Division of residue when one beneficiary owes money to the estate.

Judesman

There are two residual beneficiaries but one owed money to the estate that I have included in the value as an asset. Taking the total value I want to offset the beneficiaries debt against their distribution that is equal shares. I don't think it is just a case of deducting the loan from the beneficiaries share. Please could someone explain the accounting calculations required to obtain the correct and fair distribution. Many thanks. 

Keep_pedalling

As an example

Net assets held in the estate at the time of death = £500k

Loan owed by beneficiary A = £100k 

Total value of estate = £600 so beneficiary A and B should get £300k each. 

As Beneficiary A is already sitting on £100k (or maybe they spent it) they get paid out £200k and beneficiary B gets £300k

Flugelhorn

Judesman said:

 I don't think it is just a case of deducting the loan from the beneficiaries share. Please could someone explain the accounting calculations required to obtain the correct and fair distribution. Many thanks. 

as shown above - once the loan is added back to the total, each beneficiary (including the one who had the loan) is entitled to a share of the amount of that loan.

Judesman

Thank you. So, basically the loan value in the estate and the deduction from beneficiary A  cancel each other out.