Loan to Son Should Be Structured Like a Business Deal

Bruce Wiliams
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Posted: Mar 29, 2017 12:01 AM
Loan to Son Should Be Structured Like a Business Deal

DEAR BRUCE: My husband and I recently refinanced our home in order to loan our oldest son $16,000 to help him pay off debt that he accumulated when he started his own business. What steps should we take to keep this strictly a business deal? -- K.P.

DEAR K.P: You are wise to make this strictly a business proposition with your son. What he will have to do, at the very least, is give you a second mortgage on his home. You will have to execute a note that will be due at a certain time, or that will renew at a certain time that you all agree on.

He may not be able to pay you until he starts making more money, and that may be four or five years down the line. You will have to decide on how much time it could take.

By all means, have an attorney prepare the documents that seal this deal. Tell the attorney what you are trying to accomplish and that you want this to be strictly a business proposition. He can guide you from there.

DEAR BRUCE: My husband and I are both 59 years old. We are looking to retire within the next year or two. We have most of our money invested with a financial adviser. We have all our trust in him, hoping he is making the right decisions.

We wanted to get a second opinion, to make sure he is investing wisely, but all we come across are competitors trying to get our business. We want an unbiased opinion from a professional to look over our investments and let us know if our investments are a good choice and if we can afford to retire in the near future. Is there such a person out there who can advise us for a fee with no strings attached? -- K.M.

DEAR K.M.: What you're looking for is a fee-based adviser as opposed to one who operates on a commission basis. He or she will take a look at what you have and tell you how much it will cost to have your entire portfolio analyzed. Then the adviser will make some criticisms or compliments about the present situation.

(Send questions to bruce@brucewilliams.com. Questions of general interest will be answered in future columns. Owing to the volume of mail, personal replies cannot be provided.)

(The Bruce Williams Radio Show can now be heard 24/7 via iTunes and at www.taeradio.com. It is also available at www.brucewilliams.com.)