George W wrote:>>
Can an estate's funds be loaned to a beneficiary?
A widowed mother has inherited all her deceased husband's estate with
all probate being complete. She leaves all her estate to her two
children, son and daughter. The son is assigned to be the executor and
the daughter is executor if the son can't be. The brother and sister
are very close. There's no conflict over the terms of the will - a
simple 50-50 split.
The son has already been approved by local probate court as the
executor. There are only taxes to pay and some minor expenses. The
mother kept meticulous records and set everything up to be as simple
as possible for the son and daughter. She also used a good attorney
for assistance with her will.
The daughter is married. The daughter and her husband want to borrow
funds from the estate to purchase the home they live in that's
currently owned by the husband's father who's 88 years old in a
nursing home. The daughter's husband's parents built the house for
the couple and it's left to them in the Dad's will, but there's still
a deed of trust note to be paid off.
The executor son wants to deposit the estate funds into the estate
checking account and loan the funds to his sister with a loan
promissory note to properly account for the use of the funds and keep
the probate court happy.
Creditors have not been paid yet, but there's very few. The finances
of the estate reflect there's more than enough money for the taxes to
be paid, the few expenses to be paid and even fees for the attorney
and probate court. The loan amount to the daughter represents less of
her share of financial assets given the 50-50 split with her brother.
Is the use of the funds, in the form of a loan, considered OK? Is it
OK if the repayment terms are no payments for 2 years with a balloon
payment at the end of 2 years? The idea is the distribution of funds,
after probate, pays back the loan to the estate.
If this post doesn't provide enough information to answer, suggest
what's missing and I'll repost.
Thanks again for your feedback and input
George W
That shoulnd't be a problem. You'd basically need to have an agreement drawn
up between the widow and the daughter. The son would be a witness to it I
would think. But I'm just guessing here as I am by no means an attorney.
Best bet would be to consult an attorney and let them draw up the paperwork.
