Oral agreement for loan

[littlerock]

What is the name of your state? Florida
I wish to give $17k as loan to my cousin on the condition that he should fully pay it along with 4% interest, and the interest is counted monthly and added to the principal monthly, whenever I demand. We want to have oral agreement only, for this loan. Is this oral agreement falls outside the statute of frauds? We are from Florida. I read the material below on this.

Section 725.01, of Florida Statutes: No action shall be brought ... upon any agreement that is not to be performed within the space of 1 year from the making thereof ... unless the agreement or promise upon which such action shall be brought, or some note or memorandum thereof shall be in writing and signed by the party to be charged therewith or by some other person by her or him thereunto lawfully authorized.

Browning v. Poirier, 165 So.3d 663 (Fla.2015): The issue here focuses on interpreting the one year performance provision of the statute of frauds for oral agreements of indefinite duration, where no time is fixed by the parties for the performance of their agreement.
…
It [the agreement] contains no express provision that it should not be performed within a year, nor is there anything embraced within its terms that shows conclusively that it was intended to run for more than a year. Under its terms, it is susceptible of performance within a year, and the evidence shows that it was expected to have been performed within that time. When such is the case, even if actual performance runs beyond the year, it is not within the statute of frauds.
…
Because the oral agreement [between Browning and Poirier] could have possibly been performed within one year, it falls outside the statute of frauds. Browning v. Poirier, 165 So.3d 663 (Fla.2015)

 

[Zigner]

First: Get the agreement in WRITING. There's no reason not to, none at all.

Second: Is it your intention to add 4% per month to the amount due?

 

[zddoodah]

I wish to give $17k as loan to my cousin on the condition that he should fully pay it along with 4% interest, and the interest is counted monthly and added to the principal monthly, whenever I demand.

I'm not quite sure what "whenever I demand" relates to, but just to clarify: you want to charge 4% per month compounded monthly? If so, that's usury and may be charged as a felony.

I read the material below on this.

Ok...and? You didn't ask a question.

If you're concerned about the statute of frauds, you can obviate your concern by putting your loan agreement in writing. That said, the statute of frauds is generally interpreted such that an agreement is not voidable as long as it is capable of being performed within a year. Obviously, an agreement to repay a loan falls into that category.

 

[littlerock]

Thank you. We cannot write written agreement for some reasons cannot be revealed here in this forum. The interest rate is 4% annually (not monthly) but will be calculated and added to principal each month.

I read the material I provided earlier, but still I am not sure if the proposed loan agreement is not violating any statute of frauds.

 

[Zigner]

I suspect that your "loan" is for illicit/illegal activities. As such, any loan agreement would not be enforceable through the courts. Furthermore, this forum is not going to help in your illicit/illegal activities.

 

[zddoodah]

I read the material I provided earlier, but still I am not sure if the proposed loan agreement is not violating any statute of frauds.

The blurb you quoted from the Browning case suggests that Florida courts interpret the SOF consistent with what I wrote in the second and third sentences of the last paragraph in my prior response.

 

[NeilTheCop]

First: Get the agreement in WRITING. There's no reason not to, none at all.

Even better, have the agreement drawn up by an attorney.

 

[littlerock]

Thank to everyone.

“I suspect that your loan is for illicit/illegal activities. As such, any loan agreement would not be enforceable through the courts. Furthermore, this forum is not going to help in your illicit/illegal activities.” It is not for illicit/illegal activities but due to my very recent health condition, we want this loan to be oral agreement, and I do not want my nephew, who is more than my own children, be in trouble if I passes away before he pay back the loan if there is a written agreement (I cannot elaborate more). Also I cannot give this loan as gift to him.

Another question is, I want to loan $17K to my wife as well, interest free. I saw in para (f)7 at https://www.law.cornell.edu/uscode/text/26/7872 “A husband and wife shall be treated as 1 person.” So, can I give this loan, on oral agreement (not written agreement), to my wife without any interest on the condition that she should pay it back whenever I demand?

