How are business loans handled when the loaning party dies?

How are business loans handled when the loaning party dies?

Member since 2018 · 2 posts · 0 votes

So my mother recently passed and she invested several hundred thousand in a friends business and he was paying her a yearly return at 10%. This agreement was in place to last another 5 years. 

So is the remaining 5 years of that agreement still valid or can the estate come after that money?

Is the loan taker obligated to now pay the 10% a year to the estate while it runs its course? 

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Tom GimerBusiness Member
DMV · Member since 2017 · 3k+ posts · 3k+ votes
8y
@Kody Digre The agreement controls. If this death does not specifically trigger something (such as acceleration of the debt), then the agreement as written continues to be enforceable by the decedent‘s estate or heirs.
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  • Vandalia, MI · Member since 2018 · 569 posts · 264 votes
    8y

    I think you need to ask a lawyer.

  • Lender · Dallas, TX · Member since 2018 · 110 posts · 32 votes
    8y

    I agree with @Michele B.  The loan is an asset of your mother's just like anything else.  If not covered explicitly in her will, it will likely be addressed in probate (depending on the laws in her state or residence).

  • Tom GimerBusiness Member
    DMV · Member since 2017 · 3k+ posts · 3k+ votes
    8y
    @Kody Digre The agreement controls. If this death does not specifically trigger something (such as acceleration of the debt), then the agreement as written continues to be enforceable by the decedent‘s estate or heirs.
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