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?

Who is the exectuor?

If no will has been left - I don't believe there is an executor. The estate goes to administration, though for £20,000 im not sure if it needs to go through administration as there is not any IHT to pay.

Yes, here there are assets of £31.5k. This may be before debts like funeral costs, utility bills are paid.

https://www.citizensadvice.org.uk/family/death-and-wills/dealing-with-the-financial-affairs-of-someone-who-has-died/#:~:text=If%20there%20is%20no%20valid,the%20person%20who%20has%20died

there wasn't a will, there isn't a property -just cash, so looks like there isn't an executor or need for administration

So would I be, I bet they’d be coming after you if it was the other way round. I’d absolutely fall out with family screwing me over. Thank God it’s documented.

Their share of the inheritance pays it

We had similar recently.
$30000 in the bank and 4 DC.
DC 1 had $10000 loan and DC 3 had $5000 loan.
DC 1 got nothing, DC 2 and 4 got $10000 and DC 3 got $5000.
The rest went into the pot to be considered when the house sells.
In our family it was an easy decision and all agreed.

OP has already said it could be life-changing for her, as it could make the difference between having to stay in private rental or buy her own house. That’s a pretty important change in anyone’s life circumstances.

Are you a qualified family law solicitor?

As per my previous comment, they repay with their share of the estate
I.e they don't get anything or a reduced amount in the case of the other sibling

So that’s a choice offered eg pay what you owe if you can’t we take it off your share of inheritance ? An executor can’t take someone to small claims to settle a debt before dividing up inheritance?

Actually yes it does, or can. If the person owed the money agrees, then the repayment plan can continue but what is expected is that any money owed to the estate is paid in and any money that the deceased person owes is paid out. When my husband died, his credit card debt had to be settled from the estate. I could have negotiated payment over time with the credit card company but the standard process is that debts are settled immediately. In this case what they owe can be considered a "negative" inheritance and should be deducted from their share of the estate at rthe point of distiribution. So if each share is 1000, and someone owes 800, then they get 200 and everyone else gets 1000 plus a share of the debtors repayment. Family debtors who ask for anything else are being CF's of the highest order.

What would be the point in that?
The debt is repaid by the inheritance

You surely are not suggesting the DB takes out a loan, repays it to the estate and then is given it back as inheritance and pays the loan?

you absolutely can owe money to the estate of a dead person.

Op doesn't agree though

Bollocks to that.

This is why it should be documented especially if other siblings or another parent are still around. Even a text message acknowledging it as a debt is enough. The Executor has a responsibility to find all loans, debts, responsibilities of the estate, the estate pays for the funeral and any outstanding creditors of the deceased and should also call in any unpaid loan amounts, property or assets that are significant.

This is why I wouldn't do anything convoluted with monies or property and would advise other not to without it all being documented - no renting to relatives, large cash contributions to houses, jewellery etc without it in writing that it was a gift, loan, temporary thing etc.

I was one of two kids who were my parents executors and we had been named as such for probably 30 yrs before they passed away. I made sure to have conversations with both of them around things like this as Dad did constantly help some of us out and not others - he did it on a fair system rather than equal, which I didn't really have an issue with. Before he died (and after Mum) I had at least two conversations about if anyone had been helped out more than others and did we need to take that into account etc. But there were still some issues with belongings when we were clearing out, we had a convoluted system of assigning value, then people indicated what they wanted and we had a spreadsheet to show who had what and what value, cash was the easy bit to be honest. Deaths in family bring out some odd behaviour even in the most balanced minded families - we are 6 kids spread over 17 odd years so different attitudes to money, different life spaces, and it all made for a tricky job, albeit made easy by everyone being very agreeable in the end and understanding of those who were grieving in different ways.

Its a relatively small amount of money with the potential to cause huge rifts in the family. I think you have to count the debts when divvying up the cash and those with the biggest debts are likely to end up with nothing but maybe give them first pick of the personal items to ease the blow... but again make sure they are equally distributed as well. I honestly would go down the route of a spreadsheet with it all on as there was a post recently about someone who didn't check all debts etc as an executor and DWP are coming after them personally. Basically register the probate even for a small amount, publish the death in the Gazette which also goes online and creditors should check and after a certain amount of time you can distribute. I was lucky I knew Dad wouldn't have any debts - he was so tidy I was able to submit probate after 10 days - he literally had a file with everything listed out for me to submit. The main nuisance was he died 2 days before completing on his house sale, which meant we had to quickly get probate granted during covid and then we could complete - we were about 2 weeks late completing and it cost several thousand in compo to a mean spirited woman who had strung my Dad along for ages in the sale and then didn't even move in for 3 months afterwards. It was right legally but it was not morally in my view, had she actually been inconvenienced then yes

Debts the estate owes die if their's nothing to pay them with. Debts owed to the estate are assets of the estate. If they're documented the executor should make sure they're taken into account.

In law, the executor doesn't have a choice unless all the beneficiaries agree and a deed of variation confirms this. They have to follow the law, also the intestacy process if there is no will. Doing anything else lays them open to personal responsibility to put things right according to the law. I am not a legal beagle but have personal experience of a similar circumstance. Once the estate is properly distributed then the beneficiaries can do what they like with what they have inherited and any beneficiary who wants to give some of their share to the debtors can do so. The executor cannot.

Yes I know!

That's not how op portrayed it though. Her posts suggest she feels to estate is 20k plus the two loans. That's how I read it anyway.

"An executor can’t take someone to small claims to settle a debt before dividing up inheritance?"

Oh yes they can. And for larger amounts this does happen. (although in those cases it won't go through the small claims track).

Everyone is now throwing all different scenarios into the hat

There was no will and no executor .
There is an agreement and the DBs have acknowledged this.
The correct and fair course of action and what the Op is in agreement with is that the debts are settled out of the estate.
So DB1 gets nothing DB 2 gets a smaller share. Debts settled
No small claims, deeds of variation needed as they don't apply here
Op stay calm, stick to your guns and tell your DBs that the correct course is that they settle their debts this way.
They are then debt free and can save money for themselves

My bro got 10k less than his 2 siblings as he had had a 20k advance on inheritance

You absolutely can. It’s part of the executor’s job to gather in debts owed to the estate.

However, in this case it might be difficult to prove the father didn’t forgive the loans if the brothers claim he did.

Edited to say: sorry, for some reason I only saw the first page. Obviously this has been said multiple times.

Your brother who owes £2.5k is being ridiculous. He would get pretty much the same amount from the estate and his debt written off.
Your brother who owes £9k is ridiculous but slightly less so. He can either have £5k plus a £9k debt, or he can have the majority of his debt written off and owe just over £1k. Both would be better off repaying their debt now. Your brother who will still owe £1k should be able to scrape it together over a relatively short period of time.
Their reluctance suggests that they have no intention of paying into a pot to be split later imo.