Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@. Skimlinks & other affiliated links are turned on

Search
  • FIRST POST
    • Manxman in exile
    • By Manxman in exile 8th Aug 18, 12:10 PM
    • 1,485Posts
    • 1,128Thanks
    Manxman in exile
    Beneficiaries owing debts to the estate
    • #1
    • 8th Aug 18, 12:10 PM
    Beneficiaries owing debts to the estate 8th Aug 18 at 12:10 PM
    Hi all


    Hoping for some guidance on what ought(?) to be an easy problem.


    My MiL died a few months ago. Her estate is to be divided equally between my wife (A) and her two brothers (B and C). My wife is the sole executor (executrix?).


    Brother B had a loan from his mother of 5k and brother C a loan of 10k. My wife, A, had no loans. The loans to A and B will not be repaid, but presumably form part of MiL's estate.


    We initially thought the outstanding loans to B and C should simply be deducted from their respective shares of the estate, but what happens to the 15k (10k plus 5k) left over? How is that shared out?


    Our initial thought was that brothers B and C have benefited to a total amount of 15k that A(my wife) has not had the benefit of so that the 15k should go to her. But this doesn' seem right.


    The alternative is that of the 15k, my wife (A) and brother B equally share the 10k portion lent to brother C, and then my wife and brother C share the 5k portion lent to brother B.


    Hope that is clear enough for everybody to understand.


    Any suggestions?


    PS - Relationships between A, B and C are totally amicable and I'm sure will stay that way.
Page 1
    • Flugelhorn
    • By Flugelhorn 8th Aug 18, 12:18 PM
    • 916 Posts
    • 1,089 Thanks
    Flugelhorn
    • #2
    • 8th Aug 18, 12:18 PM
    • #2
    • 8th Aug 18, 12:18 PM
    basically the loans are owed to the estate so if the current estate is 105k then estate with the loans paid back is 120K.

    So each would get 120k divided by 3 and minus the loan:

    A gets 40K - nil = 40K
    B gets 40k-5K = 35K
    C gets 40K- 10K = 30K

    total paid out = 105K
    Last edited by Flugelhorn; 08-08-2018 at 12:21 PM.
    • warby68
    • By warby68 8th Aug 18, 12:21 PM
    • 990 Posts
    • 9,787 Thanks
    warby68
    • #3
    • 8th Aug 18, 12:21 PM
    • #3
    • 8th Aug 18, 12:21 PM
    I think the loans are added to the estate value and the total divided by 3.

    Then the loan amount owed is deducted from that person's share.
    • Manxman in exile
    • By Manxman in exile 8th Aug 18, 12:28 PM
    • 1,485 Posts
    • 1,128 Thanks
    Manxman in exile
    • #4
    • 8th Aug 18, 12:28 PM
    • #4
    • 8th Aug 18, 12:28 PM
    Sorry - there's a typo in para 3 I can't edit.


    "the loans to A and B should read " the "loans to B and C".
    • Dox
    • By Dox 8th Aug 18, 12:35 PM
    • 831 Posts
    • 606 Thanks
    Dox
    • #5
    • 8th Aug 18, 12:35 PM
    • #5
    • 8th Aug 18, 12:35 PM
    Happily it is an easy problem. Add back (at least notionally) all amounts owing to the estate; pay out any debts owed by the estate; then divide the resulting number by 3. If the two brothers don't physically repay the cash (and there's no need to, although it will need to be accounted for on any IHT forms), simply reduce the cash they receive by the amount of their respective loans.
    • Margot123
    • By Margot123 8th Aug 18, 2:04 PM
    • 1,007 Posts
    • 1,019 Thanks
    Margot123
    • #6
    • 8th Aug 18, 2:04 PM
    • #6
    • 8th Aug 18, 2:04 PM
    Is there clear documentary evidence of the loan, and does the borrower acknowledge the debt?

    I ask this as I had quite task retrieving a debt from my Brother that he had owed to my Father's estate.
    • Manxman in exile
    • By Manxman in exile 8th Aug 18, 4:56 PM
    • 1,485 Posts
    • 1,128 Thanks
    Manxman in exile
    • #7
    • 8th Aug 18, 4:56 PM
    • #7
    • 8th Aug 18, 4:56 PM
    I can log in but can't post replies(!!!???)


    Thanks to all who have replied.
    • Manxman in exile
    • By Manxman in exile 8th Aug 18, 4:58 PM
    • 1,485 Posts
    • 1,128 Thanks
    Manxman in exile
    • #8
    • 8th Aug 18, 4:58 PM
    • #8
    • 8th Aug 18, 4:58 PM
    Is there clear documentary evidence of the loan, and does the borrower acknowledge the debt?

    I ask this as I had quite task retrieving a debt from my Brother that he had owed to my Father's estate.
    Originally posted by Margot123

    No problem I think. One of the loans is mentioned in mum's will and the other is clearly acknowledged. The three siblings get on well.
    • Manxman in exile
    • By Manxman in exile 8th Aug 18, 4:59 PM
    • 1,485 Posts
    • 1,128 Thanks
    Manxman in exile
    • #9
    • 8th Aug 18, 4:59 PM
    • #9
    • 8th Aug 18, 4:59 PM
    basically the loans are owed to the estate so if the current estate is 105k then estate with the loans paid back is 120K.

    So each would get 120k divided by 3 and minus the loan:

    A gets 40K - nil = 40K
    B gets 40k-5K = 35K
    C gets 40K- 10K = 30K

    total paid out = 105K
    Originally posted by Flugelhorn

    That's what we first thought but have overthought it.


    Cheers
    • Manxman in exile
    • By Manxman in exile 8th Aug 18, 5:01 PM
    • 1,485 Posts
    • 1,128 Thanks
    Manxman in exile
    I think the loans are added to the estate value and the total divided by 3.

    Then the loan amount owed is deducted from that person's share.
    Originally posted by warby68

    Thanks. As per my previous post.
    • Manxman in exile
    • By Manxman in exile 8th Aug 18, 5:02 PM
    • 1,485 Posts
    • 1,128 Thanks
    Manxman in exile
    Happily it is an easy problem. Add back (at least notionally) all amounts owing to the estate; pay out any debts owed by the estate; then divide the resulting number by 3. If the two brothers don't physically repay the cash (and there's no need to, although it will need to be accounted for on any IHT forms), simply reduce the cash they receive by the amount of their respective loans.
    Originally posted by Dox

    Thanks. As per my two previous posts.
    • nom de plume
    • By nom de plume 9th Aug 18, 9:06 AM
    • 712 Posts
    • 657 Thanks
    nom de plume
    Is there clear documentary evidence of the loan, and does the borrower acknowledge the debt?

    I ask this as I had quite task retrieving a debt from my Brother that he had owed to my Father's estate.
    Originally posted by Margot123
    No problem I think. One of the loans is mentioned in mum's will and the other is clearly acknowledged. The three siblings get on well.
    Originally posted by Manxman in exile

    Had to pick up on this point as it is so pleasing to see that not everyone is a money grabber.
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

3,361Posts Today

8,523Users online

Martin's Twitter
  • Ta ta... for now. This August, as I try and do every few yrs, I'm lucky enough to be taking a sabbatical. No work,? https://t.co/Xx4R3eLhFG

  • RT @lethalbrignull: @MartinSLewis I've been sitting here for a good while trying to decide my answer to this, feeling grateful for living i?

  • Early days but currently it's exactly 50 50 in liberality v democracy, with younger people more liberal, older more? https://t.co/YwJr4izuIj

  • Follow Martin