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?

Op is not destroying their relationship
If the DBs blow up over this then it's on them because they are being unfair

Don't blame the Op for doing the correct and fair thing and standing up for herself.
Typical CF behaviour to accuse Op of being greedy when she insists on fairness
Distasteful my arse!

So now they want their siblings to bankroll them?

They are being unfair.

The fact is there could have been no inheritance at all.

As is you could perceive they are lucky that the inheritance due mostly covers the debt that in effect they no longer have to pay from income. So day to day they will be better off.

They have also benefited by the loan in the first place but don't want equivalence for their siblings.

If the loan(s) is/are documented the situation is clear that the amount is an asset of the estate.

Moral of the story is don't take out a loan you don't intend to pay back.

And if the brother who owes £9000 says "I didn't get anything from the Estate", then he's hoping to pull at your heart strings and assumes you're thick!

He has benefited - his loan has just been written off! Or the main bulk of it.

Chancer!

I am not sure that, as an executor, you can. Its the executor's responsibility to distribute the estate as per the will, if there is one, and the law. I mean if someone is feeling kind they might slip debtor the money to pay into the estate to keep it all square but an executor can't just let stuff go.

@godmum56 I see what you mean.
I meant that if the the three siblings agree, sibling A may not actually hand them each £375. But it’s up to them, not sibling A.

The sibling has already profited from this loan. The 9K was worth more when they were loaned it, (ie you could buy more X years ago than you can now)
Plus, whatever was bought, they have used or been advantaged by for years
Oh, and, if it was to repay a mortgage or other debt, that is interest saved. Maybe you would have liked to save on your credit card too ?

I don't even think that can happen until after the estate has been distributed and wound up. If a beneficiary or more than one agrees not to receive their due then they can do a deed of variation which will cost a fee. The executor can't actually say "you have agreed I will give you less so here you are" to a beneficiary because things have to be done in order. Estate has to be wound up owings received and debts paid before distribution and everything has to be done with a record and according to the law. basically people have to be two people.

The executor, is also a beneficiary
debtor A also a beneficiary
debtor B also a beneficiary

executor adds up estate money which is all the cash left plus the unpaid debts.
executor requires repayment from debtors but acknowledges that they are also beneficiaries and ALLOWS them to deduct what they owe from their expected share of the estate money. Where their share is less than they owe then they must pay the balance into the estate to enable the beneficiaries to receive their due. Once the estate is distributed then any beneficiary who wishes to can pass whatever they like to whever they like. The risk of doing it beforehand is that a beneficiary could then blame the executor for not receiving their full due and there would be no official record that said beneficiary had agreed to it.

Add up the total Incl the residual loans, divide by 4. Priority on the £20k goes to the kids not in receipt of a loan [unless siblings willing to pay commercial lending rate which seems unlikely]
Suggest the two brothers with loans get nothing/any surplus. The one with the larger loan pays the debt owed to the smaller leaving the other two siblings out of it entirely. Keeps it clean. See how much they like their "pot" argument then.

they can't do this either. The loan is treated as an asset of the estate and has to be dealt with as such.

No sorry it’s a personal situation I’m in so I just thought this thread was a good place to find out if what I’m being threatened with is actually allowed or not ! (Owe £500 but inheritance is a lot more than that - I said please deduct the £500 off mine was told no will take you to small
claims to get it back!)

But surely that can be dealt with as a paper transaction? If not then both brothers will have to find the cash in anticipation of their share of the £20k so either way the OP is sorted?

This isn’t about family destroying relationships over money it is about the executor of the will adhering to the letter of the law.

It really doesn’t matter what any family member wants or doesn’t want, it is about what the law states should be done in these given circumstances

Talk about destroying relationships because one sibling wants this or that to happen and the other sibling wants something different, my only advice is to step away which ever side you are on because what you want doesn’t come into it

you can't do the "priority goes to" though, it has to be treated as though the debtors and the brothers are different people. Yes it can be done as a paper calculation but the debtor who owes more than they expect to get MUST make up the difference.

What, really? That is crazy.

Yes, they could try to take you to court but you would have a defence of "equitable set-off", based on what you have said, in that you are also a beneficiary of the will and the executor has a responsibility to distribute your share of the estate to you.

Who is threatening this?

If your inheritance will be more than £500, you are absolutely right that the executor should simply deduct what you owe from your inheritance. The right of set-off applies. If the executor takes you to small claims, they should lose.

One of siblings (who is the executor) I had borrowed £1000 a while ago was meant to pay back in 4 £250 instalments which I did 2 of then lost my job then DF passed away so because I didn’t have £500 I asked can it be taken off my inheritance to be told no it’ll be small claims - but I wasn’t sure that was legal ? Very toxic family and tbh I might try and get one of those awful loans just to get them off my back as stressed and grieving , they won’t even wait till I have a new job to pay it I’m being pressured. Sorry don’t want to derail someone’s thread I just thought I could find out here

If there is any interest in maintaining the relationships, I’d possibly let it go - unless I desperately needed the money.

Haven’t RTFT op, but what are the financial circumstances of the 4 siblings? I’m assuming the 2 with the debts don’t have much money to spare if they were borrowing from their father?

The executor can't let it go.

@godmum56
Perhaps start another thread?
I think you would get good advice here in the Legal section , otherwise posters are going to get muddled on this thread
Sounds petty as far as I'm aware the set-off rule applies as per previous poster so no idea why they would pursue via SCC?

"Sorry don’t want to derail someone’s thread I just thought I could find out here"

Please, do listen to what prh47bridge said earlier.

If your inheritance will be more than £500, you are absolutely right that the executor should simply deduct what you owe from your inheritance. The right of set-off applies. If the executor takes you to small claims, they should lose.

Please do not worry about this. Let them make all the threats that they want. From what you have said here, you are entirely right. Do not let them bully you.

No you are not making sense to me.

If having a relationship with them means letting them get away with being totally selfish and unfair, then it’s not worth it.

OP I wonder if you could get the brother who didn’t borrow any money on your side, and help make the borrowers see how unfair their proposal is. Like a pp said o could all agree to write off the extra 1k for the sake of drawing a line under it, so the brother who borrowed 9k still ends up slightly better off overall.

See my post. It is perfectly legal to set off what you owe against your inheritance. The executor is wrong.

You have answered the wrong person! 😊