A thread for our lawyers and accountants can chime in.
I have the first question. Basically my Dad had passed away. To be divided evenly among 4 heirs. One of the heirs owed Dad $90,000. Let’s assume the estate is in a trust with $1,000,000.
Estate question For you
One way to calculate is to divide the estate by 4
($250,000 each).
Then the debtor heir gives $30,000 to each of the other heirs so the totals are
$280,000x3 heirs
$160,000x1 heir.
Or the estate should be considered $1,090,000 (assets plus the loan due)
That is divided 4 ways or $272,500. The debtor receives $90,000 less or 182,500
So the payouts are
$272,500x3
$182,500x1
(Amounts have been Changed from actual plus rounded to nice even numbers to make the maths easier)
The executor needs to collect any debts owed to the decedent, and needs to pay off any creditors. Whatever is left should be divided four ways. So basically, the second way.
Not a lawyer, but philosophically the second way makes way more sense. Just because the guy is the debtee, doesn’t make him any less entitled to his share of the paid debt.
Also, the more interesting question, and where this shit ends up collapsing and getting litigated sometimes, is whether the 90k debt is actually enforceable. I’m guessing this was done informally without any kind of promissory note or anything like that since it was between family. Hopefully that doesn’t happen in this case.
Thank you. 92 years and mom lived to 88. Amazingly mom had no end of life excess care and dad had only a couple of weeks. Lived off dividends, SS, and a small pension with very little spend of principal other than gifts to family or property purchase.
No dispute on the debt owed. Part of it is in a note and the brother in question volunteered there was additional debt without a note.
Very sorry for your loss. I’m not sure if your family is like this, but many many people leave their affairs in an unsettled state because it’s unpleasant to think about and can create family drama. Obviously that leaves a bunch of shit for executors to wrestle with, but you can think of the hassle you’re going through now (which hopefully will be minor!) as the price tag of your dad not having to deal with this stuff during his lifetime. You’re doing him a solid retrospectively.
His is mostly settled. He had a live in partner after mom died and there was a relationship agreement that while complicated, protected the estate (basically she got six months to move and she had bought a smaller house in the same neigborrhood island is moving before the six month date).
That and this loan are the only complications. Everything is owned by the trust. A third party (a bank representative) is the trustee so she got to be the bad guy with the live in partner as far as being firm about the six months.
Grandkids get a small cut up front. 4 brothers then get equal shares.
Getting a pretty sizable check by the end of year with more due once the property is sold.
Dad was president of the small town bank. When he retired it was it’s own subsidiary of small regional then it became just branches of the regional, then that regional swallowed a couple of other regionals, then it got swallowed and the swallowed again. It’s part of Huntington Bank now.
Sorry for your loss, and I am somewhat relieved that the complications ITT aren’t half as ugly as I expected. Hopefully doing things the 2nd way goes smoothly.
Did I mention the brother that thinks the first way is right is an undiagnosed bipolar that thought it was a good idea to live in his car in Seattle at one point?
Who is the executor? Ultimately that’s the only person whose opinion matters. God help you if you were all designated as co-executors, that’s a terrible way to distribute n estate.