Inheritance distribution

[pch]

My wife is the sole executor of her dad's will and the house is about to be sold.
There are 5 shares going to 3 people, so 2, 2 and 1.
One of the beneficiaries has already had £25,000 prior to the my father-in-laws death.
The will states that this money is to be repaid to the estate from that beneficiaries share and a contract was drawn up to that effect, before he died.

My question is, and this is to help my wife deal with it, if the 25k is taken from one of the 2 shares before distribution, does that then get divided again 5 ways, so that effectively the borrower gets 2 fifths back again, or does it go to the other 2 and 1 share?

Thank you very much for any advice and pointers to the correct procedure.
If any additional information is required to answer this, please let me know.
pch

[Pezza54]

Hi
Welcome to LB
Say the net estate value is £225k before the loan is repaid
After the £25k is repaid the estate value is £250k
Two beneficiaries would receive £100k each and one beneficiary £50k
So the beneficiary after £25k deducted from their share would receive £75k

[atticus]

My question is, and this is to help my wife deal with it, if the 25k is taken from one of the 2 shares before distribution, does that then get divided again 5 ways, so that effectively the borrower gets 2 fifths back again [...]?

The answer to that question, as edited, is Yes.

You can deal with it by set off, so that he does not repay cash. In effect you would give him £15,000 less than he would receive if he first repaid the £25,000 and was then paid his share in full. This would leave £10,000 and £5,000 more for the other beneficiaries.

[atticus]

Just expanding on that, and using Pezza54's notional figures:

Value of estate £250,000 (including debt owed by A).

Distribution:

- A - £100,000 less £25,000 already paid = £75,000

- B - £100,000

- C - £50,000.

I hope that helps.