How do we utilize gift money / inheritance in REI

[Rodney Smith]

Hello everyone! So I have a question (really more of an accounting question) but since many of you are shockingly savvy and have been involved in many deals i'm hoping to glean some wisdom from people who have maybe been down this road already or been involved in a deal of this nature. So heres what we are trying to achieve!

My siblings and I are purchasing a portfolio of properties and are using some inheritance money from our parents (still living) to help fund the transaction. Naturally my parents dont want any connection of any sort to the properties, but rather are helping fund this to jumpstart the family biz. My question is - how can we structure the payment portion from our parents in a way that does not bring on tax liability but also does not require our parents to stick their necks out by being "on the title , LLC, etc." and increasing their exposure?

We have considered buying the properties under a separate LLC entity and drafting a private loan contract between the LLC and parents (which has no legal requirement to be recorded) but i'm sure it wont be that simple. We've also considered doing an interest only loan with parents and having debt forgiven / re-nogotiated / re-fied etc each year to lower our principal balance.

Your thoughts?

Thanks in advance!