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As far as I know an intrafamily demand note that is
reasonably docuemented and is fashioned in a reasonable
business manner will stand up. At 100K or less my
recollection is that the applicable federal rates need not
apply, however I would think that your case would be more
professional if you had a written demand note at some sort
of realistic rate secured by a recordable note on the
property et al which provided for some written extension
terms etc. Absent such a business purpose et al somebody
might jump to a conclusion that you made a "gift' to your
parents w/o reporting same. But I would steer clear of
payable only upon death type words--I have no clue if that's
a problem, only that demand note formats have seemingly been
tested as not triggering gift issues in similar amounts.
And the note would of course reduce the taxable estate, if
any.

Or ask counsel.

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My parents are in their 80s, own their home free and clear,
but could use some extra monthly cash. It's a perfect
situation for a reverse mortgage. But upfront fees are
rather steep. Is there such a thing as a personal reverse
mortgage? Could I give them one for say $100,000 to be
repaid when they die and my sister and I sell the house?
What if any are the potential tax implications? Would it
affect the stepped up value of the house? Would it be
considered a gift if I charged a reasonable deferred
interest?

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