40 THE QUEENS COURIER • HEALTH • OCTOBER 7, 2021 FOR BREAKING NEWS VISIT WWW.QNS.COM
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Elder Law Minute TM
How to use intrafamily loans as part of your estate plan
BY RONALD A. FATOULLAH, ESQ.
AND EVA SCHWECHTER, ESQ.
When engaging in estate planning,
there are a number of diff erent ways
to pass your assets on to the next generation.
One planning method is the
“intrafamily loan.” When interest rates
are low, intrafamily loans can be a good
way to assist a relative with purchasing a
house or a family business, and in certain
circumstances they can be used to gift
money to the next generation.
An intrafamily loan is a loan that allows
family members to borrow money from
each other at a special rate. Th e intrafamily
loan must be structured properly
according to IRS requirements, so
that the loan is not considered a gift .
Th is means the loan must have a written
promissory note, require repayment,
and charge interest if the loan is for more
than $10,000.
Th e IRS sets the Applicable Federal
Rate (AFR) each month, and the interest
on the intrafamily loan must equal the
AFR. Th e rate is diff erent depending
on the term of the loan, which can be a
short-term loan (0-3 years), a mid-term
loan (3-9 years), or a long-term loan
ELDER LAW
(9 or more years). Th e AFR is typically
lower than the interest rate a bank would
charge, and the borrower’s credit doesn’t
aff ect the loan, so someone with bad
credit can still get a loan.
When structured properly, intrafamily
loans can assist the next generation with
purchases and allow parents to pass on
assets. Th e following are some of the ways
intrafamily loans can be used:
Pay for a house. An intrafamily loan
can be used to fund a mortgage for children
or grandchildren. Since the interest
rates are lower, the children will pay less
overall than they would with a traditional
mortgage lender.
Pass on a family business. Depending
on how large the business is, giving away
a business could exceed the prevailing
gift tax exemption. Instead, parents can
loan money to a child to purchase the
family business. Parents who are fi nancially
able could use the annual gift limit
($15,000 in 2021) to give children money
to repay the loan. Alternatively, if the
family business produces income, the
child can use the income to pay back the
loan. Even if the business doesn’t exceed
the gift tax exemption, this can be a good
strategy for parents who want to pass on
the family business, but still need a steady
income stream.
Pass on assets. Intrafamily loans can
be used as a method of passing on assets,
provided the borrower can invest the
money in a way that brings in a higher
rate of return than the interest rate on
the loan. Given the low interest rate on
intrafamily loans, this can be a successful
strategy. If the loan is a large one, it may
be wise to loan the money to a family
trust. Th e trust can invest the money and
repay the loan. Aft er the loan is repaid,
the remaining assets are protected by the
trust and can be distributed to benefi ciaries
as dictated by the trust terms.
Th e downside of an intrafamily loan
is the same as with any loan: Th e loan
must be repaid. If the family member
defaults on the loan, it could trigger a gift
tax for the person making the loan. It is
also important to have the correct paperwork
and documentation. To determine
whether an intrafamily loan is the right
tool for your estate planning needs, it is
important to consult with an estate planning
attorney.
Ronald A. Fatoullah, Esq. is the founder
of Ronald Fatoullah & Associates, a law
fi rm that concentrates in elder law, estate
planning, Medicaid planning, guardianships,
estate administration, trusts, wills,
and real estate. Eva Schwechter is an elder
law attorney with the fi rm. Th e law fi rm
can be reached at 718-261-1700, 516-
466-4422, or toll free at 1-877-ELDERLAW
or 1-877-ESTATES. Mr. Fatoullah
is also a partner with Brightside Advisors,
a wealth management fi rm with offi ces in
New York and Los Angeles.
Th is summary is not legal advice and
does not create any attorney-client relationship.
Th is summary does not provide
a defi nitive legal opinion for any factual
situation. Before the fi rm can provide
legal advice or opinion to any person
or entity, the specifi c facts at issue
must be reviewed by the fi rm. Before
an attorney-client relationship is formed,
the fi rm must have a signed engagement
letter with a client setting forth the Firm’s
scope and terms of representation.
