Loan waiver upon death

Questioner

In 2012 I gave my mother a loan of 40,000 euros to purchase her home. This is a long-term loan (until her death) on which interest is paid. I want this loan to be forgiven in the event that I die before my mother so that there can be no claim on her by my first heirs and she does not get into financial trouble. Can I arrange this via an addition to the loan agreement or renew this agreement? Or do I have to arrange this via my will or is this possible via a legacy?

Lawyer

There are several ways to arrange this wish. The most direct and binding way is often to record this in a will. In this will, you can specify exactly that the loan you granted to your mother will be forgiven after your death. This means in effect that your mother does not have to pay the outstanding debt to your heirs. There are also other ways to arrange this. One possibility is to include a clause in the loan agreement stating that the loan will expire upon your death. This clause is then called a 'waiver clause'. You can include this clause when renewing the loan agreement, or by adding an addendum to the existing agreement. In both cases - both with a will and with an addition to the loan agreement - it is advisable to seek legal advice from a notary or a specialized lawyer. They can help you to formulate and record your wish as well as possible, in order to prevent possible misunderstandings or conflicts in the future. Also note the fiscal implications. The forgiveness of the loan may be seen as a gift, which may have fiscal implications. It is advisable to seek advice from a tax specialist or tax advisor. Finally, it is important to keep in mind that, no matter how you arrange it, your first heirs are aware of your intentions. This can help to avoid unexpected problems after your death. ' ---------------- Stichting Rechtswinkel.nl is a national organization with students and volunteers. The above advice is based on limited information and may be incomplete or even incorrect for your situation. Always consult a lawyer or attorney for your further steps. Read disclaimer: https://rechtswinkel.nl/disclaimer I would like to invite you to rate the above answer so that we can learn from your response.