Loan from a Deceased Relative

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sixtoeight
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Loan from a Deceased Relative

Post by sixtoeight » Mon Jan 13, 2020 11:25 am

I have a question for the legal experts out there. I have a friend who borrowed $5,000 from her grandmother before the grandmother passed away. She made a few small payments (a few hundred dollars) back to her grandmother via checks but was apparently told by her grandmother before she passed away that she doesn't want the rest of the money anymore and consider it as a gift before she died. Now, my friend's cousin took over their grandmother's estate, and apparently, wants as much money from the estate as possible. He's been arguing with my friend about paying him back the rest of the $5,000 and even got an attorney to take my friend to court over this.

My friend made a promissory note to pay back the money when the grandmother initially lent her the money. However, the promissory note wasn't signed by the grandmother and was not notarized. Since the grandmother was old, she didn't really care too much about the money. Therefore, there is no legal documentation that the money owed needs to be paid back in full. The attorney for the cousin now claims that since my friend made some small payments in checks, the cousin can invoke the power of the estate and seek the rest of the money owed on behalf of the grandmother as the checks prove that this is a loan. If the attorney takes my friend to court, does the attorney have any legal grounds to ask for additional payments? I assume since the amount is so small, they would go to Small Claims Court?

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Re: Loan from a Deceased Relative

Post by Carefreeap » Mon Jan 13, 2020 11:27 am

Who are the beneficiaries of the estate?

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Re: Loan from a Deceased Relative

Post by sixtoeight » Mon Jan 13, 2020 11:31 am

I believe my friend said the beneficiaries is her cousin and his family. That's why he's taken over the estate. I personally don't think they have any legal grounds to win in a court for the rest of the money since there's no legal document stating that the loans need to be paid back. The only legal document was a promissory note drafted by my friend but it wasn't signed by the grandmother and was not notarized, thus it's legally void. My friend can just argue that it was a personal loan at first from one relative to another and that before the grandmother passed away, said she doesn't want the money back anymore. Does this make sense?

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Re: Loan from a Deceased Relative

Post by dm200 » Mon Jan 13, 2020 11:32 am

sixtoeight wrote:
Mon Jan 13, 2020 11:25 am
I have a question for the legal experts out there. I have a friend who borrowed $5,000 from her grandmother before the grandmother passed away. She made a few small payments (a few hundred dollars) back to her grandmother via checks but was apparently told by her grandmother before she passed away that she doesn't want the rest of the money anymore and consider it as a gift before she died. Now, my friend's cousin took over their grandmother's estate, and apparently, wants as much money from the estate as possible. He's been arguing with my friend about paying him back the rest of the $5,000 and even got an attorney to take my friend to court over this.
My friend made a promissory note to pay back the money when the grandmother initially lent her the money. However, the promissory note wasn't signed by the grandmother and was not notarized. Since the grandmother was old, she didn't really care too much about the money. Therefore, there is no legal documentation that the money owed needs to be paid back in full. The attorney for the cousin now claims that since my friend made some small payments in checks, the cousin can invoke the power of the estate and seek the rest of the money owed on behalf of the grandmother as the checks prove that this is a loan. If the attorney takes my friend to court, does the attorney have any legal grounds to ask for additional payments? I assume since the amount is so small, they would go to Small Claims Court?
No legal expertise here, but it seems to me that this loan balance may be fully collectible by the estate. There is a promissory note, signed by the borrower. Your friend seems not to dispute this. Also, several payments were made. I tend to believe your friend will end up owing the full balance of the loan plus attorney fees.

