Sisters loan from dad and impact his estate

[blanketedbydust]

Hi,

We are in the process of working through my late Father's finances and estate.

It has come to light that our dad lent my sister £20k, £17K of which was still outstanding at the point of his death. There was no written agreement, however sister has confirmed that this was the agreement.

I feel that my sister's share of dad's estate should be reduced by the value of the debt and the money that she owed has effectively reduced his estate by 17K. My partner disagrees and thinks that it's nothing to do with us

Surely morally she should accept that her share of any inheritance must be reduced that that amount? AIBU?

But why should the sibling be £17k better off? Surely most of us want our dc to have equal share of the inheritance. The dad didn’t leave extra to one - his wishes are clear 50:50.

If I was in a good financial position but my sibling struggling then I’d let it go but generally, she’s already received £17k of her inheritance just early.

As PP have said, the executors have a legal duty to include the loan in the valuation of the estate. This isn't something you and your sister can just ignore.

It would depend on circumstance for me. If she borrowed the money because she was struggling then I wouldn’t say a word. If it was to buy something like a car or an exotic holiday I may feel differently. I would hope that I wouldn’t care in all honesty, I don’t value money enough to fall out with anyone over it.

I’ve been executor for two estates in my family. In my mother’s case it rapidly became obvious that my sister had been fleecing mum for years. Geographically close to her, she had been up to no good.

With DBro’s knowledge I assessed what was OTT and produced estate accounts for the sorry situation. When it came to dividing up at the end, DSis had a large deduction from her share. My local sol advised that it COULD be challenged.

The accounts were very detailed and she went ballistic. Never talked to either of us again. A huge loss, and no challenge ever came.

Even then, DSis got away with a lot that could not be proved. A lot of it was “Oh, mum told me to treat myself to…” so, so difficult to prove anything…

@TeenLifeMum by ignoring the loan they are making the inheritance equal. The sibling will be £17k better off on that occasion, but throughout life, nothing is ever entirely equal. I'm sure there were occasions OP received help where her sibling didn't, and vice versa.

There are times I've received more than my siblings, and times they've received more than me. No one is keeping count to deduct it from inheritance because "why should they be better off" 🙄

But it was supposed to be paid back so essentially they had their inheritance early. They don’t have to pay it back, they just get less now. There’s strict rules re gifting money with maximum amounts within 7 years before you die. Tax related so there’s some precedent set.

@blanketedbydust Did she repay the 20k before she borrowed the 17k? whatever she still owed has to be deducted from her share so you end up having had the same. it is grossly unfair for you to be missing inheritance when she has gained so much more. tell your husband that it is most definitely everything to do with you!

Unless you know when you are going to die how do you propose to deal with your money. In theory you could close your account and open new ones every month and destroy records. Or you could just appoint a solicitor as an executor and say you don't want details disclosed to family members of what you spent and who to.

@TeenLifeMum considering the value of the house/total estate (over 300K) is the 17K worth the fallout?
and would the parent really have wanted the fallout between siblings over this?

Op, you cannot vary the will, only your sister can. In the grand scheme of things it’s not a lot of money and I suspect your father knew it would never be repaid.

So you illegally decided that you would decide who would get what despite what the will, stated? Or even intestate? I would be keeping hold of that extra money because you will be responsible if your sister decided to claim.

Definitely should be deducted from her share . It was a loan not a gift .

@Iwasafool I'm a really private person, the idea of my kids trawling through my banking details to find out what I've spent money on or who I've given money is really upsetting. it sounds like you have lent one of your children a lot of money by the way you have said this! not fair on the remaining kids who didnt get!

How many of you will be sharing the estate ?

Is there a will?
Who is the Executor ?

You are correct. 17k is still outstanding so it's only right it's reduced by 17k otherwise it's not being spilt equally.

Morally speaking if it was a loan then it should be paid back to the estate out of her inheritance. Legally speaking not sure if there is no proof.

Is there a back story here that she did all or most of the care/life admin for him? If she did then I'd say to forget about it

@blanketedbydust I dont think many parents realise the damage they do when they give money constantly to one child rather than all of them. it is grossly unfair and it makes the remaining siblings feel that their lives were unvalued to the parent!

She’s a CF. And no, her own personal circumstances don’t matter.

It was a loan not a gift. She needs to repay it or have it taken from her inheritance. She can’t be gifted within 7 years of death anyway due to inheritance tax law kicking in so she’d have to pay a big chunk to my tax man…

So you’ll be getting about £180,000? That’s a nice tidy sum. I’d forget about the outstanding £17,000.

It would depend on the circumstances. If my sister was in a position where she needed to borrow 20k from our dad , it would be for a necessity, not for something like a holiday. So with an estate of over 300k, clawing back the 17 k wouldn’t interest me. Only you know your family dynamic and sister. I’m guessing that you aren’t particularly close.

I’m in your sisters position and agree with you.

But why? Why should one child get 17k more than the other one. It is irrelevant how much the amount is. It was a loan, and therefore should be treated as such. I cannot believe there are people who actually say it shoud be written off! The sister is not disputing it was a loan. She is disputing (weirdly) she should have to pay it back!