Does writing "loan" in a check notation prove there was a loan?

[MellieP]

State: Massachusetts
My now deceased mom asked me to come home to help her last year, at her expense. The agreement was she'd pay travel expenses and I would help her around the house and run errands for her, as she was paralyzed. She purchased my airline ticket. Months before the trip I was struggling financially, so she offered (I did not ask) me money. I accepted the offer, and she told me to just pay her back with my travel expenses. In other words: instead of her paying for my travel expenses when I was at her house, just use my own money toward the payoff.

I am told this is considered a gift. But she wrote "loan" in the margin of the check. Our agreement was verbal. There are no contracts stating there was a loan. Her estate is insolvent and the executor is asking for proof this was paid back. Even after explaining to him and showing my bank statements that I spent that money on the trip to reimburse her, he keeps saying "pay it back" and that my bank statements are not sufficient evidence.

I'm told by some people that with no formal contract of a loan, I can't be held accountable, as it's not part of the estate. There was no will or living will acknowledging this "loan", and that this was a private transaction and none of the executor's business. All there is is a record that she wrote me a check and wrote "loan" in the margin. Someone told me that is no more legally binding than writing "paid in full" on a mortgage payment.

Since it wasn't an official loan, it was more her fronting the money to me and I spent it as we agreed. Can the court come after me? Does the executor have a right to harass me? Isn't the burden of proof on them to prove there was a loan?

 

[Taxing Matters]

She wrote "loan" on the check she sent you and that you then evidently cashed. That is evidence that the estate could offer to help prove that there was loan between you and your mother. If the estate sues you for repayment, it will indeed be the estate's burden to prove that there was a loan. The estate will likely need something more than just this check to prove what the terms of the loan were. Whether the estate can succeed in proving a loan is something I cannot make any reasonable guess at as I've not seen the evidence both sides would present in the matter. How much is the executor trying to collect?

 

[justalayman]

Gifts are not required to be paid back. Your mother specifically spoke of repayment.


It’s not clear to me what this means:

In other words: instead of her paying for my travel expenses when I was at her house, just use my own money toward the payoff.

 

[MellieP]

The check was for $1000. I showed him my bank statements, which prove I spent $1066 on the trip. It's all travel expenses. Food, rental car, flight expenses, cash from the ATM. I also showed him proof that my mom purchased the airline ticket.

I didn't even notice she had written "loan" on the check but I probably wouldn't have thought anything of it, because I knew I was going to pay that back on the trip.

 

[MellieP]

Gifts are not required to be paid back. Your mother specifically spoke of repayment.


It’s not clear to me what this means:

In other words: instead of her paying for my travel expenses when I was at her house, just use my own money toward the payoff.

Our agreement was that I was coming home to help her, and she was going to pay for the flight, rental car, food, etc. This is no different from her giving me money if I was renting a room from her, and telling me "just use the money toward the rent you owe me in a few weeks".

She gave me money, I put it in my account, and I used it for the travel expenses. Instead of me getting there, and using her credit card for travel expenses, as was the original plan.

 

[justalayman]

I'm told by some people that with no formal contract of a loan, I can't be held accountable, as it's not part of the estate

Some people are wrong. A contract doesn’t have to be written nor is there much formality required. If I hand you money and I say you need to repay me and you say ok, that’s a contract. A poor one but a contract.

and that this was a private transaction and none of the executor's business

And that is where you would be wrong. It is part of the estate. The financial isssues of your mother are now issues of her estate and the executor has all rights to delve into them

 

[Taxing Matters]

The check was for $1000. I showed him my bank statements, which prove I spent $1066 on the trip. It's all travel expenses. Food, rental car, flight expenses, cash from the ATM. I also showed him proof that my mom purchased the airline ticket.

Then for $1000 I think it highly unlikely that the estate will sue to force you to repay. The estate's attorney's fees will easily exceed that and the estate can't recover those fees from you.

