In any circumstances where a loan of money is to be made, a formal agreement should be prepared and executed.
It occurs from time to time that individuals make loans to family members, friends, business associates etc. In our experience, often those loans are made on a “hand-shake” basis and generally without any form of documentation at all.
Regrettably, what can then occur is that the borrower defaults or passes away and of course the lender wishes to recover the money lent.
Regardless of the relationship between the lender and the borrower, there ought be a written agreement which sets out important terms of the loan. Such terms include the loan amount; when the loan is to be repaid; interest; default provisions, etc and, where-ever available, security for the loan.