RONALD FATOULLAH
ESQ, CELA*
a range of emotions. New
parents have lots on their plate,
especially with concerns around
COVID-19. Th is can leave many
feeling overwhelmed from information
and advice, which can
lead to skipping the important
step of making appointments for
themselves and their baby.
“Pregnancy can be an exciting
time for many. However, pregnancy
can also bring a lot of
questions, wondering and worry
for women and their partners,”
says Dr. Carolyn Brooks, senior
director, Clinical Capability,
UnitedHealthcare Community &
State. “It’s important to take steps
throughout the pregnancy to connect
to care and resources that
can support mom and baby, from
early in pregnancy all the way into
the fi rst years of a baby’s life.”
Dr. Brooks and the experts
at UnitedHealthcare share some
important things pregnant
women should know during the
pandemic and beyond:
Find a doctor and make
an appointment as soon
as you suspect or learn
that you are pregnant
To ensure optimal health for
you and your baby, prenatal
appointments are essential and
the earlier in the pregnancy the
better. At the fi rst appointment,
a health care expert will confi rm
your pregnancy and work with
you to determine a healthy plan
for the future. During your prenatal
appointments, your provider
will measure your weight
and blood pressure and screen
for conditions such as hypertension,
diabetes, anemia and
hepatitis B, which are important
to detect and treat during
pregnancy.
Th is is also a good time to
ask questions you may have or
explore any early symptoms like
morning sickness you may be
experiencing to learn about common
management and nutrition.
You can also ask about the many
programs and resources that can
help you throughout your pregnancy,
from getting you access
to prenatal vitamins and baby
supplies to connecting you to
case management programs,
group support options and other
programs that could address
substance use and behavioral
health needs.
Access the many
programs and
resources available
for you that benefi t
you and your baby
Th ere are a variety of programs
that can help you get
what you need for a successful
pregnancy, continuing into
the fi rst years of your child’s
life. Use the many community
resources available, ask your
health care team to assist in supporting
your care coordination
and utilize the opportunities for
enhanced programs from your
insurance provider. When you
inquire, you may fi nd you qualify
for numerous programs, particularly
if you’re experiencing
diffi cult times.
As a fi rst step, if you are a
UnitedHealthcare member, you
can call the number on your
insurance card to determine
what resources are available to
you as there are a range of programs
and support services the
company can off er or connect
you with.
Go to all your prenatal
and postpartum
appointments — even
during COVID-19
Even during COVID-19, you
should keep prenatal and postpartum
appointments with your
healthcare provider. In some
instances, you may have an
option to use telehealth for some
appointments, which allows you
to meet with your provider over
a phone or computer and is a
safe option, if recommended.
Other appointments will still
need to take place in person.
Health care facilities are taking
extra steps to ensure a safe, clean
environment. You can be proactive
and help stay healthy during
in-person visits by practicing
social distancing, washing your
hands oft en and wearing a mask.
The CDC recommends a
COVID-19 vaccine for pregnant
women so make sure to ask
your health care provider when
you should get this vaccine and
other important vaccinations to
protect you and your baby.
Acknowledge and
manage stress, anxiety
and depression
Being pregnant or taking care
of a new baby during COVID-19
may have you feeling uncertain,
nervous or worried. You aren’t
alone. Th ese are normal feelings
to have, especially during a pandemic,
and it’s important to fi rst
acknowledge and then take steps
to ask for help when needed to
manage stress, anxiety or depression
during this time.
While it can be diffi cult, try to
focus on yourself and your mental
health. Practicing self-care by
creating a daily routine and taking
breaks from the news can
help. If you’re feeling lonely or
isolated, talk to family, friends
or your health care provider. You
are not alone in this journey.
For more information and
resources, visit everypregnancy.
com.
— Courtesy of BPT
/WWW.QNS.COM
