When a Family Loan Goes to Court: What Makes an Informal Debt Legally Enforceable—and What Destroys It
Lending money to a family member feels like an act of generosity, but without proper documentation it can become a legal and financial liability. Courts regularly reclassify undocumented family loans as gifts, leaving lenders without recourse and creating unexpected tax consequences for both parties. The solution is straightforward, but most families never implement it until the damage is already done.