Debt forgiveness in trust
UPDATED: Oct 1, 2022
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Debt forgiveness in trust
Hi, my parents wish to forgive me some money
debt I owe them. Its in their trust that I owe
them. Is there a generic form I can acquire to
have them sign and have notarized, rather than
going back to the lawyer that set up the trust
hes kind of expensive. Thanks
Asked on October 24, 2018 under Estate Planning, California
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 4 years ago | Contributor
I am not aware of any generic form that is appropriate, but you or your parents can draw an agreement up and both sign it and it will be enforceble. It needs to simply state clearly what is foregiven and why--i.e. the amount of money, and it should state that they are doing so "for good and valuable consideration"--or in exchange for something of value--"receipt of which is hereby acknowledged," and should probably also say "as well as in exchange for a mutual release of any and all claims any party to the contract may have against each other"--not that you or your parents necessarily have any claims against each other, but waiving or giving up potential or possible claims is itself consideration or something of value. For a contract to be enforceable, there must be consideration on both sides--that that, both you and your parents have to get something out of it. That's why you want the agreement to state that they are receiving consideration.
Again, there is no need for a lawyer: just write a clear agreement which recites what is being given and the consideration, and have everyone sign. There is no need to notarize: a notary does NOT, contrary to common belief, make an agreement more binding or official or enforceable or legal. All the notary does is verify that he knows you or checked your IDs and that the people signing all the people they claim to be.
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