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Re: Loan from a Deceased Relative

Post by JoeRetire » Mon Jan 13, 2020 11:34 am

sixtoeight wrote:
Mon Jan 13, 2020 11:25 am
I have a question for the legal experts out there. I have a friend who borrowed $5,000 from her grandmother before the grandmother passed away. She made a few small payments (a few hundred dollars) back to her grandmother via checks but was apparently told by her grandmother before she passed away that she doesn't want the rest of the money anymore and consider it as a gift before she died.
How convenient. How unfortunate grandmother didn't express that in writing.
Now, my friend's cousin took over their grandmother's estate, and apparently, wants as much money from the estate as possible. He's been arguing with my friend about paying him back the rest of the $5,000 and even got an attorney to take my friend to court over this.
No surprise. Assuming the cousin is the executor, it's their job as a fiduciary to collect all debts owed.
My friend made a promissory note to pay back the money when the grandmother initially lent her the money. However, the promissory note wasn't signed by the grandmother and was not notarized.
Your friend made a mistake.
Since the grandmother was old, she didn't really care too much about the money. Therefore, there is no legal documentation that the money owed needs to be paid back in full. The attorney for the cousin now claims that since my friend made some small payments in checks, the cousin can invoke the power of the estate and seek the rest of the money owed on behalf of the grandmother as the checks prove that this is a loan.
Correct.
If the attorney takes my friend to court, does the attorney have any legal grounds to ask for additional payments?
Yes.
I assume since the amount is so small, they would go to Small Claims Court?
Maybe. Most folks don't use an attorney for Small Claims Court.
Last edited by JoeRetire on Mon Jan 13, 2020 11:36 am, edited 2 times in total.
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Re: Loan from a Deceased Relative

Post by dm200 » Mon Jan 13, 2020 11:34 am

sixtoeight wrote:
Mon Jan 13, 2020 11:31 am
I believe my friend said the beneficiaries is her cousin and his family. That's why he's taken over the estate. I personally don't think they have any legal grounds to win in a court for the rest of the money since there's no legal document stating that the loans need to be paid back. The only legal document was a promissory note drafted by my friend but it wasn't signed by the grandmother and was not notarized, thus it's legally void. My friend can just argue that it was a personal loan at first from one relative to another and that before the grandmother passed away, said she doesn't want the money back anymore. Does this make sense?
Not to me. No legal expertise, but I doubt this is legally void. My "bet" is that your friend would lose in court.

Almost all consumer (not real estate) loans, for example, from banks and credit unions are not notarized.

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Re: Loan from a Deceased Relative

Post by dm200 » Mon Jan 13, 2020 11:36 am

Neither do I see any indication that the cousin is acting improperly. I believe it is the duty of the legitimate person handling an estate to collect any and all amounts properly due to the estate.

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Re: Loan from a Deceased Relative

Post by delamer » Mon Jan 13, 2020 11:36 am

Has your friend considered meeting the cousin halfway, like at a $2500 total pay back to the estate?

It could be taken out of your friend’s share of the inheritance (assuming s/he is one of the heirs).

I am assuming that since there is no loan agreement signed by both parties that it’s all very murky.

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Re: Loan from a Deceased Relative

Post by littlebird » Mon Jan 13, 2020 11:37 am

sixtoeight wrote:
Mon Jan 13, 2020 11:25 am
My friend made a promissory note to pay back the money money when the grandmother initially lent her the money. However, the promissory note wasn't signed by the grandmother and was not notarized. Since the grandmother was old, she didn't really care too much about the money. Therefore, there is no legal documentation that the money owed needs to be paid back in full
You seems to have resolved the legal issues already, so what do you want from the forum?

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Re: Loan from a Deceased Relative

Post by JoeRetire » Mon Jan 13, 2020 11:39 am

sixtoeight wrote:
Mon Jan 13, 2020 11:31 am
I believe my friend said the beneficiaries is her cousin and his family. That's why he's taken over the estate. I personally don't think they have any legal grounds to win in a court for the rest of the money since there's no legal document stating that the loans need to be paid back. The only legal document was a promissory note drafted by my friend but it wasn't signed by the grandmother and was not notarized, thus it's legally void. My friend can just argue that it was a personal loan at first from one relative to another and that before the grandmother passed away, said she doesn't want the money back anymore. Does this make sense?
That will be your friend's argument in court.

