The Moneyist: My parents died of COVID-19 and left no will. My brother lives rent-free in their home, and borrowed $35,000. What now?

One of my brothers lives in the home rent-free. My mother loaned my other brother $35,000 for his down payment on his mobile home. He now says it was a gift, and he does not have to pay it back. There are receipts, but it was paid directly to the escrow company from my mother’s bank account.

Does he have to pay that money back given that it was a good-faith loan? Does my other brother have to pay rent, and how do we move into probate so we do not lose the house and bank accounts, while not killing ourselves in the process given that half of us see things one way — and the others see it a completely different way?

JB

You can email The Moneyist with any financial and ethical questions related to coronavirus at [email protected]

Dear JB,

You need to appoint an administrator who can start probate, and mediate any concerns among your siblings. This can be a laborious process. In addition to gathering paperwork for your parents’ assets, in some states the administrator also requires a veritable family tree of descendants. But given your sibling standoff, and how some of your siblings would benefit from delaying probate, there is no other option. Ideally, this person should be an objective party with no horse in the race. Estate law firms will have probate and estate administration attorneys to help.

Unlike an executor, an administrator takes over when there is no will. “If the decedent failed to take advantage of his right to name a personal representative, and if no persons with close relationships are available, the court, in its discretion, might appoint someone unknown to the decedent and unfamiliar with his affairs,” according to law firm White and Williams. “This is often the case when the court is concerned about possible conflicts of interest or the rights of creditors or other beneficiaries.”

And, now, a warning. “While many executors and administrators perform these designated tasks in an expeditious and prudent manner, this is not always the case,” the law firm adds. “State law usually holds the personal representative to the standard of care of a ‘reasonable, prudent individual’ under all circumstances. What is reasonable and prudent to the personal representative when performing his tasks, however, is not always so to the beneficiaries, especially retrospectively.”

If your parents helped your brother to qualify for a mortgage, they will have likely signed a “Gift Letter” to satisfy the bank and/or residents’ association. Assuming this was not a notarized loan agreement, the administrator will likely rule that this $35,000 was given to your brother as a gift. This is a cautionary tale to always ensure that personal loans — however well you know the person and well intentioned — are recorded in a notarized agreement.

For anyone who has not made a will, your story provides another lesson. Whether you are 30 or 80, you should have a last will and testament, especially if you have children. As your story painfully illustrates, siblings seldom agree.

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