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Legal Ease
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Category: Canada Law
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My mother cosigned a student line of credit niece with the

Customer Question

My mother cosigned a student line of credit for my niece with the verbal agreement with my brother that he and his wife would replace her cosignature with theirs when an expected deal closed. The deal closed, my mother was never released from the credit line. My niece has been paying only the interest on the credit line since her graduation a year ago, and my mother is now in the final stages of Alzheimers dementia.
\my question is this. In the absence of a written agreement that my brother would release Mom from her responsibility as cosignor, if the loan remains unpaid when she passes, is it legal to repay the loan from my brothers portion of the estate, or must the loan be payed out, then the remainder divided evenly between the beneficiaries.
Submitted: 11 months ago.
Category: Canada Law
Expert:  Legal Ease replied 11 months ago.

Do you know whether the niece is planning to start paying back the capital or not?

Does your mother have someone acting under a power of attorney for her?

Customer: replied 11 months ago.
My sister and I have power of attorney for Mom. It appears my niece is planning to continue to pay interest only. Her father has
withdrawn from us since the settlement of my father;s estate as the family cottage was left to two other siblings and he only received a large acreage. My suspicion is that they plan to leave the loan as is in hopes that my mothers estate will pay it out when she passes and he will carry no responsibility for it.
Expert:  Legal Ease replied 11 months ago.

The niece is in breach of her agreement with your mother. You can sue her on you mother's behalf while acting under the POA. I suggest that you do so now as it may end up being too later after your mother dies and it also may be the case that they will argue that your mother let this go so she was not going to enforce the agreement.

If you don't sue now you can sue on behalf of the estate.

But you cannot deduct what your niece owes from your brother's portion of his inheritance as there is no lawful ground for doing unless the agreement is really with your brother and not his daughter. If your brother does owe funds to the estate then it can be deducted from what he is to inherit.

The concern again is that he will say that if that is what your mother wanted to see happen she would have put that in the Will so in my view this should be dealt with now.

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