Published On: Sun, Dec 3rd, 2023

My father has dementia and ‘forgave’ my brother’s $200,000 house loan. The nursing-home notary said he was of sound mind. What can we do?

My father has dementia and ‘forgave’ my brother’s 0,000 house loan. The nursing-home notary said he was of sound mind. What can we do?
My father has dementia and ‘forgave’ my brother’s 0,000 house loan. The nursing-home notary said he was of sound mind. What can we do?

My father lent my brother the funds to purchase a house in 2006. The loan was formal and registered in the county. The interest was 4%, and it was a 30-year loan for $300,000. It was bought as an investment property for my brother. It is in a very rural area. 

My parents made many improvements, replacing windows, siding and fencing. They paid all taxes and insurance — although, according to the loan, my brother should have paid them. They managed the farm, including cattle and hay, and improved the fields.

They also signed a document in 2016, indicating they would pay “rent” toward the loan for use of the property. My brother paid $150,000 at the beginning of the loan, then nothing. He said he would pay it off when our parents died and he got his inheritance. 

My dad, who is in his late 90s, has early dementia and delirium induced by a urinary-tract infection. My brother had him sign a deed that he had paid off the loan. I have power of attorney for my father, and am his estate’s executor and trustee. I looked at the loan terms. My brother owed $205,000. I hit the ceiling.

The state was ready to investigate for financial exploitation. I believe the nursing home that supplied the notary was in the wrong by ruling my father was of sound mind, given that they knew I had power of attorney and was concerned about my father’s cognitive health.

Dad said he would give the other siblings the same amount over time. My brother went ballistic and said our siblings should not get cash gifts. The property has more than doubled in value, but he still feels cheated. I’ve consulted an attorney, who agrees the written documents should prevail.

What can I do?

Betrayed Brother

“Your father fell into a trap.”

MarketWatch illustration

Dear Betrayed,

If your father leaves his other children $205,000, and deducts that sum from this brother’s inheritance, that would seem like the path of least resistance. It would be cheaper and easier than challenging the notary’s assessment of your father’s competence in court. 

Giving you $205,000 over a number of years will be a more difficult proposition, given your father’s failing health. The annual exclusion, or the amount you can give a third party without using your annual gift- or estate-tax exemption, is $17,000 in 2023 for a single person or $34,000 for a married couple. Otherwise, you must file a gift-tax return with the Internal Revenue Service.

For 2023, the lifetime gift- and estate-tax exemption is $12.92 million for a single person, or $25.84 million for a married couple. Those rates will sunset at the end of 2025 if Congress doesn’t act, reverting to their levels prior to the Tax Cuts and Jobs Act, which went into effect in 2018.

The notarization process has flaws

“Notarization is excellent proof of some things, but less reliable for others,” says Mike Fiffik, a LegalShield partner attorney in Pittsburgh. “But in all cases, notarized documents can be challenged.” 

A notarized document suggests a signer acted without duress and understood what they were signing. But there are flaws. “In practice, notaries have little to no training or experience assessing a signer’s mental capacity,” Fiffik says. “Notaries may look for ‘red flags,’ such as the signer communicating incoherently, in obvious physical duress [or] overly medicated.” 

“If there is other evidence to cast doubt on the signer’s mental capacity at the time the document was signed, the fact that it was notarized would not prevent the document from being challenged,” Fiffik adds. “The notary will certainly be a witness in a court proceeding.”

The perils of lending to a family member

Your father fell into a trap: giving one child preferential treatment over the others. That can work out if the child in question is trustworthy, but can also lead to unwise terms. In this case, your parents lent your brother money to buy a house and paid rent on the property. Bad combo.

In a recent survey of more than 2,000 adults by, nearly 60% of people who had loaned money to family members said that the loan was not a good idea. What’s more, 42% never got their money back, and 10% said their credit score suffered.

Never loan more than you can afford to lose, and know that having a friend or family member indebted to you can alter the nature of the relationship, create an unequal balance of power, and ultimately do irreparable damage to that relationship.

You do, however, have options. Weigh the risks and proceed with caution.

More from Quentin Fottrell:

Is it OK for my new boyfriend to ask me to split the bill? ‘I don’t want him to get used to me paying for my own meals.’

My stepdaughter is executor to her late father’s will, and believes she’s now on the deed to my home. Is that possible?

I inherited $246,000 from my late mother and used $142,000 to pay off our mortgage. If we divorce, can I claim this money?

You can email The Moneyist with any financial and ethical questions at, and follow Quentin Fottrell on X, the platform formerly known as Twitter. The Moneyist regrets he cannot reply to questions individually.

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