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Original poster

Inheritance when a sibling owes money to deceased parent

304 replies

JustSaltPlease · 30/07/2024 16:27

Hi

My dad has sadly passed away a few weeks ago. He had around 20k in the bank which is being shared between the 4 children. No will.

However, one brother owed him 9k, and the other 2.5k.

What is the best way here. Surely what they owe should be considered dad's estate, and the whole amounts divided by 4. Siblings will still owe the other recipients then but this does mean the 2 brothers walk away without any cash. Am I making sense?

OP posts:
Kitkat1523 · 30/07/2024 18:07

Gasp0deTheW0nderD0g · 30/07/2024 17:40

It doesn't. When someone dies, their estate still owes any balance left on their mortgage, credit card, overdraft etc. Mirroring that, the bank owes them the amount they have in any savings accounts, utilities companies would have to pay back any overpayment, and so on. It's just the same if an individual owes them money. It's an asset of the estate and the executor or administrator has a legal duty to collect the money so it can be distributed to the beneficiaries.

Tricky when it involves family members, though.

Show quote history

Exactly…AC says it was a gift….no one can prove otherwise….it happens so so often….like I said ….so called ‘debt’ is gone….end of

ByUmberCrow · 30/07/2024 18:09

If I was the sibling that owed the 9K, I would morally not expect to receive any of the inheritance.

Likewise, if I knew I owed the £2.5K, I would expect this to be taken into account.

So - sibling with debt receives £5K, other two get £8750

Flibflobflibflob · 30/07/2024 18:13

I don’t understand how people can stiff their own siblings or be dishonest and be fine with that. i’d be the first to say “don’t forget I owe x amount”. Inheritance really brings out the worst in some people.

cabbageking · 30/07/2024 18:18

Payments due to the estate should be collected and debts paid before anyone is paid any inheritance.

It depends on the detail of the loan and whether there is anything official or it was a hand out.

If there is something written down you may wish to discuss with your sibling if he wants to pay it back to settle the issue or have it deducted from any settlement.

See how it goes down.

BreadInCaptivity · 30/07/2024 18:18

I find it odd when people say - is it worth the fallout?

Because what they are really saying is the siblings without the loans are being expected to put up with pretty shit behaviour from those who do.

In other words - roll over for the cheeky fuckers and let them get away with it to keep the peace (which is exactly why CF's keep behaving like they do).

I'd argue the responsibility to keep family relationships positive is with those who borrowed money.

I'm not a legal expert but my understanding is that if there is some proof these were loans they remain assets of the estate.

If they were gifts then depending on when they were made and the amount they could be liable for inheritance tax.

As a start point I'd be looking for evidence (emails, letters, texts, WhatsApp's) that demonstrate this money was a loan and not a gift.

caringcarer · 30/07/2024 18:28

Soontobe60 · 30/07/2024 16:35

You’re wrong - an executor has a duty to collect all debts owed to the deceased before distributing it.

Show quote history

This. The debts owed should be added to estate. DC who owes £2.5k should only receive £4.5k. DC who owes £9k should repay estate £2k. Others get paid out £7.5k.

NCwhattodo · 30/07/2024 18:31

My db owes my parents in the region of 30k My dm has a file which states how much he owes and dates etc.
She has said I’m to give it to the solicitor and it will be adjusted to take the money owed into account.
I don’t know if I will or not. As from my point of view the childcare she has done for me over the last 20 years would have cost me more than 30k.
I’m more worried about dm dying before df as he is completely unaware of the loan and will not be happy with db!

LaLaLouella · 30/07/2024 18:41

BreadInCaptivity · 30/07/2024 18:18

I find it odd when people say - is it worth the fallout?

Because what they are really saying is the siblings without the loans are being expected to put up with pretty shit behaviour from those who do.

In other words - roll over for the cheeky fuckers and let them get away with it to keep the peace (which is exactly why CF's keep behaving like they do).

I'd argue the responsibility to keep family relationships positive is with those who borrowed money.

I'm not a legal expert but my understanding is that if there is some proof these were loans they remain assets of the estate.

If they were gifts then depending on when they were made and the amount they could be liable for inheritance tax.

As a start point I'd be looking for evidence (emails, letters, texts, WhatsApp's) that demonstrate this money was a loan and not a gift.

