Legal Question in Wills and Trusts in New York

Even if the debt is unenforceable by virtue of the statute of limitations or by a discharge in bankruptcy, it can nevertheless be applied to reduce the inheritance payable to your sibling.

Maybe and probably. I have seen no documents such as loan documents, a Will or the bankruptcy papers, and one or more of them could influence this response. If your father has been claiming this loss on his tax returns, he may have considered it "paid" (actually not paid but forgiven, for tax purposes) and this may impact this response as well. Plus there is the moral issue, of one child having received something the others did not. What is this siblings position on repayment? This may also bear on it. Finally, although not discharged in the bankruptcy, your father's knowledge of the bankruptcy and his subsequent deducting this, may also come into play. The cleanest way of handling this is for the Executor to raise the issue, first with the sibling, and if he refuses to acknowledge the debt, litigation by suing for payment should resolve the legal issue - the loan's enforceability. The last issue is hoiw to allocate this balance (writing off part for taxes reduces the balance payable). Do the other sublings get equivalent amounts first, or the estate divided, the balance is repaid, and the proceeds of the payoff split among all 4 heirs, or is the debt considered part of the estate, divide the total by 4 and consider the owing sibling as having received what he owes as part of his estate distribution.? How to handle this may need a Court interpretation. This is a response to an Internet question and the reply is not intended to be legal advice or as creating an attorney-client relationship.