Inheritance and Legal Implications of Lifetime Loans: A Comprehensive Overview

Can loans given during one’s lifetime be contested by heirs to ensure the funds return to the estate? How does this differ from donations? According to the law, a donation is essentially an advance on the inheritance, requiring recipients to deduct gifted assets from their future inheritance share. This prompts the question of whether money lent during one’s lifetime is also included in the inheritance.

This query raises crucial points: What are the fundamental differences between donations and loans? How can one determine if a money transfer was a loan or a donation? What if the lent funds are not repaid? In this article, we delve into the intricacies of laws and successor rights related to money lent during one’s lifetime and its impact on inheritance.

Donation and Loan: Key Differences

The primary distinction between donation and loan is evident: in a loan, the money must be repaid, while a donation involves no such obligation. Essentially, a donation is a gift. However, in practice, distinguishing whether a money transfer was a donation or a loan can be complicated, especially if the donor has passed away.

Clarity in the intent of the involved parties at the time of the transfer is crucial.

Money Transfer: When is it a Donation?

For a money transfer to be considered a donation, it is necessary to identify the donor’s intention to enrich the recipient without expecting anything in return (known as “animus donandi“). The fundamental characteristic of a donation is the spirit of generosity; the donor gives without expecting reciprocation, thereby enriching the recipient at their own expense.

This comprehensive exploration aims to provide insights into the legal landscape surrounding lifetime loans and their implications for inheritance, aiding individuals in understanding their rights and responsibilities in such scenarios.

VGS Lawyers is a law firm specialised in Inheritance and contested probate. Should you need assistance please  send your enquiry to: info@vgslawyers.com