Will Terminology to Include Re/Payment of Debt

fluffyanimal

Hi

Was wondering if anyone might be able to offer some assistance in drafting some words to cover the repayment of a family debt within a will.

Situation is:
* Mother wanting to revise her will to accommodate the debt and a divorce.
* Two beneficiaries (myself and brother)
* Brother got in to financial difficulties a few years ago and mother paid off debt by way of a loan
* Brother is making small interest payments on the loan (as mother is a little dependent on the income still - side point)
* DIY Loan agreement written and signed by all three parties
* There is no disagreement about the loan needing to be repaid (at some point)

We're just a little unsure of how to include words in the will to cover this. If people feel that this is the sort of more complicated issue then mother is happy to go via a solicitor but we thought we could see if we could avoid that in the first instance. As stated in the last bullet, the need to repay the debt is not in question with any party, my mother just wanted it more formally documented in the will.

I've come up with the below wording...... thoughts / critique please....


Part n. Loan to <<BROTHER NAME>>

Re the loan of monies provided to <<BROTHER NAME>> during 2010; reference document "Loan Agreement <<MOTHER NAME>> and <<BROTHER NAME>>" between Mrs <<MOTHER NAME>> (<<MOTHER ADDRESS>>) and Mr <<BROTHER NAME>> (<<BROTHER ADDRESS>>).

The outstanding loan balance, at the time of my death, is either to be:

I. Repaid to the estate in full prior to the distribution of the estate

or

II. Deducted from the value of the estate bequeathed to <<BROTHER NAME>> and included in the value of the estate bequeathed to <<MY NAME>>

g6jns_2

fluffyanimal wrote: »

Hi

Was wondering if anyone might be able to offer some assistance in drafting some words to cover the repayment of a family debt within a will.

Situation is:
* Mother wanting to revise her will to accommodate the debt and a divorce.
* Two beneficiaries (myself and brother)
* Brother got in to financial difficulties a few years ago and mother paid off debt by way of a loan
* Brother is making small interest payments on the loan (as mother is a little dependent on the income still - side point)
* DIY Loan agreement written and signed by all three parties
* There is no disagreement about the loan needing to be repaid (at some point)

We're just a little unsure of how to include words in the will to cover this. If people feel that this is the sort of more complicated issue then mother is happy to go via a solicitor but we thought we could see if we could avoid that in the first instance. As stated in the last bullet, the need to repay the debt is not in question with any party, my mother just wanted it more formally documented in the will.

I've come up with the below wording...... thoughts / critique please....


Part n. Loan to <<BROTHER NAME>>

Re the loan of monies provided to <<BROTHER NAME>> during 2010; reference document "Loan Agreement <<MOTHER NAME>> and <<BROTHER NAME>>" between Mrs <<MOTHER NAME>> (<<MOTHER ADDRESS>>) and Mr <<BROTHER NAME>> (<<BROTHER ADDRESS>>).

The outstanding loan balance, at the time of my death, is either to be:

I. Repaid to the estate in full prior to the distribution of the estate

or

II. Deducted from the value of the estate bequeathed to <<BROTHER NAME>> and included in the value of the estate bequeathed to <<MY NAME>>

Don't DIY the will. Get a solicitor to do it. Cost will be around £100.

Mojisola

As the debt is documented, it would have to be repaid to the estate anyway. If your brother didn't have the money, the executors could reduce his inheritance by that amount.

Does it need to be put in the will at all?

fluffyanimal

Mojisola wrote: »

Does it need to be put in the will at all?

I honestly don't know.

I'm merely following my mother's request. She just wants things to be.... 'just so'. She's already arranged and paid for her own funeral and has got little named boxes where she can place things of sentimental value etc for each grandchild, daughter-in-law etc etc.

She very organised.

Mojisola

fluffyanimal wrote: »

I honestly don't know.

I'm merely following my mother's request. She just wants things to be.... 'just so'. She's already arranged and paid for her own funeral and has got little named boxes where she can place things of sentimental value etc for each grandchild, daughter-in-law etc etc.

She very organised.

That's very sensible of her. I would get to a solicitor to get the will written.

It may be that a very straightforward will is all that is required with an accompanying letter confirming that the debt is to be repaid.

It's also worth having in the will what should happen to her money if one or both of you die before her.

getmore4less

As long as the debt is documented as repayable on death that should do, a lot of open ended debts cannot be called in even on death.

Mojisola

It has been known for family debtors to claim that Mum or Dad told them the debt would die with them - that's why it does need to be documented somewhere. They may eventually have to pay up but it causes a lot of problems and upsets while things get sorted.

TBagpuss

get your mum to see a solicitor.

fluffyanimal

Thanks for everyones comments.

In the Loan Agreement there is a section which cover the death of the lender and the debt:

Death of the Lender
On the death of the 'lender' any outstanding loan amount will be held as a debt owed to the estate of the 'lender'.

Any outstanding loan amount will be deducted from any inheritance entitlement due to the 'borrower' from the 'lenders' estate, with the value of the outstanding loan being included in the estate for distribution to remaining beneficiaries in accordance with the lenders will.

Should the 'borrower' be the only remaining beneficiary of the estate the debt will be rendered null and void.

So the intent of the loan and the repayment of the debt is very clear in the Loan Agreement. As mentioned previously none of this is in question by any party it is just my mum trying to cover all bases.

Does this additional info add to people's thoughts/comment?

TIA

Mojisola

fluffyanimal wrote: »

In the Loan Agreement there is a section which cover the death of the lender and the debt:

Death of the Lender
On the death of the 'lender' any outstanding loan amount will be held as a debt owed to the estate of the 'lender'.

Any outstanding loan amount will be deducted from any inheritance entitlement due to the 'borrower' from the 'lenders' estate, with the value of the outstanding loan being included in the estate for distribution to remaining beneficiaries in accordance with the lenders will.

Should the 'borrower' be the only remaining beneficiary of the estate the debt will be rendered null and void.

So the intent of the loan and the repayment of the debt is very clear in the Loan Agreement. As mentioned previously none of this is in question by any party it is just my mum trying to cover all bases.

Is there any plan for if your brother dies first? It will be a debt on his estate - would your mother expect things he owns to be sold to repay her or would she write off the debt?

If his share is to go to someone other than you if he predeceases her, will she still want the split to be 50/50 or will she want any part of the debt not repaid to be deducted from the beneficiary's inheritance?

Remember that a will becomes a public document so don't have anything in it that you wouldn't want the world to know.

fluffyanimal

Mojisola wrote: »

Is there any plan for if your brother dies first? It will be a debt on his estate - would your mother expect things he owns to be sold to repay her or would she write off the debt?

Other than personal items I am the only other beneficiary so if my brother goes first the debt will just be written off.

EDIT: My mother has made specific gifts for grand kids

EDIT EDIT: I think if my brother goes first and my mu m wishes to revise the main estate split she will update the will, i.e. if she wants whatever may have gone ot my brother (Ex. the debt) to go to his children then we (she) will just update the will appropriately.