You and the law – 11th May 2010

Guarantee beyond grave?

My elderly mother and father own their house.  They have always suggested that when they die the house will be divided between me and my two brothers. However in recent years they have signed as guarantors for loans my brothers have taken out for their business.  How will this affect me when my parents die, since they haven’t made a Will?  CW

If your brothers fail to repay the loans and the loan company calls on your parents for money while they are alive it will obviously affect the amount they have to leave.  They ought to draw up a Will to reflect this. 

If your parents were to die while still acting as guarantors, the loan company could ask for repayment from their estate.  If your parents don’t make a will the estate will be distributed between the three of you, but once both parents have died the administrator should refuse to distribute the estate until its guarantee liability has been released. 

If a Will is prepared, this will be an effective way of ensuring that your brothers’ shares in the house proceeds are used to pay back their loan without recourse to your own share.

Not to be trusted

My uncle died recently and in his Will appointed myself and my brother as executors.  He left some money to our nephews and nieces, aged between eight and 20, “to be held in trust until 25 years of age.”  Can we override this by asking parents and guardians for their written agreement to our releasing the funds now on the understanding that the money is for the children?  AB

If you do this and the children don’t get the money when they reach 25 they will be asking you, not their parents and guardians, for their legacies.

Bear in mind that, within the next 17 years his or her parent or guardian may have died, divorced or gone bankrupt.  I suggest you open a bank account for the trust fund with a view to investing the money and preferably see a solicitor.

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