Inheritance when a sibling owes money to deceased parent

[JustSaltPlease]

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?

There may well not be any need for probate. Banks and building societies are prepared to release funds under a certain amount to executors/personal representative on sight of a death certificate and the will, where there is one. I assume if there isn't one you sign a declaration to that effect.

Not sure why the seven year rule was mentioned above. That relates to inheritance tax and that is only relevant where the deceased has left hundreds of thousands of pounds, and if most of that is a family home being left to family, not even then.

£20K + £9K + £2.5K = £31.5K
That’s £7,875 inheritance each.
but there is only £20K available right now.
Clearly brother owing £9K gets nothing
I’d allocate £5K to the brother owing £2.5K and £7,500 to the two of you who owe nothing.
You can decide whether to write off the £1,125 split 3 ways (£375 each) the first brother owes you. I’d leave it.

OP is right about how this should play out.

I don't understand why the brothers prefer to keep paying back according to a plan, when one can get his debt repaid and walk away with a small lump sum and the other can reduce what he owes to £1k. They sound a bit thick to me.
You might suggest he repays the £1k in instalments and it will all be done and dusted in a few months.

I am a lawyer who specialises in this area. Try not to involve lawyers, as on these values it won't be worth the fees.

With such a low balance, is the bank insisting on a Grant before they release the funds? If they don't want a Grant it's likely all siblings will need to sign the instruction to the bank re where to send the money (good!). If you need a Grant, I suggest you look into being the one to obtain it. Siblings rank equally, so you will have to notify the others, but it will put you in control to make sure it's done properly.

And all people take note: Make a Will, appointing someone you trust to be fair-minded as executor. And always document any financial dealings with anyone, including family.

Do you not trust them to repay it?

No. That doesn’t work.

Why should the kid who borrowed £9k only benefit to the tune of £5k whilst 2 others get £7k?

if you’re going to insist it’s part of the pot what you do is add the 9 from A and the 2.5 from B to the total and divide by 4.

if this goes to court the likelihood is that the legal costs would be more than the amounts involved and very possible. For the amounts we are talking about it’s a sad thing to destroy relationships over.

I do see why the OP wouldn't be happy with a continuing loan though if the brothers have the cash to hand and are in better financial circumstances. Have you appealed to their better nature and put your cards on the table about how much having the money now would mean to you OP?

I would open an east access account and put all the money there and let the brothers continue paying their repayments for the debt. Then say in 6 months time, pay out £2,000 each and again in further 6 months time, until the time when the money is paid back in full. I think if you ask Solicitor advice, they will say money lent should be repaid before distributing any money, as that debt is part of the deceased estate. Sorry for your loss.

What cheeky f***y! ! Your brothers are grabby. If they could take the skin off your back, they would. Prepare to either do battle or to watch your inheritance walk off into the sunset with them. You are not going to change their minds, you’ll need to legally enforce it.

Surely the siblings should be aware they borrowed money so this will affect their share. I’d be expecting that if I’d have borrowed money from a parent

Keep it factual and reply with no, that won’t work. Share the sums and say they have two options:

a) they pay what they owe back into the estate now and then the total is shared equally.

b) Or what they owe is taken into consideration and it effectively means they’ve had their share so the estate is split between the siblings who don’t owe anything.

present it as they are the only two choices. None of this pay into a pot nonsense, that will never happen.

but as others have said, the estate needs to pay for the funeral etc and possibly other debts 1st so the total estate could be less and in scenario b) the bond debt owing siblings are effectively paying for that so the other siblings should contribute to the costs.

the simplest thing would be for all debts to be repaid and then the estate to be split so they’d get their money back straight away anyway but they don’t inherit twice which is what they’re effectively trying to orchestrate

That's how we did it. All debts should be called in by the estate.

So for example there was 100,000 to go between 4, but A owed 14k and b owed 6.

Total pot is now 120k.

Split by 4 that would be 30k each.

So A gets £16k
B gets £24k
C gets £40k
D gets £40k

Your brothers are being really shitty about this, if they were decent people they would see the justice of your position especially taking into account who owns and doesn’t own a house. So with that in mind, I’d say stick to your guns and don’t compromise, and if you fall out with them over it then so be it, because they’re not nice people and they don’t care about your welfare.

Sibling A, who owes £9k, should receive nothing

Sibling B, who owes £2.5k, should get £5000

Siblings C&D who owe nothing, should get £7500

Sibling A, owes siblings B, C and D, £375 each.

OK, this does really make a very big difference.

I understand that you don't want to fall out about this but, just sometimes, you've got to put your own needs equally with that of others.

You say that there is no will, so somebody will have to step us as administrator of the estate.

It is the responsibility of the administrator to recover any debts owing to the deceased's estate.

Normally, in this sort of situation there won't be anything written down and it would be very difficult to prove (it would just be a case of he said/she said).

But a written, witnessed agreement is a totally different ball game.

My parents helped out one of my siblings a lot. There was no question we would have considered this when dividing their estate.

I think you should write off this money as if it had been gifted rather than loaned.

Just all take £5k it's not the time for stress or fall outs over a few grand if you can help it

I think what your brothers have suggested is very reasonable. You wouldn't have had the money anyway if he hadn't died and do you really want to push for the money immediately and risk a family rift when you'd get the money eventually anyway?

This is the right way.

The question is whether you want to risk the fall out for the sake of an extra £2.5k?

A lot of people who don’t know what they’re talking about are giving legal advice on this thread.

I agree.

Why should OP drop it? And who do you think you are to tell them to focus their energy on qualifications and long term earnings??? What arrogance. 😒

The actual amount doesn't matter. Two siblings, one especially, are going to benefit more from their father's death, which probably wasn't what he intended given that the loans are documented.

@Ihateslugs Even this doesn't actually make it fair as £20k when you die (20 years away?) will be worth far less than the £20k is now (or say 5 years ago).

You would be far better gifting the £20k now and allowing your other children to benefit fairly, if that is your true intention.

Really? For the sake of an extra £2.5K? I would understand it if it was a life-changing sum of money, but to fall out with siblings for the sake of £2.5K is just sad.

Do you know the OP's situation? Perhaps an extra couple of thousand would make a really big difference to her life?

There is everybody on MN from those who are part of a couple earning well over £200k a year to those who are single parents living on benefits.

You do come across as being a bit judgey.

At a guess, I'd say they might not be intending to keep the repayments going.