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NSW Deceased Estate - Disclose Personal Loan Owed to the Deceased?

Discussion in 'Wills and Estate Planning Law Forum' started by samuraidarryl, 20 April 2016.

  1. samuraidarryl

    samuraidarryl Member

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    Hi,

    My question is this:

    A person passes away and is survived by his wife. The deceased had loaned monies to a relative and these loan funds came from a joint bank account of the deceased and his wife.

    Effectively this loan is a joint asset - correct?

    Should this loan be advised to the solicitor that is handling the deceased estate? Or is it irrelevant and does not need to be mentioned? And does the borrower now automatically owe all the monies to the deceased's wife?

    Should the solicitor handling the estate be aware of this personal loan and ensure that in the future there will be no issues?

    Thank you
     
  2. Tim W

    Tim W Lawyer

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    1. The executor should be told everything, always.

    2. Since you are not the lender, who are you in all this?

    3. Is the solicitor the executor, or is the executor someone else
      (making the executor the solicitor's client)?

    4. The debt doesn't die just because the lender does.
      In any event, it is usual for a survivor to automatically inherit a joint account
      (and usually, the right to be repaid a joint loan).

    5. It's less about the account it came from, and more about the wording of the T&Cs of the loan.

      Who made the loan? Was it Dad alone, even if it came from a joint account, or
      was it Mum and Dad jointly, even if one parent did most of the talking/arranging/negotiating?

      What matters more is the T&Cs of the loan (however informally worded).
      What account it comes from is relevant and informative, but not decisive in itself.
    For specific and reliable advice in this particular case, I suggest asking the solicitor that is already engaged.
     
  3. samuraidarryl

    samuraidarryl Member

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    Thank you. The executors are the three daughters- (my wife and her two sisters), not the solicitor. The executors are aware of the loan. It was made to one of the sister's son (and his wife). I am therefore a son-in-law. It's good to know that the know loan continues and my mother-in-law was aware of the loan at the time.

    The T&C's were nominal - just a handwritten document by my father-in-law signed by all parties- which basically comprised an interest rate (3%) and when interest is to be paid (each 60 days) (defaulted already) but no term or basis of repayment noted (i.e. the sale of another property). It was understood that clearance was to be from this source but not on the agreement and no solicitor or security involved - we are talking excess of $500,000 to purchase a second residence).

    My mother-in-law is legally blind - has been for many years. The loan was made in December 2015 with my father-in-law in poor deteriorating health (passed away 2 weeks ago). No effort was made to have any solicitor involved or security taken. My sister in law (borrower's mother) has been residing with her parents for 18 months and was aware of my father-in-law's poor health (83 years old at the time of the loan) - she was aware of the proposed loan and allowed it to proceed.

    The borrower is self-employed- no effort to access capacity to repay - nothing at all.

    The new property purchased with the loan is 700+ kms from where the business is located and the capacity to service any residual debt after a property sale is very questionable.

    I come from a commercial lending background for in excess of 25 years.

    I think you can see my concern.

    Thank you.
     

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