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First, the clause is only valid if your mum (or your dad's wife) died before your dad.
If that is the case, then your sister effectively is given £30,000 plus 8% annual interest from the date the Will was signed to death. If the Will was signed 2 years before death, then your sister would get £2400 for every year plus the additional £30,000, meaning £34,800.
The money owed by your sister is a separate matter and should be repaid if it is still owed. Also the money should be paid when the estate has cash to do so.
No, I am afraid you cannot contest the Will on that basis. However, the £17500 should be ofset. Basically it was your parents wish that they leave her that much. If the amount works out to be much, much more than is reasonable, then you could perhaps contest it on the basis that your parents did not understand the true effect of the Will.
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