Legal Question in Credit and Debt Law in Pennsylvania

I don't know as you provide no information. The relative lender says a personal loan was made. Well, is there some documentary proof of that? Your post does not indicate. Was a timely claim filed? If not, then the claim can be denied on this basis alone. If a timely claim was filed, the executor is free to accept, reject or compromise the claim. Assuming that there is documentary proof of the loan (a cancelled check with "loan" written in the memo line or a promissory note) then you can pay if there are assets.

But something is not right here. Claims must be filed within the time set forth in the notice to creditors. So why are funds disbursed? This should not be if the estate is still open. And this should not occur anyway. All claims are filed. Claims are paid if the estate has sufficient funds. Before anything else is disbursed to the heirs, the approval of the tax office must be obtained and there should be signed receipts and releases filed (this helps streamline the final accounting). Otherwise, the final accounting is filed and a confirmation hearing is held by the clerk or court, depending on the county. After the accounting is confirmed, then the funds or other assets are distributed to the heirs/beneficiaries.

So what you describe is not possible if the estate was properly administered. Either a timely claim was filed prior to distribution of the estate or it was not. If the claim was not timely that is the end of it. If, however, you improperly administered the estate and distributed assets before the time for claims ran out and if the claim was timely filed and if there are no other grounds for denying the claim, then you as an executor will be placed in the position of either asking the heirs to cough up money OR else you as executor will be held personally liable because you made an at risk distribution.

I hope its the former not the latter. I strongly suggest that you contact a probate attorney who practices in the county where the estate is pending to review what has happened here and to review the claim filed by the family member.