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?

You most certainly can owe money to a dead person's estate! It is up to the executor to collect debts if they can prove they exist.

Only in the eyes of the person who borrowed the money and now doesn't want to repay it!

What a rubbish 'suggestion', maybe from one who borrows with no intention of repaying?

Technically: debt is owed to estate so should be collected in before distribution
In reality: if there is no evidence of the debt (ideally written but doesn’t have to be) then it is hard to prove it was not a gift
exception: if the borrower was appointed an executor in the will, it will be presumed in the absence of evidence otherwise that the debt was forgiven and not intended to be repaid.

I just don't understand ppl like your sil. They borrowed the money how can she think it's OK to not pay it back.. and to claim the debt died with the mil. They have literally been given 15k more then the other kids if they didnt pay it back. How can she think it's OK not to pay it back or get less inheritance . It was good of your hubby to say not worth the upset but I can't see that anyone other then your sil caused upset on the matter . Wanting 15k and not pay it back would have been absolutely wrong against the rest of you. And she essentially didn't pay it back did she. She got an advance on their inheritance and never had to get the money together to pay the 15k back.

If the debt is documented and this is how much is still owing then the estate in theory is the £20,000 + £11,500 owed to the estate by the 2 brothers so £31,500 divided by 4
So £7875 each.
The brother who owes £9000 will still owe £1125 to the estate so that would mean £375 to each of his 3 siblings.

So the 2 who don’t owe anything will get £7500 each and the one who owed £2500 will have his debt written off and will receive £5000. The one who owed £9,000 will have £7875 of the debt written off and owe each sibling £375 each.

If however there is nothing in writing which indicates there was any loans made then unless the brothers who owe the money are willing to forfeit or adjust the amount they take for their inheritance then it is £5000 each

In these sorts of situations sometimes if there is nothing in writing about the loans made and to not cause bad feelings then either asking for half the outstanding amount back to be repayable as a gesture of goodwill and the amounts adjusted to right off the rest so even the one who owes £9k receives something from his fathers estate (£1937.50) whilst the rest get £6437.50 £6437.50 and £5187.50 respectively

its not just "up to" its a legal responsibility. If the executor fails in that responsibility then the beneficiaries can require the money from the executor themselves!

My brother treats DM (who is on incapacity benefits / pension) as a cashpoint and I daren't think how many 1000s she has handed out to him. A lot of money.

As far as I know in her will she is giving something to each of our DDs (we each only have one child) and we split the rest 50/50. I don't care about that, my mum isn't rich and I don't really need what little money she has.

I guess it sticks in my craw that this is money that we could be giving to our daughters to help them in their lives, instead of it all going to maintaining his chaotic dysfunctional lifestyle.

With you on this. I think the onus is of course on the siblings who borrowed money.

If they aren't forthcoming (disappointing!) then ask them how they'd feel if it were the other way round, paint an imaginary scenario with brother A and brother B and ask what the correct outcome should be 😬/ or say your Dad lent you 40k but it was ages ago so doesn't count. 😁

Makes no sense! They should get less because they've already had and enjoyed the money. Clearly. Hope the solicitor clears this up for you so you don't have to.

I'd tell them where to shove that suggestion.

Well yeh….obviously

@Soontobe60
"
Why should she be the one to subsidise her Dbs though? For some people, £2.8k is an awful lot of money. they expect their ‘share’ up front and she has to wait for hers? Talk about male entitlement!"

This ⬆️

Then why not suggest that the loans are deducted from their share

i.e the 2 without the loan get £7500

the one with the £2.5k loan gets the loan written off and £5000 which is after all, all he was expecting if the monies were divided 4 ways and would still have then had to pay a sum of money each month
Into a pot to pay for his £2500 loan
and the one that owes £9000 gets nothing but only then owes £375 to each sibling which he can then pay off monthly

Ultimately the executors could insist on the whole £9000 and £2500 to be paid back before the monies are distributed.

It might not be to everyone’s liking and it might have been thought of as a loan without a repayment date but ultimately that repayment date came on the day your father died.

This isn’t about what family members want or don’t want to happen. There is no point in anyone getting angry as to how anyone wants the money divided up
There are laws that the executor has to adhere to and it doesn’t matter what you or your brother or individual family members think is fair or unfair. It is the law that has to be applied

Your brother shouldn’t be blaming you for the executor of the will applying the law

Since the loan is documented, look at the terms of the loan. It is repayable on demand? If so, the executor should make a demand on the loan so that it is repayable in full immediately. The executor should do this because it is their duty to call in all the assets of the estate for distribution to the beneficiaries. Once the demand is made, the borrower must pay up in full.

None of this 'pot' nonsense which is just dragging things out to the advantage of the borrower, will fuel continuing disputes and bad feeling between the siblings rather than a clean distribution which is in accordance with OP's father's wishes. I'll bet nothing goes into the pot and the sum is too small to sue and this arrangement (sensibly) requires lawyers to draft and legal fees will eat into the 'pot' any way.

It is more complicated if the loan is not repayable on demand. This may require advice from a probate lawyer as to how to realise the value of the loan.

I don't think it matters. I think that he default position is that the loan immediately becomes repayable to the estate where this is possible. In this case it appears to be possible or mostly possible because the debtors are also beneficiaries.

It’s not arrogance to say that family relationships matter more than £2.5k, no matter how much you earn. Even if you’re on minimum wage, £2.5k is a small portion of your annual salary. I wouldn’t destroy my relationship with my siblings for many multiples of my annual salary.

The whole idea of “benefitting more from their father’s death” is distasteful and if I were in this situation I’d want to move on as quickly as possible.

Not sure why it’s a bad idea to work on your own earning power, instead of scrabbling in the dust fighting your own family for a couple of thousand.

Have you not understood that the law says that this cannot happen? It seems as though the debtors have no such scuples about "destroying the relationship"

But why should it fall to the OP to keep the family relationship going well by forfeiting money that is rightfully theirs?

It's not up to you to decide if the amount is small to the OP. If they don't generally have cash to spare then thousands do matter.

Perhaps if the brother had done as you're suggesting he wouldn't have had to borrow the money in the first place? He doesn't just get to keep it now that his parent has died.

@Caramelbuttonsandalatte The brother owing the £9K doesn’t need to come up with the full amount in cash, they’ll divide everything up as @Blondiebeachbabe has outlined:

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.

I wouldn’t destroy my relationship with my siblings for many multiples of my annual salary.

But what if your siblings would?

Exactly. Perhaps then is the time to decide if you want to fall out over £375 if he indeed then refuses to pay.

But giving him his share when he already owes money? Nope. He may feel like he's not benefiting from the inheritance but he already has.

Very similar divide here to an old MN favourite 'Should we split the bill or each pay for what we had?' Whenever this comes up, it always goes something like this:

OP: I am unemployed and almost out of savings. I met a friend for a catch up. I had a cup of coffee and a glass of water, which cost £4. My friend had a bottle of Veuve Clicquot and a seven course tasting menu, which cost £300. She wanted to split the bill between us. Am I being a Scrooge to say no?

Vast majority of posters: No.

A few posters: Who can be bothered to be this petty? Just pay half the bill! You had a nice time with your friend, didn't you?

Exactly, @CellophaneFlower , sibling A has already benefitted from the inheritance, he got his share early.

I’d be inclined to let the £375 go to keep things simple.