Legal Question in Wills and Trusts in North Carolina

You answered your own question. A verbal agreement with a dead person is a nullity. The only question now is whether the money already paid by your father should be treated as a completed gift or not. You ask if your brother can call it a loan. Sure, I can call my cat a snow leopard too. It doesn't change the fact that my cat is a cat not a snow leopard.

If your brother is the executor and he is trying to reclaim monies into your father's estate then what evidence does he have to show that this was a loan rather than a gift? You state that the agreement was verbal. So what evidence is there to show that your father made a loan rather than a gift? Your brother will have to waive application of the dead man's rule and claim he had conversations with your father or else present other witnesses who will claim your father told them this was a loan. It will be your job in such case to prove it was a gift. The fact that your father kept records of what he paid may or may not be relevant. All it shows is that he paid - it does not address the question of whether it was a loan or a gift does it? Obviously if your father wrote something about this (either loan or gift) and someone can attest that the note was written by your father in his handwriting, then you will have something. Otherwise, its just your word against your brother's and his witnesses word against your witnesses' word.

Your father could have solved the whole problem by making a will and referring in the will to the fact that he paid for your son's education and intended this to be a loan or gift. He obviously failed to do that or we would not be having this discussion.

The answer is not to pay the money back to the estate until your brother provides written proof that this was a loan not a gift. If he can't, tell him to pound sand and sue you. Then go see your own probate attorney who can write your brother or the executor of your father's estate a nice letter explaining why this was a gift. You will have to pay the attorney for the letter but if the facts are as you say and brother has nothing to show this was a loan, then you should not have to pay the money back.