IMHO, your friend will lose. It it were me, I'd advise my friend to pay the remainder of the loan to the estate.
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Re: Loan from a Deceased Relative

Post by sixtoeight » Mon Jan 13, 2020 11:40 am

littlebird wrote:
Mon Jan 13, 2020 11:37 am
sixtoeight wrote:
Mon Jan 13, 2020 11:25 am
My friend made a promissory note to pay back the money money when the grandmother initially lent her the money. However, the promissory note wasn't signed by the grandmother and was not notarized. Since the grandmother was old, she didn't really care too much about the money. Therefore, there is no legal documentation that the money owed needs to be paid back in full
You seems to have resolved the legal issues already, so what do you want from the forum?
I have no resolved any of the legal issues. I was only stating the facts of the circumstance and inserting my own (non-legal) opinion on the circumstance. I am not a lawyer and want the opinion of the forum on whether all the estate need is a partially signed promissory note to re-claim the rest of the loans in court.

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Re: Loan from a Deceased Relative

Post by chevca » Mon Jan 13, 2020 11:43 am

I also believe your friend would lose that battle. I'd advise them to just pay it back.

Sounds like the family situation isn't good? Seems petty the cousin would go after that amount, but also seems they find it worth it. Do the friend and cousin get along... why wasn't the friend left anything by grandma? Probably more than we need to know on a forum. But, seems like an unfortunate family situation. Sad to hear about that, but it happens.

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Re: Loan from a Deceased Relative

Post by dm200 » Mon Jan 13, 2020 11:45 am

chevca wrote:
Mon Jan 13, 2020 11:43 am
I also believe your friend would lose that battle. I'd advise them to just pay it back.
Sounds like the family situation isn't good? Seems petty the cousin would go after that amount, but also seems they find it worth it. Do the friend and cousin get along... why wasn't the friend left anything by grandma? Probably more than we need to know on a forum. But, seems like an unfortunate family situation. Sad to hear about that, but it happens.
I agree - and, as I stated, if the friend loses in court, he will also be likely to have to pay the legal costs.

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Re: Loan from a Deceased Relative

Post by RickBoglehead » Mon Jan 13, 2020 11:45 am

The executor is doing exactly what he should be doing in settling the estate.

The existence of payments made clearly shows it was intended to be paid back.

The agreement drafted shows the same, and it's assumed that the grandchild signed it and then forwarded it on to the grandmother.

The best the grandchild can hope for is to ask for a payment plan to the estate, if they cannot afford to pay it back in full at this time.
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Re: Loan from a Deceased Relative

Post by sixtoeight » Mon Jan 13, 2020 11:50 am

chevca wrote:
Mon Jan 13, 2020 11:43 am
I also believe your friend would lose that battle. I'd advise them to just pay it back.

Sounds like the family situation isn't good? Seems petty the cousin would go after that amount, but also seems they find it worth it. Do the friend and cousin get along... why wasn't the friend left anything by grandma? Probably more than we need to know on a forum. But, seems like an unfortunate family situation. Sad to hear about that, but it happens.
Yea, my friend said the cousin is blowing through the money on useless things right now like fancy cars and shoes. This is definitely coming from greed but as it appears from all the responses, it seems he's doing exactly what he's tasked to do.

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Re: Loan from a Deceased Relative

Post by Katietsu » Mon Jan 13, 2020 11:51 am

Forget about the legal argument for a second.

There is a written promissory note substantiating a loan. There are a few checks that show some payments were made. On the other hand, we have only the word of the borrower that a deceased person forgave the loan.

I am not suggesting that the loan was not forgiven. But that the proof looks to be on the side of still being owed.

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Re: Loan from a Deceased Relative

Post by EHEngineer » Mon Jan 13, 2020 11:54 am

sixtoeight wrote:
Mon Jan 13, 2020 11:25 am
She made a few small payments (a few hundred dollars) back to her grandmother via checks but was apparently told by her grandmother before she passed away that she doesn't want the rest of the money anymore and consider it as a gift before she died.
I'm not a lawyer.

