What is the fairest way to settle a parent’s estate if a child borrowed money years ago from the parent?

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What is the fairest way to settle a parent’s estate if a child borrowed money years ago from the parent?

About 38 years ago, I borrowed $35,000 from my mother to buy a house. We had an amortized schedule made up and paid the interest for several years. My mother decided to drop it all and just give it to us. How should that money be handled? Should the money owed be subtracted from the Will or should interest be paid on it? There are 2 of us in the Will. For my wife, monies borrowed whenever were subtracted from the person who borrowed it in the Will. What is the fairest way to settle this?

Asked on April 1, 2019 under Estate Planning, North Carolina

Answers:

M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 2 years ago | Contributor

What is fair is uo to you. By law, unless the Will requires that previous loans be deducted from your inheritance, then you are entitled to your full share.

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 2 years ago | Contributor

If the will doesn't specify that any unpaid loan amounts are to be deducted from the inheritance, then legally, they do not have to be deducted. The will is given effort as written, and any gifts, loans, etc. made previously by the deceased have no bearing on the will or the distribution of assets under it. So if the will doesn't take the debt into account, you are legally entitled to whatever the will gives you.
That's the legal answer. As for what is fair, you have to decide what seems fair and right to you. You can voluntarily waive or give up part of your inheritance, so you can could give up your right to the unpaid balance and/or unpaid balance plus interest and let the other heir get those amounts, if you deem that the right thing to do.


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