Somewhere in almost every family, there is a check that changed things. Fifty thousand dollars toward a son’s first house. Help with a daughter’s business. At the time, nobody wrote anything down, because writing it down felt cold. But when an estate goes through probate in Virginia, that unwritten money can leave the people you love guessing at what you intended. The good news is that one thoughtful paragraph, written now, can answer the question for good.

Was it a loan, a gift, or an advance on the inheritance?

Legally, that money can only be one of three things. If it was a loan, it is an asset of the estate, and what remains unpaid generally must be collected or deducted before anything is divided. If it was a gift, nothing is owed, and the other children simply inherit alongside the sibling who received it. If it was an advance on the inheritance, the amount is counted against that child’s share so everyone comes out even.

Three very different outcomes, and without documentation, the answer rests on memory. The son remembers a gift. His sister remembers the word loan being used at Thanksgiving. Both are being honest, which is exactly why putting your intentions in writing is such a gift to them both.

Does the executor have to collect a family loan?

This is the part that surprises people. An executor has a legal duty to gather the estate’s assets, and a genuine loan is an asset like any other. If your daughter is the executor and your son is the borrower, you may have unknowingly assigned one of your children the job of pursuing the other for money. A little planning now means no one you love is ever put in that position.

How do I account for family loans in my estate plan?

The fix is simple: a ledger provision. It is a paragraph, or a signed schedule kept with your will or trust, that lists what each child received and states plainly what you intend. You can forgive a loan at your death, direct that it be deducted from that child’s share, or confirm it was always a gift. Any of those choices works. What does not work is silence. If money is still moving, a short promissory note today protects everyone as well, and you can update the ledger in minutes whenever life changes.

Getting Started

If you have helped one child more than another, you are in good company, and you are one paragraph away from making sure your intentions are clear. Thoughtful estate planning puts your wishes in writing where they will do the most good, so the people you love never have to guess. We would love to help you write that paragraph. Schedule a free 15-minute call to get started, or reach out to us at 703.424.9242. 

Frequently Asked Questions

Can an executor forgive a loan the deceased made?

Not on their own. An executor must follow the will or trust, so a loan is typically forgiven only if the document says to forgive it. Otherwise, the executor usually has a duty to collect it for the estate.

Is a verbal family loan enforceable after death?

It can be, but proving it is difficult. Without a note or written record, the outcome often turns on bank records, texts, and memory. Clear documentation now spares everyone that uncertainty later.

Is a loan forgiven at death taxable income to my child?

Generally, no. A loan forgiven through your will or trust is typically treated as part of your child’s inheritance rather than income, though every situation is different and worth confirming with your attorney.