You should check to see when the promisory note and the checks were written. It's possible this debt is past the statute of limitations.

In my understanding, if the executor doesn't collect all debts owed to the estate the executor can be sued by the other beneficiaries and be personally liable for the debt.

edited to correct spelling error.
Last edited by EHEngineer on Mon Jan 13, 2020 1:53 pm, edited 1 time in total.
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Re: Loan from a Deceased Relative

Post by dm200 » Mon Jan 13, 2020 11:59 am

Katietsu wrote:
Mon Jan 13, 2020 11:51 am
Forget about the legal argument for a second.
There is a written promissory note substantiating a loan. There are a few checks that show some payments were made. On the other hand, we have only the word of the borrower that a deceased person forgave the loan.
I am not suggesting that the loan was not forgiven. But that the proof looks to be on the side of still being owed.
Yes - my conclusion as well.

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Re: Loan from a Deceased Relative

Post by sixtoeight » Mon Jan 13, 2020 12:01 pm

EHEngineer wrote:
Mon Jan 13, 2020 11:54 am
sixtoeight wrote:
Mon Jan 13, 2020 11:25 am
She made a few small payments (a few hundred dollars) back to her grandmother via checks but was apparently told by her grandmother before she passed away that she doesn't want the rest of the money anymore and consider it as a gift before she died.
I'm not a lawyer.

You should check to see when the promisory note and the checks were written. It's possible this debt is past the statue of limitations.

In my understanding, if the executor doesn't collect all debts owed to the estate the executor can be sued by the other beneficiaries and be personally liable for the debt.
I think it's all within 1-2 years when this happened, so recent. What is the statue of limitations? I assume something way longer?

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Re: Loan from a Deceased Relative

Post by delamer » Mon Jan 13, 2020 12:02 pm

sixtoeight wrote:
Mon Jan 13, 2020 11:50 am
chevca wrote:
Mon Jan 13, 2020 11:43 am
I also believe your friend would lose that battle. I'd advise them to just pay it back.

Sounds like the family situation isn't good? Seems petty the cousin would go after that amount, but also seems they find it worth it. Do the friend and cousin get along... why wasn't the friend left anything by grandma? Probably more than we need to know on a forum. But, seems like an unfortunate family situation. Sad to hear about that, but it happens.
Yea, my friend said the cousin is blowing through the money on useless things right now like fancy cars and shoes. This is definitely coming from greed but as it appears from all the responses, it seems he's doing exactly what he's tasked to do.
The way the cousin is spending the money is irrelevant.

If the cousin was sending it all to orphans in a 3rd-world country, would that make your friend more willing to pay back the loan?

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Re: Loan from a Deceased Relative

Post by RickBoglehead » Mon Jan 13, 2020 12:06 pm

sixtoeight wrote:
Mon Jan 13, 2020 12:01 pm
I think it's all within 1-2 years when this happened, so recent. What is the statue of limitations? I assume something way longer?
That depends on the state. https://www.thebalance.com/state-by-sta ... ebt-960881

IANAL but your friend's goose is cooked.
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Re: Loan from a Deceased Relative

Post by 123 » Mon Jan 13, 2020 12:06 pm

sixtoeight wrote:
Mon Jan 13, 2020 11:25 am
...I assume since the amount is so small, they would go to Small Claims Court?
It would seem that Small Claims Court is the most likely but is there a formal probate case being opened to settle the estate or is it more informal like a irrevocable trust and/or account beneficiaries?

If there is no person in a formal role as trustee of an irrevocable trust or an appointed executor of the estate there may be no one who has legal standing to collect the debt. All this could vary by state. It might be necessary for someone to have legal standing to pursue the debt. If they don't have legal standing and you pay them the debt it might just be treated as a gift to them if someone with legal standing comes after you to collect the debt later on.

