Use this comprehensive checklist to ensure you've covered all key considerations when structuring a family loan.

Before the loan is made:

☐ Determine whether the transaction should be a gift or a loan
☐ Discuss and agree on the loan amount
☐ Agree on whether interest will be charged and at what rate
☐ Decide on repayment terms (scheduled payments, lump sum, on sale, etc.)
☐ Consider whether security should be taken (mortgage registration)
☐ Discuss tax implications with an accountant if the loan is large or complex
☐ Consider relationship property implications if the borrower is in a relationship
☐ Discuss whether a contracting out agreement (prenup) should be obtained
☐ Decide how the loan should be treated for estate planning purposes
☐ Determine whether legal advice should be obtained by either or both parties

Documenting the loan:

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☐ Prepare a written loan agreement including all essential terms
☐ Ensure the agreement clearly identifies the parties, amount, and terms
☐ Include clauses addressing interest, repayment, security, and default
☐ Address relationship property considerations in the agreement
☐ Include estate planning provisions (forgiveness or continuation)
☐ Have both parties sign and date the agreement
☐ Keep the original agreement in a safe place accessible to both parties
☐ Provide copies to your lawyer and accountant for their records

After the loan is made:

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☐ Transfer the loan funds by traceable method (bank transfer, not cash)
☐ Keep records of when and how the funds were transferred
☐ Maintain a loan ledger tracking the outstanding balance
☐ Record all repayments made by the borrower
☐ If charging interest, calculate and record interest accrued
☐ Provide annual statements to the borrower showing the outstanding balance
☐ If receiving interest, declare it in your tax return
☐ Keep all documentation organised and accessible
☐ Review the loan terms periodically to ensure they remain appropriate
☐ Update your will to reflect your intentions regarding the loan
☐ Inform your executor that the loan exists and provide them with documentation

If circumstances change:

☐ If modifying repayment terms, document variations in writing
☐ If forgiving any portion of the debt, document this clearly
☐ If the borrower enters a relationship, consider whether additional protection is needed
☐ If refinancing is planned, provide documentation to the new lender
☐ If the secured property is being sold, ensure loan repayment from sale proceeds
☐ If financial hardship occurs, document any repayment holidays or adjustments
☐ Review estate planning documents if your intentions regarding the loan change

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