Hello and thank you for your question.
Two things happened:
1. Your parents borrowed a sum of money from a bank, secured by a
second mortgage on their home, and gave the money to your brother.
While your brother probably didn't sign anything legally obligating
him to make their loan payments for them, that's what he's been doing.
2. Your brother used the money that your parents gave him as a
downpayment for a loan that he took out, and your parents signed a
guarantee, legally obligating them to pay his bank loan for him if he
stops paying or goes bankrupt.
You can assume that your parents' two legal obligations - - to pay
back the money they borrowed in (1) if your brother stops paying it
for them, and (2) to pay back your brother's loan if he stops paying
it, will continue as legal obligations of their estates after they
If the value of your parent's home and their other assets is less than
the amount of their all their debts (including number (1) and, if your
brother defaults, number (2)), then their estate will be an "insolvent
estate" and there will be nothing for you to inherit.
But the answer to your question is that even if you are executor of
their estate and trustee of their revocable trust, you will not be
obligated to use your own money to pay off any of their debts, even if
their assets fall short.
All you will have to do, as their executor and trustee, is give the
proper notices and file the proper papers, and make sure that you pay
their debts in the proper order (since you won't have enough of their
funds to pay all their creditorss in full). You won't be personally
liable unless you pay the wrong creditor.
For example, here is an explanation for Vermont, but every state has
its own statute that tells you exactly what to do [and most state laws
will allow you to use your parent's money to hire a lawyer to get it
done right, even though that will leave less for the creditors; you
should even be able to collect a fee for the work that you do]
So, while as beneficiary of an insolvent estate there will be nothing
for you to inherit, you do not have to fear losing your own assets to
your parents' creditors.
Search terms used:
"insolvent estate" executor discharge
Thanks again for letting us help.