I worked while I was in college to pay tuition and only borrowed a few hundred dollars. I repaid more than half the money, which was noted next to the amount. Emily borrowed $6,000 to spend a semester in London. Paul borrowed $20,000 when he lost his job to pay his mortgage and keep his family afloat. Emily repaid about $500 and Paul didn't make any repayments to our mother. When mom jotted down small repayments that were made, she didn't specify what interest she expected to be paid, if any, and none of us ever signed promissory notes. She didn't mention the loans in any of the legal documents.

The discovery of the "loans" has caused a rift between my brother, sister, and me, which is far from the legacy mom would have wanted for us. Since I borrowed just a few hundred dollars and paid back half, I think it is only fair that my sister and brother' loans are repaid or offset. My sister agrees with me about that. I am wondering what can be done in a situation like this to ensure fairness and perhaps repair our sibling relationship? 

If there's a signed promissory note or any other written loan document that meets certain conditions, then any loan, including a family loan, becomes an asset of the parent's estate. The loan has value, because the principal comes back to the estate, sometimes with interest, sometimes without. If that loan remains outstanding when the parent dies, then the general rule is that the loan must be repaid - in this case most likely with an "offset," meaning the outstanding loan of each child gets deducted from that child's share of the estate.

However, you don't indicate here that you or your siblings signed any loan agreement, and your mother's "list of loans," even if she signed it, is not a valid agreement unless there is something also signed by the borrowers - i.e., you and your siblings. In your case and your sister's case, you both partly repaid the loan, and this "partial performance" could be used by a court to show that you agreed to the loan. In your brother's case, since he has not made any repayment, he might argue that mom made a gift to him. However, if he acknowledges that the money was a loan, they the loan should be paid back to the estate.

Your mom could have changed this result using her living trust. She could have either forgiven the outstanding loans or specified that she wanted them to be treated as an advancement of each child's inheritance. In short, the parent can control how the loans are treated -- if the parent spells out how these loans should be treated .

In the case of your family, since your brother apparently did not sign a promissory note, and your mother never specified what should happen with these loans, what can happen (other than going to court) to ensure fairness and a mutually acceptable solution? A mediator (in person or online), facilitator, arbitrator, or other type of collaborative professional can be especially effective in these cases, able to field concerns and emotional outbursts, to lay out all the details and help point to the most effective solution. Finding a collaborative professional who specializes in elder law is easy - one way is to go to www.mediate.com and click "Search Professionals."  Select the type of collaborative professional you want and then, under "Select Type of Matter," choose "Elder".

I hope your family comes to an acceptable solution and that your relationship can be repaired. When it comes to yourself and your wife and family (if you are married and have children), make sure this situation does not present itself again. To ensure that all of your estate planning documents are in order and your desires are spelled out, you should meet with a Certified Elder Law Attorney, such as Evan H. Farr. Please call The Fairfax Estate Planning Law Firm of Evan H. Farr, P.C. at 703-691-1888 to make an appointment for a no-cost consultation.