How do we divide and credit our respective shares in our parents' estate?

You are correct.

The terms of the trust will govern, and if the trust is unclear, then the statutory law may govern. You being a beneficiary, I would encourage you to obtain beneficiary legal representation to guide you in your negotiation with your brother re the division of the assets.

You are right. The debts are assets of the estate. Add up all the assets, and then divide by 6. Imagine that the result is $20,000 each, and that one of the assets is a debt from brother C for $6,000. He gets to be relieved of the indebtedness and gets another $14,000 worth of assets from the estate.

First of all, if your brother is indeed the Trustee that means there is a Trust whose terms your brother must follow. The assets in the Trust are totally separate from the estate; anything in the Trust is not in the estate assets which is controlled by the Will's terms. You do not indicate if your father has already died and, if so, what the exact language of the Trust and Will is. If no mention is made of the loans, then they are ignored and the distribution occurs as if they do not exist, unless the heirs are willing to all agree to different terms. If your father has not yet died, he needs to decide how to handle the matter. You should probably sit down with all the children and work out how much each one gets based upon both methods so that none complain later than they were treated unfairly. Then, if the language of the Will is unclear to anyone, that person should get an opinion from someone independent and unfamiliar with any one of you as to which method is right. The easiest way might be to select an attorney and pay the several hundred dollars they will charge in order to get an answer to try to avoid fights in the future as to how the division was made, which will undoubtedly occur [but you can blame the neutral person for it and not be blamed yourself]. Technically, it the loan is not paid back to the estate, it could be considered income that is subject to personal taxes [an inheritance is not taxable] [much like in a foreclosure on a house the amount of the mortgage not paid is considered income]. You also have to be sure that the money given to each child before your father's death was actually a loan and not a gift, as the person getting a gift does not "owe" anything to the estate of the Trust or Will.

They owe the amount to the estate which will then be divided 6 ways giving some back to them so you are correct.