Is the cousin's friend the legally appointed representative of the estate? An attorney could write a coercive letter without real authority behind it, they're good at making vague threats sound legal.
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Re: Loan from a Deceased Relative

Post by Mr. Rumples » Mon Jan 13, 2020 12:10 pm

Some states specifically prohibit attorneys in small claims courts. In some jurisdictions, the court system is also affiliated with a small claims mediation system. DC has such a system, VA has it in some jurisdictions and for some cases, it appears MD has a system for their district courts, not sure if small claims falls into that.

If your friend does pay the balance, your friend should write the check to "The Estate of XYZ" and have the tax ID # issued by the IRS for the estate.

A few years back one of my cousins sued his siblings over the estate. The judge threw it out. My cousin sued again. Again, it was thrown out. From what I can tell, they just don't like this type of thing and to cause a family rift over this loan might be seen as unseemly by a judge. Your friend could win or loose depending on the mood of the judge and the degree to which he/she is permitted to use discretion in these cases. Perhaps your friend should go and see what goes on in small claims court to see if its worth the risk. My guess is its a toss up.

I only went to small claims court once, to be with a friend who was being sued. I was naive...I thought it would be like Judge Judy with some questioning. I think each case took two or three minutes in total.
Last edited by Mr. Rumples on Mon Jan 13, 2020 12:47 pm, edited 5 times in total.

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Re: Loan from a Deceased Relative

Post by surfstar » Mon Jan 13, 2020 12:17 pm

statute

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Re: Loan from a Deceased Relative

Post by Watty » Mon Jan 13, 2020 12:23 pm

What does the promissory note say about when the loan will be paid back?

If it says something like he will pay $100 a month then he may owe some back payments but that would not mean that the full $5K was due right now. Once he is current then he could continue making the remaining payments to the estate on the same schedule.

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Re: Loan from a Deceased Relative

Post by dm200 » Mon Jan 13, 2020 12:23 pm

It is interesting that the signed (by your friend) promissory note and record of payments made were in the deceased's records - indicating, to me, that such records were of some significance to the deceased.

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Re: Loan from a Deceased Relative

Post by chevca » Mon Jan 13, 2020 12:24 pm

Haha... I didn't even catch that. Just reading right along, my brain saw 'statute'.

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Re: Loan from a Deceased Relative

Post by dm200 » Mon Jan 13, 2020 12:25 pm

Watty wrote:
Mon Jan 13, 2020 12:23 pm
What does the promissory note say about when the loan will be paid back?
If it says something like he will pay $100 a month then he may owe some back payments but that would not mean that the full $5K was due right now. Once he is current then he could continue making the remaining payments to the estate on the same schedule.
Very true. it sounds, though, that no payments have been made by the friend for a considerable period of time.

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Re: Loan from a Deceased Relative

Post by chevca » Mon Jan 13, 2020 12:28 pm

dm200 wrote:
Mon Jan 13, 2020 12:23 pm
It is interesting that the signed (by your friend) promissory note and record of payments made were in the deceased's records - indicating, to me, that such records were of some significance to the deceased.
I was thinking that too. The fact the estate is even aware of this loan kind of seals the deal against the friend.

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Re: Loan from a Deceased Relative

Post by chevca » Mon Jan 13, 2020 12:33 pm

dm200 wrote:
Mon Jan 13, 2020 12:25 pm
Watty wrote:
Mon Jan 13, 2020 12:23 pm
What does the promissory note say about when the loan will be paid back?
If it says something like he will pay $100 a month then he may owe some back payments but that would not mean that the full $5K was due right now. Once he is current then he could continue making the remaining payments to the estate on the same schedule.
Very true. it sounds, though, that no payments have been made by the friend for a considerable period of time.
That's the whole 'proof' thing brought up earlier though. The proof now is, the estate has the note and however many checks. In theory, the friend could have paid the rest back in cash years ago to wipe out the loan. Although, there would probably be a deposit somewhere? But, the cousin could still be as petty and say the loan was only paid back the amount of however much the checks covered. All that matters now is what can be shown on paper.

