepayment: Terms allowing early repayment of the loan

8. 8. Default: Definition of what constitutes default and consequences

9. 9. Signatures: Execution section with date and signatures of both parties

Optional Sections

1. Security: Used when the loan is secured against specific assets of the borrower

2. Death or Incapacity: Include when parties want to specify what happens to the loan in case of death or incapacity of either party

3. Loan Forgiveness: Include when the lender wants to specify conditions under which part or all of the loan might be forgiven

4. Assignment: Include when there's a possibility of the loan being transferred to another family member

5. Dispute Resolution: Include when parties want to specify how family disputes about the loan should be resolved

6. Tax Implications: Include when parties want to acknowledge their understanding of tax implications

7. Amendment Process: Include when parties want to specify how changes to the agreement can be made

Suggested Schedules

1. Schedule A - Payment Schedule: Detailed breakdown of payment dates and amounts

2. Schedule B - Interest Calculation: If applicable, detailed method for calculating interest

3. Schedule C - Security Details: If loan is secured, details of the security provided

4. Appendix 1 - Proof of Funds Transfer: Copy of bank transfer or other proof that the loan amount was provided

5. Appendix 2 - Tax Declaration: Optional declaration for tax purposes confirming this is a loan not a gift

Authors

Alex Denne

Head of Growth (Open Source Law) @ ��Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

alex.den.21@genieai.co

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