 

[MellieP]

Well our verbal contract was that I was to pay this back by using it toward my travel expenses, which I can prove.

 

[justalayman]

Our agreement was that I was coming home to help her, and she was going to pay for the flight, rental car, food, etc. This is no different from her giving me money if I was renting a room from her, and telling me "just use the money toward the rent you owe me in a few weeks".

She gave me money, I put it in my account, and I used it for the travel expenses. Instead of me getting there, and using her credit card for travel expenses, as was the original plan.

Well, the problem I see is you may have a problem proving the terms of the loan were repaid by you paying for your own expenses. As it stands. The executor has a check that says loan on it and you cannot show you repaid it.

 

[justalayman]

Well our verbal contract was that I was to pay this back by using it toward my travel expenses, which I can prove.

How do you prove that verbal contract

And if you can it should settle the matter

 

[MellieP]

Then for $1000 I think it highly unlikely that the estate will sue to force you to repay. The estate's attorney's fees will easily exceed that and the estate can't recover those fees from you.

That's good to know. Because I'm still a little confused about who is accountable for the attorney's fees. I did not hire her. She was already my brother's attorney. He is the executor. He "invited" me at no cost to me to "piggyback" her services. I told him I had no intention on hiring a lawyer, I'm just an heir. I live out of state. I didn't need a lawyer. So I thought he was paying everything and then I find out the estate pays. But it's insolvent, which is why they are asking for this money back. And I'm left wondering if he tricked me into being a client and being forced to pay for a lawyer I didn't hire?

 

[MellieP]

How do you prove that verbal contract

And if you can it should settle the matter

Yes, that is the dilemma! All I have is my word, and circumstantial evidence that she paid for the flight and that I spent the money on the trip. I also have pictures she asked me to take in rooms she was unable to get into, and witness accounts from people who knew I was there at her expense.

 

[not2cleverRed]

Then for $1000 I think it highly unlikely that the estate will sue to force you to repay. The estate's attorney's fees will easily exceed that and the estate can't recover those fees from you.

Plus, the estate is insolvent.

Methinks OP's brother was hopeful of more of a bonanza.

Since Mom needed help, and it was help that would otherwise have to be paid for, perhaps OP should present those expense as debts against the estate - it's kind of a wash, after all.

Perhaps OP's brother is just jealous or resentful - my mama always said you should make your least favorite child your executor.

 

[adjusterjack]

Can the court come after me?

Of course.

Does the executor have a right to harass me?

You mean ask you for payment? Yes.

Isn't the burden of proof on them to prove there was a loan?

Yes, but the bar is set pretty low for that. All the plaintiff has to do is show the judge the check that says "loan" on it to make a prima facie case that it was a loan. Prima facie means a fact that is presumed to be true unless it is disproved. Then the burden shifts to you to prove that you paid it back. There's no way to predict whether your "evidence" will convince the judge.

 

[MellieP]

He's the executor because he lives in MA where my mom lived. I live in CA. He hired his own lawyer to be the estate lawyer. So it was the practical thing. If I had ANY idea that executors are allowed to get away with the crap he has done to me, I would never have agreed to let him be the executor. And the lawyer told me there's not much I can do, because even if I have a valid complaint, judges have little patience for motions to remove the executor and they favor the executor. I think you are correct about the jealousy, as it was well known I was my mom's favorite.

My Execubrother has been abusive and harassed me. I had to cut off contact with him this week (and defer all contact to my husband) because he would not stop being abusive in emails to me.

You are right that he was hoping for more of a bonanza. I told him we won't see a dime from the sale of the house. He held out hope. There are no dimes. It's insolvent. I told him so. I wish I had handed over my portion of the house to him and washed my hands of it. I think he's really upset that he put so much work into the house to get nothing. And he told me if there is an overage of the attorney's bill "we" would have to pay it. He's angry because I said "I'm not paying for that! I never agreed to pay a lawyer!". It's not my fault he chose to hire one. I'm still afraid he's going to stick me with half the bill.