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Re: Loan from a Deceased Relative

Post by chevca » Mon Jan 13, 2020 12:36 pm

It sounds like the friend and cousin don't have too great a relationship. I would think it would be worth the price to pay it back and just be done with this, dealing with the cousin, and having to go to court.

Is this a battle your friend really finds worth the fight??

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Re: Loan from a Deceased Relative

Post by Gill » Mon Jan 13, 2020 12:40 pm

Agree with the others who feel she is obligated on the note. No need for the lender/grandmother to sign the note as long as it was signed by the borrower. Unless she has evidence the loan was either paid or forgiven she is obligated to pay the estate.
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Re: Loan from a Deceased Relative

Post by UncleBen » Mon Jan 13, 2020 12:56 pm

I'm not lawyer either but as far as I know all that is needed for an enforceable contract is an offer, acceptance, and consideration. All are present here. Signatures and notarization are additional requirements only in circumstances.

The friend should pay up if he cannot prove the loan forgiveness.

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Re: Loan from a Deceased Relative

Post by TallBoy29er » Mon Jan 13, 2020 1:00 pm

dm200 wrote:
Mon Jan 13, 2020 12:25 pm
Watty wrote:
Mon Jan 13, 2020 12:23 pm
What does the promissory note say about when the loan will be paid back?
If it says something like he will pay $100 a month then he may owe some back payments but that would not mean that the full $5K was due right now. Once he is current then he could continue making the remaining payments to the estate on the same schedule.
Very true. it sounds, though, that no payments have been made by the friend for a considerable period of time.
On the same token, if the grandmother was alive, and evidence exists that no payments were made (funny, right...evidence of a negative) when the payment schedule would have suggested that they should have been, that could suggest that the loan had been forgiven.

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Re: Loan from a Deceased Relative

Post by cchrissyy » Mon Jan 13, 2020 1:06 pm

My friend made a promissory note to pay back the money when the grandmother initially lent her the money.
Therefore, there is no legal documentation that the money owed needs to be paid back in full.
This is self-contradicting. The promissory note IS legal documentation

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Re: Loan from a Deceased Relative

Post by sixtoeight » Mon Jan 13, 2020 1:38 pm

Thanks for all the feedback. At this point, I think the smart thing for my friend to do is come to some kind of repayment plan with her cousin.

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Re: Loan from a Deceased Relative

Post by Carefreeap » Mon Jan 13, 2020 1:40 pm

TallBoy29er wrote:
Mon Jan 13, 2020 1:00 pm
dm200 wrote:
Mon Jan 13, 2020 12:25 pm
Watty wrote:
Mon Jan 13, 2020 12:23 pm
What does the promissory note say about when the loan will be paid back?
If it says something like he will pay $100 a month then he may owe some back payments but that would not mean that the full $5K was due right now. Once he is current then he could continue making the remaining payments to the estate on the same schedule.
Very true. it sounds, though, that no payments have been made by the friend for a considerable period of time.
On the same token, if the grandmother was alive, and evidence exists that no payments were made (funny, right...evidence of a negative) when the payment schedule would have suggested that they should have been, that could suggest that the loan had been forgiven.
Not necessarily. My girlfriend borrowed about $30k from her parents almost twenty five years ago for a down payment. No note was written and no payments were made. But the loan was on the parents' "ledger". Her older siblings (the co-Trustees) wanted her to pay not only the note but accrued interest over time! They wound up backing off on the interest demand but did deduct the $30k from her share. Was it legal? The estate attorney thought so otherwise why would the amount have been left on the parents ledger? In any case my friend wasn't going to engage the services of an attorney to fight something whereby she had a high probability of losing. And the bottom line was she DID borrow the money but neither party addressed the terms in which it would be paid back.

In the OP's case it would seem the amount is so small it's really not worth it unless it exceeds the amount of the inheritance.

