Intra-Family Loan Agreement Template

What Is the Intra-Family Loan Agreement?

An intra-family loan agreement is a formal contract documenting loans between relatives—parents to children, grandparents to grandchildren, or between siblings. The agreement establishes interest rates that comply with IRS requirements, specifies repayment terms, and creates evidence that the transaction is a legitimate loan rather than a disguised gift. Without proper documentation, the IRS can treat family loans as taxable gifts and impute interest income to the lender.

This agreement protects family relationships by eliminating ambiguity about repayment expectations. It addresses critical tax considerations including Applicable Federal Rate compliance, interest reporting obligations, and estate planning implications. The template includes options for secured and unsecured loans, multiple repayment structures, and provisions for handling defaults without destroying family relationships.

 

Is This Intra-Family Loan Agreement Right for You?

You need this agreement if you're:

• Lending money to children for home purchases
• Providing startup capital to family members
• Making loans exceeding $10,000 to relatives
• Helping family consolidate high-interest debt
• Funding education expenses with repayment expectations
• Making estate planning gifts structured as loans

You definitely need this agreement if:

• Your "gift" could trigger IRS gift tax filings
• You're charging below-market interest on family loans
• Past informal arrangements created tax reporting confusion
• You need documentation for mortgage interest deductions
• Estate planning involves forgiving loans at death

 

 

Why Thousands Trust Legal GPS Templates

Save Money: Attorney-drafted family loan agreements cost $800-$2,500. This template provides the same IRS-compliant structure for $35.

Save Time: Get your agreement today, customize it in 45 minutes, and establish proper loan documentation immediately.

Look Professional: Banks and title companies accept professionally drafted agreements. Create legally sound documentation that institutions recognize.

Keeps You Out of Court: The Interest Rate and Applicable Federal Rate provisions satisfy IRS scrutiny, while Default and Remedies protections establish enforceable collection rights if repayment issues arise.

 

 

Get Protected in 3 Simple Steps

Step 1: Secure Checkout

Complete your purchase through our encrypted payment system. Receive immediate access to your template.

Step 2: Instant Download

Download your attorney-drafted intra-family loan agreement template in Microsoft Word format. Open it in Word or Google Docs.

Step 3: Fill In the Highlighted Fields

Follow the bracketed guidance to customize your agreement. Complete party information, loan terms, interest rates, repayment schedule, and security provisions. Both parties sign and consider notarization for additional enforceability.

 

Frequently Asked Questions

Can I use this template multiple times?

Yes. You purchase the template once and can use it for multiple family loans. Customize it each time for the specific loan terms, parties, and collateral involved.

Is this contract legally binding?

Yes. When properly completed and signed by both parties, this creates an enforceable loan obligation. Consider notarization to strengthen enforceability and meet recording requirements if securing the loan with real property.

What interest rate should I charge?

You must charge at least the Applicable Federal Rate published monthly by the IRS. Charging below the AFR triggers gift tax consequences and imputed interest income. The template guides you through finding the correct AFR for your loan term.

Do I need to secure the loan with collateral?

No. Unsecured family loans are common and simpler to implement. Secured loans provide additional protection but require additional documentation like mortgages for real property or UCC-1 filings for personal property.

What happens if my family member doesn't pay?

The Default and Remedies provisions establish your right to accelerate the loan and pursue collection, including legal action. For secured loans, you have foreclosure rights. The agreement also includes modification and forbearance provisions for temporary hardships.

How does this affect my estate plan?

The Death, Incapacity, and Estate Considerations article addresses what happens when either party dies. You can structure the loan to continue after death or accelerate immediately. The outstanding loan balance becomes part of your estate assets.