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In this video, Michele explains the importance of a promissory note when lending money. The key point is to distinguish whether the money is a gift or a loan, ensuring clear expectations between the lender and borrower regarding repayment. When lending larger amounts, clarity on repayment terms is crucial before the transaction takes place. Although legal recourse is possible without a promissory note, having one establishes formal documentation of the loan, protecting both parties' interests and ensuring that repayment expectations are met.