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Re: Loan from a Deceased Relative

Post by Carefreeap » Mon Jan 13, 2020 1:41 pm

sixtoeight wrote:
Mon Jan 13, 2020 1:38 pm
Thanks for all the feedback. At this point, I think the smart thing for my friend to do is come to some kind of repayment plan with her cousin.
How much is the estate worth? I would have the amount of the loan deducted from your friend's share of the inheritance.

sailaway
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Joined: Fri May 12, 2017 1:11 pm

Re: Loan from a Deceased Relative

Post by sailaway » Mon Jan 13, 2020 1:49 pm

Carefreeap wrote:
Mon Jan 13, 2020 1:41 pm
sixtoeight wrote:
Mon Jan 13, 2020 1:38 pm
Thanks for all the feedback. At this point, I think the smart thing for my friend to do is come to some kind of repayment plan with her cousin.
How much is the estate worth? I would have the amount of the loan deducted from your friend's share of the inheritance.
I don't know what is written down, but this is the understanding my parents have given me for my brothers' loans. And in our case, one has made regular payments and is near pay off, while the other hasn't made payments in years and is unlikely to start. His wife made a post about their new stove, with a fancy feature, and their latest attempt to get out of debt in the same week.

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sixtoeight
Posts: 35
Joined: Mon Nov 05, 2018 12:09 pm
Location: Washington, DC

Re: Loan from a Deceased Relative

Post by sixtoeight » Mon Jan 13, 2020 1:50 pm

Carefreeap wrote:
Mon Jan 13, 2020 1:41 pm
sixtoeight wrote:
Mon Jan 13, 2020 1:38 pm
Thanks for all the feedback. At this point, I think the smart thing for my friend to do is come to some kind of repayment plan with her cousin.
How much is the estate worth? I would have the amount of the loan deducted from your friend's share of the inheritance.
I don't think she inherited anything.

LFS1234
Posts: 123
Joined: Fri Feb 08, 2019 4:13 am

Re: Loan from a Deceased Relative

Post by LFS1234 » Mon Jan 13, 2020 2:23 pm

TallBoy29er wrote:
Mon Jan 13, 2020 1:00 pm
dm200 wrote:
Mon Jan 13, 2020 12:25 pm
Watty wrote:
Mon Jan 13, 2020 12:23 pm
What does the promissory note say about when the loan will be paid back?
If it says something like he will pay $100 a month then he may owe some back payments but that would not mean that the full $5K was due right now. Once he is current then he could continue making the remaining payments to the estate on the same schedule.
Very true. it sounds, though, that no payments have been made by the friend for a considerable period of time.
On the same token, if the grandmother was alive, and evidence exists that no payments were made (funny, right...evidence of a negative) when the payment schedule would have suggested that they should have been, that could suggest that the loan had been forgiven.
Granddaughter borrowed $5,000 from Grandmother. Apparently, Grandmother insisted upon a promissory note, which granddaughter executed. (I'm assuming this is the case, since the executor of the estate would have a difficult case if he/she is unable to produce such a note.)

Granddaughter essentially claims that Grandmother later turned the loan into a gift. However, the same Grandmother who was sophisticated enough to insist upon a promissory note for the loan, neither returned that note nor cancelled it - the obvious action that should have been taken if she no longer desired repayment of the note.

To get really good answers to her legal questions, Granddaughter would have to consult an attorney in the relevant jurisdiction. Sometimes there are obscure technicalities that aren't met. But I concur with the others who feel that it is more likely than not that she will have to repay what she borrowed, as well as collection costs, should this go the legal route.

There is also the right thing to do morally, and to the executor as well as to her other relatives, the view that an apparent loan should be turned into a gift because Grandmother "didn't really care too much about the money because she was old" probably won't sit very well.

Many families are estranged through long-ago inheritance battles, many of which were over fairly trivial things. Good family relations are worth a lot and shouldn't be compromised lightly. Unless there is something we're missing here, I'd suggest that Granddaughter find away of repaying the amount at issue ASAP, and that she do so in a way that minimizes hard feelings all around.

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