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?

DH was given the understanding from his parents that in their Will it would acknowledge the house deposit given to his DSis and ‘even’ up things for him at the end of the day.

there was no such consideration written in the end. The DSis even got her mother to go to a different solicitor and change her Will to include her children!

yes I would expect adjustments to be made but I don’t know how you enforce it… costs more in legal fees these days taking it to court.

Haven't rtft so apologies if this has already been mentioned. If he pays £8k into the estate, he'll get half of it back again anyway, so assuming you are the only two beneficiaries, he owes you £4k.

If the estate is £300k and you are due £150k each, then in theory the value of the estate is £308k so £154k each. You get £154k, he gets the remainder and since the cash hasn't actually changed hands, he gets £146k.

Basically, is it worth destroying your relationship with your brother for £4k?

Yes be nice if he paid it back into the estate esp if both getting £150k

tho £8k would go back in which means you would then both get £4k extra

is it worth falling out over £4k if getting almost 40 times that

Morally you're right but I think the law would be on your brother's side - IANAL, though.

I would not fight it, but I'd want very little to do with my brother going forward if I were in your shoes.

Had something similar @Triflemuncher and brother is returning what he owes to the pot before we share the pot. Parents would be unimpressed if we didn’t act fairly, even though it was an informal agreement.

Inheritance Tax on an estate of £300k?

I thought it was more than that. Won’t make much difference if under the limit

Agree

If it was a loan that he was relating then it's a debt to the estate and should be taken into account when evaluating the value of the estate and distributing money.

Your brother sounds shady thinking his debt should be written off because your mum died.

I am sorry for your loss. Things like this make processing your grief more difficult. I have an awful sibling, whose (not so secret) true character came out after our parents died and I have decided to go no contact as a result.

@Triflemuncher Basically, you're foregoing 4k if you don't pursue it.

Estate 300k
Add balance outstanding on loan 8k
Total estate 308k
50/50 split 154k each.

Probably cost more than that in solicitors fees to force him to pay.

You might be able to convince him to split slightly in your favour with him not having to repay by splitting (estate - 4k)/2

Assuming 300k is total cash available
(300-4)/2 = 296/2 = 148k
So you would get 152k (148+4) and him 148k. You're 2k better off than 50/50 and he's 2k worse off than 50/50. He might agree to that if he's only losing 2k from what he was expecting to get.

He was paying it back to your mother, not to her estate.

What does that mean? Her estate is her, in effect?

I guess you're another person who thinks brother should get away with not paying the money back.

Money she owed to others at the time of her death would be paid out of the estate, and money that other people owed her should be paid in.

If it’s the end of your relationship anyway then fight it. He’s copping 150k and still wants more! He’s no brother he’s a scumbag.

interesting how some people think she should just let the 4k go as it’s not worth ruining a relationship when HE is happy to destroy it over 4k and not paying back his debt.

Legally - no. Morally -yes. Is £8k out of £150k a hill I’d want to die on ? No

I would definitely die on this hill because obviously it's symbolic of major issues between these two siblings.

I've been very surprised by the number of people who think OP should just concede £4k - for what reason?

Thank goodness my parents were just fair in the way my parents managed money amongst us siblings, a tradition we've carried on into the next generation.

How do you know he is happy to destroy the relationship? If this happened after my mom died, I wouldn't expect my brother to cut me off over it, and nor would I consider cutting him off. It's a difference of opinion. Our relationship would survive it.

I am sorry to hear that. I assume he has done lots of other bad things for you to feel like this.

Losing a parent is fucking hard - from my experience it gets harder, not easier, as time moves on and people expect you to be over it. Your siblings are the only people who absolutely share your pain. So I would urge you, even purely for your own sake, not to cut ties with him unless you can see no other option.

But you know your own situation best, and one assumes you have thought this through.

Again, so sorry for your loss.

Because she’s raised it and he’s said no so now the option is to pursue and risk him kicking off or just let it go which lots of people are saying is for the best. My point is that it’s HER who has to do the bending and ‘150,000 is a lot of money’ (it is) but it’s not HE should maintain relationship because 146,000 is still a lot of money!

And the reverse happened in my extended family. The executors took legal advice and the legal opinion was that the debt must be paid to the estate. In the event it was deducted from an inheritance.