In 2020, I gave $15,000 as a gift to someone. Can I pay the same person’s college tuition fee (I directly pay it to his college, which is a state university) also as a gift in 2020? DO I need to pay any taxes on these two?

 

[Zigner]

Thank to everyone.

“I suspect that your loan is for illicit/illegal activities. As such, any loan agreement would not be enforceable through the courts. Furthermore, this forum is not going to help in your illicit/illegal activities.” It is not for illicit/illegal activities but due to my very recent health condition, we want this loan to be oral agreement, and I do not want my nephew, who is more than my own children, be in trouble if I passes away before he pay back the loan if there is a written agreement (I cannot elaborate more). Also I cannot give this loan as gift to him.

Is your nephew on some sort of public assistance? Is your nephew subject to some other restrictions on the amount of money that he can possess?

Another question is, I want to loan $17K to my wife as well, interest free. I saw in para (f)7 at https://www.law.cornell.edu/uscode/text/26/7872 “A husband and wife shall be treated as 1 person.” So, can I give this loan, on oral agreement (not written agreement), to my wife without any interest on the condition that she should pay it back whenever I demand?

What do you wish to accomplish?

In 2020, I gave $15,000 as a gift to someone. Can I pay the same person’s college tuition fee (I directly pay it to his college, which is a state university) also as a gift in 2020? DO I need to pay any taxes on these two?

What makes you think you have to pay taxes on gifts?

 

[Zigner]

Even better, have the agreement drawn up by an attorney.

This brings up a related point. With such large sums of money in play, the OP should consult with an attorney, regardless of his ultimate decision on how he's going to structure any loans or gifts.

 

[adjusterjack]

I may be wrong but it seems to me that you might want to illegally shelter your assets from Medicaid. Well, it isn't going to work if you need Medicaid within the next 5 years. Medicaid has a 5 year lookback period and Medicaid investigators are very good at figuring out where your money went to.

 

[Zigner]

The problem is that there is no rationale reason that we can think of that you can't memorialize such a transaction in writing. Since you seem to be unwilling to explain your true intentions here, you should seek the advice of an attorney.

 

[littlerock]

Thanks to everyone. No medicaid fraud (as I am not receiving any government assistance and do not want any in future) or anything illicit/illegal. etc. "What you want to accomplish?" I want to see and prove true nature of some people.
"What makes you think you have to pay taxes on gifts? " I made a mistake in asking my question. Do I need to report these gifts in my tax return next year?

 

[Taxing Matters]

What makes you think you have to pay taxes on gifts?

The federal gift tax, perhaps?

In 2020, I gave $15,000 as a gift to someone.

The first $15,000 in gifts you give to any one person during the year are excluded from federal gift tax. The gifts you give to that person that exceed $15,000 are known as taxable gifts for federal gift tax. So for example if Amy gives gifts totaling $20,000 to Brad this year then Amy has given Brad $5,000 in taxable gifts. Amy would need to file a federal gift tax return to report the gift. But Amy does not actually pay tax on that gift unless she's used up her lifetime unified credit against federal estate and gift taxes, which currently is $11,580,000. So if she hasn't used up that credit, her gift to Brad just reduces her credit by $5,000 and she pay no tax.

Can I pay the same person’s college tuition fee (I directly pay it to his college, which is a state university) also as a gift in 2020?

There are two kinds of gifts you can make to another person in any amount that are not subject to gift tax. One of them is gifts of education expenses when you pay the school/college/university directly. The other is payment of medical expenses when you make the payment yourself to directly to the medical provider. So you could pay that tuition and still not have to reduce your unified credit so long as the total of other gifts you give him/her do not exceed $15,000.

 

[Just Blue]

Thanks to everyone. No medicaid fraud (as I am not receiving any government assistance and do not want any in future) or anything illicit/illegal. etc. "What you want to accomplish?" I want to see and prove true nature of some people.

huh?


You should consult with an attorney.