Legal Question in Civil Litigation in New York
loan no written agreement
My mother's brother gave her $240,000 to use as a deposit at a retirement community. He understood that when she left the facility, or died only 90% would be returned. He also knew that the deposit could be used for monthly fees when she depleted her savings, therefore reducing the deposit. They did not sign any contract or agreement. Her children were never told that this was a loan, we assumed it was a gift. He wrote on the check ''loan 6%''. One member of the family said he had received a check, as a gift, from my mother's brother and was told he only wrote ''loan 6%'' to avoid paying taxes. My uncle died leaving his estate to a charity. His lawyer wants my mother to sign a promissory note stating she owes the full amount plus 6% interest compounded twice a year. If she doesn't they will sue. We all agree that whatever money is remaining at my mother's death will go to her brother's estate. However, we disagree on her signing this promissory note. My question is: Can they sue my 88 year old mother to get her money when all they have is a cancelled check with ''loan 6%'' written on it? Should we instead have her sign a statement that whatever money is remaining when she dies will go to her brother's estate?
3 Answers from Attorneys
Re: loan no written agreement
The writing on the check is evidence of a loan, but it does not "prove" that the money was a loan at 6% interest.
This case could go in many ways; including your mother's estate retaining the money after she passes. The money may also be allocated to the "natural objects of the brother's bounty" (this is legal language for his family).
The rule is: do not sign anything before looking into this more deeply. I am not confidant that the money is a part of the brother's estate and legally must go to the charity. Remember: you still have the right to give it to the charity regardless of how the law turns out. Very little has happened yet in this case. However, I am uncomfortable with the aggressiveness of the charitable group's lawyer.
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Re: loan no written agreement
Sounds like a very agressive charity hired a very agreesive lawyer. I would not sign ANYTHING until your mother with your guidance consulted her own lawyer. Whether it is ultimately determined to be a loan or a gift, your mother has rights and since there is no evidence of a contract, promissary note or otherwise, there is definately aquestion of whether it is a loan or a gift.
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Re: loan no written agreement
Generally, a promissory note is only evidence of a debt. One can loan another money under an oral agreement but there has to be intent that the transfer is a loan and not a gift. The notation "loan at 6%" is evidence of your uncle's intent. Your mother's endorsement and negotiation of the check might evince her consent to the loan.
The analysis does not end there. Your mother may have certain contractual defenses to the estate's claim. Given the amount in question, you should not sign any document without first consulting a lawyer.
This answer is general in nature and does not constitute legal advice and no attorney/client relationship has been established.
Good luck.
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