First, regardless of whether its written down, family members should still be charged interest. If you charge below the rate, or make an interest-free loan, the IRS may impute the difference as interest earned and consider it taxable income. In some cases, the IRS could characterize the entire loan as a gift, subject to gift tax.

An acceptable interest rate for the IRS is the “Applicable Federal Rate” or AFR. You can check out those rates by following this link. The imputed interest rules don’t apply to loans of less than $10,000.  You can read much more about related-party transactions and the below-market interest rules in IRS Publication 550 at the IRS website.

Second, the promissory note should include all of the following elements:

• The loan amount.
• A definite payment date or dates.
• A stated rate of interest.
• Collateral or security.

Third, you might consider taking the awkward moments out of a family loan by having a third party administer it. For a $99 fee, Virgin Money formalizes the agreement you and takes care of the paperwork. For $199 plus $9 per payment, they’ll also electronically collect payments from the borrower’s bank account and credit yours. For $14.95, LoanBack will generate a promissory note and pay schedule, but won’t help you collect.

Fourth, from an estate planning standpoint, it is much better to put these agreements in writing to provide a paper trail for the executor or trustee to piece together who owes what and to whom.

Hope this helps.

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“In 2004, the California Supreme Court voided about 4,000 same-sex marriage licenses granted in San Francisco. Are those marriages now legally recognized by the state?
No. Those couples would have to remarry.”

“Will the federal government recognize a California same-sex marriage?
The federal government does not recognize same-sex marriage. This means that married couples of the same sex cannot file joint federal income tax returns or receive federal spousal benefits, including those from the Social Security Administration or the Department of Veterans Affairs. A U.S. citizen who marries a foreigner of the same sex in California will not be allowed to sponsor the spouse to immigrate here.”

“When will same-sex couples be able to marry?
The decision will take effect 30 days after it was issued. Los Angeles County and San Francisco officials are reviewing the decision and have not said when they will begin issuing licenses to same-sex couples.”

Los Angeles County gearing up for same-sex marriage licenses (L.A. Times)
Here is an excerpt from the article:

“In Los Angeles County, supervisors asked Dean C. Logan, acting registrar-recorder and county clerk, to report back Tuesday on what needs to be done before the order takes effect…

Logan, whose department issues about 75,000 marriage licenses a year, said ‘the phone was ringing off the hook’ after Thursday’s court decision, with couples inquiring about the process.

Currently, couples wishing to obtain marriage licenses must do so by appointment. County officials said the anticipated rush for appointments may require extending hours at county facilities.”


California sets June 17 as earliest date for licenses for gay marriages (L.A. Times)
Here is an excerpt from the article:

“New marriage license forms will include lines for ‘Party A’ and ‘Party B’ instead of bride and groom, according to the memo…

Logan has said he would consider extending hours at other county offices and recruiting more volunteers to officiate at marriages. And supervisors already have asked the Sheriff’s Department and the Office of Public Safety, which protects county buildings, to provide extra security during the first few weeks that the marriages are permitted.

‘We expect quite a bit of activity, and we want to do as much advance prep work as we can to ensure a smooth and orderly process,’ Logan said.”

Poll: Majority of Californians Back Gay Marriage (Washington Post)
Here is an excerpt from the article:

“The idea of allowing gay and lesbian couples to marry is now approved by 51 percent to 42 percent statewide, according to the survey of about 1,000 voters conducted this month.The results mark the first time in 30 years and six previous polls that the majority of Californians support same-sex marriage. In 1977, for example, more than twice as many Californians — 59 percent — disapproved allowing such unions.”

The 4-3 ruling declared the state Constitution protects a fundamental “right to marry” that extends equally to same-sex couples. The decision opens the way for tens of thousands of gay people to wed in California, starting as early as mid-June.

The majority opinion, by Chief Justice Ronald M. George, declares any law that discriminates on the basis of sexual orientation is constitutionally suspect in California in the same way as laws that discriminate by race or gender, making the state’s high court the first in the nation to adopt such a stringent standard.

Take a look around the website. Tell us what you think.