Yep, this exactly! Be a doormat to keep the peace. No, The onus should be on the siblings that have already received loans to settle their debts and preserve good family relations.

mitogoshi · 30/07/2024 18:50

All depends on whether they are owning up to it and want to be fair as it's probable that it's hard to enforce and isn't worth falling out over.

Caramelbuttonsandalatte · 30/07/2024 18:52

Soontobe60 · 30/07/2024 16:35

You’re wrong - an executor has a duty to collect all debts owed to the deceased before distributing it.

Show quote history

how does that actually work does the executor have to take )in this case for example) a family member to small
claims court?

lastgreat · 30/07/2024 18:55

Does it not depend if it was documented as a loan or just given as a gift?

Ihateslugs · 30/07/2024 18:56

I have this situation having given my eldest son £20,000 over the years to help him out in a toxic divorce. When I rewrote my will recently, I have stipulated that my other two children will receive £20,000 each then the rest of my estate will be split three ways. I used a solicitor to write the will.

Luckily there should be plenty of money to do this, due to the value of my bungalow and other savings including inheritance from my mum which will more than cover any possible care costs.

BruFord · 30/07/2024 19:05

I agree with PP’s that documentation is the key here. My FIL has lent money to each of his four children over the years and keeps spreadsheets of what has been repaid/is still owed. My DH is one of his executors and as far as he knows, one sister currently owes their Dad money.

If she still owes money when the time comes, the documentation will be there. If all the siblings agree to write it off, fair enough. If not, DH will feel obliged to view it as a debt to the estate. I have a feeling that as everyone else, including DH, has repaid their Dad, the siblings will view it as a debt.

It’s not a nice situation to be dealing with. What do your siblings think?

BruFord · 30/07/2024 19:12

@Ihateslugs Your approach is the most logical and avoids unnecessary stress for your children down the line.

Tbh, it would make sense for my FIL (84) to do this if my SIL owes him a substantial amount (no idea if she does). Far less awkward.

Marchingonagain · 30/07/2024 19:28

Soontobe60 · 30/07/2024 16:34

If there is proof that your DF lent your siblings money, and there was, for example, a repayment plan in place, then yes, the debts should be ‘repaid’. His estate is actually worth 31.5K and each beneficiary should receive £7.9K each.

this

Andthereitis · 30/07/2024 19:43

Sympathies. It's a crap lot to deal with.

Sibling inequality is awful for one side.

PurpleDiva22 · 30/07/2024 19:46

I look at it like had my parents lived for the debt to be repaid, they would've spent the money and I wouldn't have seen it anyway

unsync · 30/07/2024 19:57

It goes back into the Estate as a debt. If they claim it was a gift, it will fall under the 7 year rule.

Original poster
JustSaltPlease · 30/07/2024 21:52

The debt is documented. A repayment agreement drawn up, amd witnessed!

I don't want to fall put over it but for me, the extra few thousand would male a big difference. All siblings own their own homes (one who owes 9k borrowed it to help with a deposit) and I'm private renting.

OP posts:
Original poster
JustSaltPlease · 30/07/2024 21:54

I just feel strongly that it shouldn't be written off

OP posts:
MissMoneyFairy · 30/07/2024 22:11

Have they offered or been asked to pay it back, what's left to pay on the repayment plan

Witchlite · 30/07/2024 22:22

Where does the idea that debts die when someone dies come from?

the estate is owed the money by the siblings. The estate may be owed money.

Add the amounts owed back into the pot, then divide and people get their share less the amount they owe.

MissMoneyFairy · 30/07/2024 22:26

Debts die on death if there's no money, property or assets,

Witchlite · 30/07/2024 22:29

Absolutely, but there are assets here. The debt is an asset.

Sewannoying · 30/07/2024 23:19

Witchlite · 30/07/2024 22:22

Where does the idea that debts die when someone dies come from?

the estate is owed the money by the siblings. The estate may be owed money.

Add the amounts owed back into the pot, then divide and people get their share less the amount they owe.

I think people are getting confused with the fact that debts owed by the deceased die if there are no assets to pay them with. But obviously this is different. It’s a debt owed to the deceased and needs to be recovered.