I borrowed $100,000 from my parents to buy a house back in 2005. There was nothing in writing saying I owe the money back or that I even borrowed the money. It was a good faith loan. I was paying them back $500 a month. This was kind of an investment for my parents. I paid $500 a month for 5 years until I foreclosed on the house because I couldn’t afford it any longer. My parents knew I was losing that money and they never offered to help save the house. Shortly after, my parents went through a nasty divorce. I never paid a dime after that.
‘I paid $500 a month for 5 years until I foreclosed on the house because I couldn’t afford it any longer.’
In my parents’ divorce my dad kept all their debts, paid my mom off and kept the house they lived in. My father died suddenly last year and he did not have a will. He left my sister and me as his legal heirs. We have been going through probate for my father’s things and it’s almost done.
My mom brought up my debt and says I owe my father for that debt and it’s around $80,000. She says that it should come out of my half. My sister was never there or close to my father and now that he died she’s sticking her hand out wanting money. I was always very close to my father doing almost everything for him for years.
My father told me to forget about the debt before he died because I helped him and was there for him (nothing in writing though). He told me he didn’t want my sister to get anything of his when he dies. The bad thing is there is no will or written proof. I am named beneficiary on all his accounts and 401(k). I want to be fair to my sister, so I am splitting everything my father has 50/50 with my sister.
Do you think I am on the hook to pay the $80,000 back? My sister and mother think so, but I don’t.
This has 100,000 shades of gray. But I’ll deal with just a few.
If your father and mother lent you the money and he took over that loan when they divorced, then it was up to him to decide how it should be repaid and if it should be repaid. Assuming what you say is true — and you would have no reason to lie to a stranger, unless you were showing this exchange to your sister and mother as “evidence” — then you have no legal obligation to repay the money. Even with the record of repayments already made, your story sounds believable. Either way, it would be difficult to prove it was a gift or a loan. (The eternal question Judge Judy grapples with.)
‘Your letter contains a shade of self-pity and a shade of entitlement and a shade of, well, shadiness.’
They helped you buy the house. They didn’t need to do that, but they did. (As I tell people: Only loan money if you believe that you can afford to lose it.) It wasn’t their duty to help you pay for the home after giving you $100,000. It was your responsibility to choose a home you could afford, rather than use the deposit for a home that was probably out of your reach. Your letter contains a shade of self-pity and a shade of entitlement. And by letting the your debt repayments slip to the point where your father ended up forgiving it, it also has a shade of — well — shadiness.
You’ve paid $30,000, so there’s $70,000 remaining. If you repaid that remaining $70,000? Half of that would go to your sister and half of it would go back to you, as part of your father’s estate. So it’s really a question of giving your sister $35,000, or not. Sure, she’ll inherit half of your father’s estate. She’s his legal heir, after all. If he really didn’t want her to inherit a dime, he should have expressly excluded her from his will. He didn’t do that. Assuming you are already the sole beneficiary of his 401(k) and other accounts, it seems churlish to hang onto that $35,000.
Return the $70,000 to your father’s estate. Ultimately, it’s a small amount of money in the larger picture. And that way you can be sure that you have squared that debt with your father. As far as your mother and sister are concerned, at least, you will also have done the right thing.
You’re not on that proverbial hook. But you’re not entirely off it either.
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