I am executor to my dad's trust and my brother borrowed $55,000 over time what do I do about making things right?

Question

My brother borrowed $5,000, then $20,000, then $30,000. He never paid it back. He has always been that way. What do I do to balance the scales with the remaining 3 of us and I am 1 of the 3.

Kathleen Delacy · Answer

You need to look at the trust to see if there is a provision.  It would depend on when he borrowed the money, etc.

Monica H. Donaldson Stewart · Answer

I am answering this question from the perspective of "settling" the dispute since I do not litigate probate/trust matters. If the amount your brother borrowed was less than his "entire" share of the trust, you can "credit" his share with the amount he borrows, and then divide the rest among the other beneficiaries. For example, if the trust estate is valued at $300k, that means that each sibling would be entitled to $100k; however, your brother has already received $55k of his share. This means that you and the third sibling would each receive $55k (to balance out the loans to your brother), and then the remaining amount would be equally divided among the three of you.

Erven Nelson · Answer

You should treat the brother like any other person who owes the trust money.  As trustee, send him a demand letter telling him that if he doesn't pay or come to terms with you he will be sued by a lawyer on behalf of the trust.  I have a partner who specializes in trust administration, and there are other good lawyers in Nevada who can help you.

Victor Waid · Answer

Same answer I gave before. Were these actual loans? If so, then they are assets of the estate and need to be accounted for, especially when time comes for distribution according to the terms of the trust; if not, and were gifts, then they were gifts outside of the trust estate.

Frances Headley · Answer

It depends upon what the will says and what proof you have of the indebtedness.  You should consult a probate attorney to determine how you can proceed.

Richard Keyes · Answer

You as the trustee have the right to take the $55,000 in consideration when you distribute the trust assets.  Please make sure that you are letting your brother know that you are doing this and get a release from him that the net amount is all he is entitled to for the distribution.

Gerald Bagazinski · Answer

You could treat the loan as an asset in the trust inventory.

Christine James · Answer

Tell him he needs to pay it back by having his share reduced and see what he says. Legally if there was no promissory note it will be hard to force repayment.

James Frederick · Answer

The question cannot be answered from the facts you have stated. Was it clear that your dad intended the money to be paid back? That seems like an obvious question, but unless it is clear from the documents that he did, then you may not be able to collect it. If that is the case, you would need to equally divide the estate assets.

Douglas Tull · Answer

A lot depends on the language of the trust, when it was signed, and when these "loans" made.  If no evidence of a loan exists from the Trust (no promissory notes or memos on check which indicate they are "loans" from the Trust - and if dad's Trust was written or amended after the "loans" then you may have trouble asserting a right against brother.  Also, without something mentioning the trust in terms of the disbursements (did funds come from the trust) to the brother, the right of action that exists, if any, may be in a probate proceeding - which would add cost and delay to settlement of your father's trust/estate.

Brian Haggerty · Answer

Talk to the lawyer helping you with the administration of the trust (please tell me you've got the advice of a lawyer in doing this). In general, in Oregon, unless your Dad got enforceable promissory notes for the "loans," or unless he left some specific directions in his trust, there isn't much you can do.

Bernard H. Greenberg · Answer

To start, your job is not "to balance the scales". Your job is to be the trustee of the trust and follow it's terms and Colorado law in administering the trust. If there are legitimate debts owed by your brother to the trust, then there are actions you can take concerning these.  To determine your proper course of action, you should consult with an attorney who specializes in trust administration and litigation.

James Oberholtzer · Answer

If your brother really borrowed the money and you can prove it, he owes it back to whomever he borrowed it from.  If it was the trust, the trustee has a duty to recover it.

Mark T. Peters · Answer

Assuming that there has been documentation regarding the loans, he has received $55,000 towards his share.  If the $55,000 is also part of his siblings share, then you should ask for repayment.  If he doesn't repay, then you sue him to repay the trust.  Of course, if there is no promissory note, that may be tough.

Norman Green · Answer

Consult your lawyer.  Are you executor of your dad's estate or trustee of his trust?  Are their promissory notes?  To your dad individually or as trustee?  Possibly you will be able to treat this as an advance to him or as an asset of the trust or estate, which likely would have similar effect.

Thomas Edward Gates · Answer

You need to check both the will and trust document concerning forgiveness of outstanding loans.  If no language exist to that effect, then you can subtract from his distribution the money that he owes the estate.

Dara J. Goldsmith · Answer

There are a number of issues, are the loans documented in writing?  Does your brother acknowledge that he still owes the money?  Are the loans addressed in the estate planning documents?  You should probably address the answers to those questions with an estate attorney to assist you in your next steps.

Susan Wideman · Answer

Is there documentation of his "loans" and that he had to pay them back?  Does he want to pay them back or does he claim they are gifts.  Unless you can prove they were loans and not gifts, you may not be able to "make things right" between all of the children.

Christian Albut · Answer

This is a factual question.  Will need to know if promissory notes were made for the loans or if the money was seen as an advance on the inheritance.  If they were considered gifts then it would be very difficult to say there should be a balance unless the brother agrees.

Richard Wooster · Answer

First, you have to establish that it was a loan and not a gift.  Was there a promissory note or other evidence that it was a loan.  If the loan was in fact a loan, it is an asset of the estate.  You will have to prove it in court and it could be deducted from his share if the loan is proven.

John Brennan · Answer

Call for an appointment and consultation.  Generally you brother should either be paying back the loans, or, in the alternative, have his distributions decreased until he is even with he rest of the beneficiaries but that will not be necessary and losses loans from your father are properly documented and legally enforceable. For a firm opinion I would have to review the trust. Clearly you have not been seeking legal counsel and should. All my office for an appointment or another attorney.

Find a Lawyer

Ask a Lawyer

Read Legal Articles

Ask a Lawyer

Read Legal Articles

I am executor to my dad's trust and my brother borrowed $55,000 over time what do I do about making things right?

21 ANSWERS

Find Local Estate Planning Lawyers

Helpful Resources

Ask a Lawyer