If a family member took out a loan from parents is it required to come out of estate after they are deceased?
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If a family member took out a loan from parents is it required to come out of estate after they are deceased?
My parents loaned my daughter money for graduate school. There was no formal
repayment agreement and each parent told me it did not need to be paid back.
However a document in their files noted there was a loan to my daughter and the
executors want to take it out of her share of the inheritance. Can this be disputed?
My parents lived in Missouri. Daughter lives in Washington state.
Asked on June 6, 2018 under Estate Planning, California
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 5 years ago | Contributor
No, they can NOT take it out from her share unless there was a written will which stated that such-and-such amount would come out from her share.
1) Only a will controls what happens to assets after death, not a "note" in a file;
2) An agreement to repay must be mutual and must include the repayment terms--if there was no actual agreement between your daughter and your parents that she would repay the money at a certain time, it was a gift, not a loan, and their notes in the file do not change that; that is, since the agreement would have had to have been between your daughter and your parents, notes in their file do not create an agreement to repay where none existed. (One party or side cannot create an agreement on its own--the other side *must* agree to the terms.)
3) Generally, giving someone money pre-death does not reduce their post-death share of any inheritance.
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 5 years ago | Contributor
No, they can NOT take it out from her share unless there was a written will which stated that such-and-such amount would come out from her share.
1) Only a will controls what happens to assets after death, not a "note" in a file;
2) An agreement to repay must be mutual and must include the repayment terms--if there was no actual agreement between your daughter and your parents that she would repay the money at a certain time, it was a gift, not a loan, and their notes in the file do not change that; that is, since the agreement would have had to have been between your daughter and your parents, notes in their file do not create an agreement to repay where none existed. (One party or side cannot create an agreement on its own--the other side *must* agree to the terms.)
3) Generally, giving someone money pre-death does not reduce their post-death share of any inheritance.
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