Should an unpaid family loan be deducted from my brother's inheritance?

[Triflemuncher]

Hi everyone.

Mum passed away semi- unexpectedly. A horrible sad time for us all.

my brother and I have started the process of unpicking her finances. About a year before mum died she lent my brother 10k. At the time of her death there was about £8k left to pay. There was no written loan agreement which I can understand to some degree.

my view is the 8k remaining debt needs to be deducted from brothers share of mums estate. He disagrees and thinks that it was an Informal arrangement between him and mum with no terms and conditions, or any link to her estate.

Where do we stand on this? Is there anything I can do or is this £8k just written off?

For him to refuse shows his moral compass is pretty skewed. I guess you’re going to have to accept it, but I’d be taking a big step back from any sort of relationship with him.

This. He should obviously be suggesting this himself. He now owes his debt to the estate instead of your mum.
Very hard to make this happen though.

@Triflemuncher If you have got some evidence of his debt (bank statements, emails/texts) then def make hime make good on it.

If not you sadly don't have a case and you will just have to accept that your brother is morally corrupt and have as little to do with him in the future as you can.

I think this is a good response. I personally couldn’t do with the stress of going through bank accounts to find evidence etc and then potentially a solicitor to enforce it.

You say you’re the executors. Are you doing it all yourselves or using a solicitor? If the latter maybe he’d listen to a solicitor. If not I’d print off something from the internet saying that legally he owes the money to the estate and that you could follow up enforcement of this. Put the ball in his court and hopefully he does the right thing.

I think by referring to it as ‘the estate’ your brother is allowing himself to depersonalise it. If I were you I would perhaps send him one polite but very clear message which makes it crystal clear that by opting not to repay the ‘estate’ he is taking money from you, for himself. And then leave the ball in his court. If he chooses not to repay it then so be it, I wouldn’t try anything legal as it won’t be worth the money, stress or damage to your relationship.

Then it would obviously be up to you as to whether it does affect your relationship long term. Hopefully not, but I suppose it would depend on how close you are, whether this is a pattern of behaviour or not.

Lastly, I’m so sorry about your mum. Virtual hugs

I wouldn’t as I would be 100% equal and fair to both children. By writing off that debt you are saying you love that child more than the other

OP as you are a joint executor you are in the perfect position to deal with this. You can have the outstanding 8k treated as a debt to the estate. People here can help you with this but not if you won't engage with them.

We need to know, is there anything in writing at all referencing the loan. Not an official document, just messages, part payments back to your mum's account, anything that would show to a reasonable unbiased person that there was in fact a loan to your brother.

If you can come back to the thread to discuss it more, you can recover that debt and it doesn't have to cost anything in legal fees.

I don’t think it should count towards inheritance as it was lent when she was alive.

I do know someone who’s mum gave them 3k to pay a credit card off 20 years before she died when she was a young struggling mum. When her mum died the two sisters made her pay them back 1k each so they’d all had equal money out of their mum. I thought that was bloody awful. Her mum had gifted her that money, but she paid them to keep the peace.

another incident is were a relative of mine died and his grand daughter owed about 5k (not a written agreement) and the beneficiaries demanded she pay it back to them as part of their inheritance. She agreed to this but before she started paying it back they had a falling out over some funeral arrangements and she told them they could stuff the money and she never paid it back.

Of course the 8k should come off his. He sounds like an asshole

Him: 142k
You: 158k

8k is a lot of cash, pays for a car, holidays etc
He shouldn't expect it to be written off and still have a decent relationship with you.

He owes you £4k. Failing that, tell him you would have appreciated the same value loan from your mum and can you deduct that from the estate so it’s fair, and then split the rest? He’s being a CF.

no. If anything it would be 154 and 154

Or is it because someone’s written out a clear example how it’s not fair at all…!

Possibly - can’t say I read it particularly closely. One eye on the tv!

Oops. Yes. 🤭

As it was only a year ago I think it is still subject to inheritance tax. I would take my 150k and then let him know he needs to pay tax on it.

Huh?

300 +8 debt

308 she should get 154k
He should get 146k

No. He is a joint benefactor

so if he returned the loan in full
he would still be entitled to £4k of it!

If you give money away within 7 years of your death it counts as part of your estate. There are limits on how much you can gift annually, so if it’s not a loan it’s a gift and as within 7 years of death part of estate - it’s a rule to prevent tax avoidance

Ok so…

let’s say he throws hands up and says ok I’ll pay back £8k in to the estate

he is a joint benefactor so he’ll get £4k back!!

it’s not hard

Of course he should deduct it

But he's clearly not going to

In England? This is not what happened when my mother died and parents had lent £6k to one child and bought an £8k car for another. Very much not 'written off' and it was regarded as an asset by the solicitor.

So either he pays the money back and there’s 308k, you both then get 154k.

or the payout is adjusted to take the debt into account and you get 154k and he gets 146k

or he refuses and you know he’s a twat who values 4k over a relationship with his sister.

So much incorrect advice here. It does not have to be written off. It can be very easily recovered.