Can an estate collect a loan from an heir during probate?

Full question:

Looking for a statute in Wisconsin regarding collecting on money given to an heir marked 'loan' or not marked as gift that was never paid back to the deceased. Estate is in probate. Looking for any caselaw where, in such a situation, the personal representative won a money judgement for the estate against the heir. Must apply to Wisconsin. Need solid support because heir will argue debts were paid, yet no documents exist showing debt was paid in full. Heir is dishonest and will create receipts and forge signature and pass them off as legitimate. Please point to appropriate case name and any applicable law. There is a WI statute about heir owing debt to an 'intestate' estate. However, this estate had a will dividing property 50/50 between heirs. If heir #1 who owes money does not pay, heir #2 will receive nothing. Heir #1 received more than his share while dad was living, and papers found indicate dad intended these as loans, not free cash. Heir #1 also did not report all the monies as income on his tax return - cash received by him (there is a paper trail) are in excess of $90,000.

• Category: Wills and Estates
• Subcategory: Will Contests
• Date: 04/07/2025
• State: Wisconsin

Answer:

Issues regarding liabilities for loans made during the deceased's lifetime often hinge on the evidence presented in each case. The court will determine if the loan was repaid or intended as an advancement against future inheritance based on the facts and evidence available. In Wisconsin, the following cases address evidence of loans in estate matters: 1. **In Matter of Estate of Alexander**, 75 Wis.2d 168 (1977) - This case discusses the complexities of claims against an estate, including issues of forgery and the validity of documents. The court found that a claim could be allowed based on the circumstances surrounding the agreements made. 2. **Estate of Gutenkunst**, 232 Wis. 81 (1939) - This case involves a promissory note and the obligations of an executor to the estate. It highlights the importance of agreements made between heirs and the estate's obligations. In your situation, if the heir marked the money as a loan and there is no evidence of repayment, the estate may have a valid claim against the heir. The personal representative could potentially seek a money judgment for the estate. However, the heir's argument that debts were paid could complicate matters, especially if they attempt to forge documents. It is crucial to gather all available evidence, including any written agreements or records of payments, to support the estate's claim. Additionally, Wisconsin law (Wis. Stat. § 859.13) requires that claims against an estate be filed within a certain timeframe, and the nature of the claim must be clearly established. If the estate can prove that the funds given to the heir were indeed loans, and not gifts, the court may rule in favor of the estate.