How to word agreement to guarantee repayment of loan in the event of borrower’s death?
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How to word agreement to guarantee repayment of loan in the event of borrower’s death?
A relative is trying to pay off credit card debt, however of one negative item on her credit report she can’t get a typical loan. The bank will make a loan if it is secured by a third party with the matching funds in a frozen account. I am trying to remain an anonymous third party; and as she has significant health problems want to ensure if she defaults on the loan that I would be reimbursed from her estate in the event of her death. How would such an agreement be worded to be legally sound?
Asked on August 25, 2011 Tennessee
Answers:
FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
In order to safeguard your loan with this relative in the event of her death so that you are guaranteed its repayment from funds in a frozen bank account you need to do the following;
1. have a written agreement signed by you and this relative setting forth the basis for the loan, when it will be repaid, any bearing interest, and principal amount. Signatures on the document should be notarized. The agreement needs to state that the money will be placed in a frozen bank account in your and the relative's names as "joint tenants with the right of survivorship."
2. have a promissory note created and signed by the relative memorilaizing the terms of the loan payable to you. If the note can be secured, the better.
3. have the bank account funded as a "joint tenancy" account as stated in item number one above.
You should consult with an attorney to assist you with the above suggestions.
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