Example

The customer borrowed $25,000 from his sister in April two years ago. They had an oral loan agreement that the customer would pay back the full amount in 10 monthly installments of $2,500 beginning that May.

The customer missed a few payments and still owed his sister $7,500 that he paid her this month, after the oral agreement was no longer valid because a year had already passed since the oral agreement.

The $7,500 the customer repaid his sister after the loan was no longer valid is considered a transfer with uncompensated value.