Probate Questions

[Eric P]

So my mom passed away last week and I need so advise. She was divorced, and my sister and I are her only heirs. We have come to find out her finances were a mess. She owned a house and has a home equity loan for ~90% of the value of the house. She also had 2 maxed out credit cards and a judgment against her on one. She had cashed out her IRA and life insurance policies and had no savings. So basically all she left was debt. The debt was because she was sending money she didn't have to her mom to support a 50 year old drunken brother who never moved out. I had tried to get her to stop sending money and she said she did. She was working as a contract nurse with no benefits. She was in the hospital for about 2 months before passing, so who knows what that bill will be. We found a very old will listing my dad (spouse, now X-spouse) as primary beneficiary, then my sister and I at 50/50 as secondary. The 3rd & final beneficiaries have also passed a while ago. She again had my dad listed as executor of her estate and her dad as the back-up, but her dad had passed 20 years ago.
So my questions to the legal types here:

1. My dad doesn't want anything to do with her estate. Can my sister or I be the executor without much fuss?
2. Should we discard the will since it is so outdated?
3. My sister would like to purchase the house. Could this be done by talking with the bank, or does it need to be settled in probate?
4. Will my sister and I be responsible for any of her other debt? Its all unsecured credit. Credit cards and hospital bills?
5. Would it be better to strip the house of what we want and just walk away?

I paid for the funeral services and burial out of my pocket. I really don't want nothing more than that cost back from her estate if possible.

I have a consultation with a lawyer in the county she lived in next week to seek legal advise, but I would like to hear what the law types on this board have to say, so I can hone my questions to the lawyer.

Thanks.

[spqrzilla]

You did not say what state your mother resided in.

"1. My dad doesn't want anything to do with her estate. Can my sister or I be the executor without much fuss?"
Yes, your dad would simply sign a renunciation of the appointment as executor.

"2. Should we discard the will since it is so outdated?"
No, that would be fraud on the court if you opened a probate. Depending on the state in which your mother passed, the bequest to your father may be voided by the divorce.

"3. My sister would like to purchase the house. Could this be done by talking with the bank, or does it need to be settled in probate?"
The bank has no power to sell the house until it has foreclosed. Which may take months or years. It would have to be settled in probate if the state in which your mother resided requires a court probate for estates with real estate as Colorado does. Unless there is some very important sentimental reasons to retain possession of the house, I would advise against it.

"4. Will my sister and I be responsible for any of her other debt? Its all unsecured credit. Credit cards and hospital bills?"
Depends on state law, in Colorado you would not be responsible for that debt but the estate would be.

"5. Would it be better to strip the house of what we want and just walk away?"
It is a good possibility that it would be the wise course of action economically. Would have to sit down with a calculator and do the full math. I've seen a lot of these estates where the estate was insolvent. Opening a probate in such cases would only benefit the estate's attorney (ie., me) and the creditors.

In fact, I had an almost identical case in my office some months ago. Up to and including the drunken useless brother sitting at the conference table with a smug look thinking he was going to raid the estate for more funds. Not a fun consultation.

[Eric P]

She lived in Colorado.

An the reason she wants the house is that a mortgage would be about half of what she pays in rent. She lives in the same neighborhood. This is also the house we grew up in and moving everything out wouldn't have to happen.

[killianak9]

Sorry to hear about your mom, Eric. I lost my mom this year and have almost the same situation! Only my mom had no will but finances were a bigger mess. In Florida law is a pain in the ass. All of my mom estate has been sitting in probate for almost 12 months to the date. The big shot attorney we hired took forever to get anything done and charged a fee of almost 15k.
My moms estate came in at just under 100k.
Point is, in my experience if the estate does have any value , you should be reimbursed for all expenses regarding your moms death. Lawyers get paid first 😲At least it was for my case in Florida. Long story short we liquidated everything.
Do not under any circumstances make who ever you end up hiring the personal representative. In doing so you basically just sign your right away. One less way to get screwed , in my opinion!
I would use the will that she did have cause in may say the house would go to you guys in her passing. If so it's easy to pay the fee to quit claim it to you both. Keep in mind again I only know Florida law from my experience but.......
I have also found that in death a lot of skeletons will come out if the closet. If you are close to your sister and family try to stay that way. This has been a true test of faith and has taught me a lot of what not to do with my life when it ends!
Good luck and keep us posted

[spqrzilla]

An the reason she wants the house is that a mortgage would be about half of what she pays in rent. She lives in the same neighborhood.
That's a good reason to buy a house. Not necessarily a good reason to buy your mother's house.

You need to sit down and do the math on the estate with respect to the value of the house, the amount of its mortgage and equity remaining, the costs of probate and refinancing the mortgage as well as the total debts of the estate.

There are also other options regarding the estate and the timing of beginning a probate that should be discussed with an attorney.

[Eric P]

Thank you all for this general information.

Here are the questions I have left, that I will ask the lawyer:

1. What does probate cost? Lawyer fees or other costs. I think there is a $40 filing fee.
2. What would my liability be if I do most of the work and represent the estate?
3. Can my sister and I be completely isolated from the estate's debts. All debts, the HELOC, credit cards, hospital bills, utility bills, taxes, ect.
4. Is there anything my sister and I would be responsible for? Her debtors have never called either of us.
5. Can my sister and I empty the house? There is not much monetary value in what we would take. Family photos, knick knacks, maybe some furniture.
6. If we have an estate sale to sell the contents of the house, where does that funding go?
7. She is probably due back all her income tax, were does that funding go?
8. There is a car that's maybe worth $1k that was paid off, but we can't find the title. We don't want it, but could sell it.
8a. Does the county issue replacement titles?
8b. Could we sell it, or would it be part of the probate?
9. And another bill arrived today from the state. They say they overpaid unemployment and want it repaid. Since she was unemployed during her hospital stay, could she file posthumously file for 2 months of unemployment to pay the state back?

Doing some of the math in general terms:
Her HELOC is 92% of the banks estimated value of the house. This was known before her death because she was going to refinance before she was admitted to hospital.
The credit cards that we have found so far are about 40% of the house's estimated value.
Medical bills from the 2+ months??? A rough estimate of 3-4+ times the value of the house.

So liabilities are ~ 500% of assets.

I think walking away is the best option.
I do not want to pay an attorney too much and get nothing in return other than more debt on top of the funeral costs. If we can get something back after attorney fees it would be worth it. My sister has already said that I get the first $XX to pay for the funeral and we would split what is left 50/50.

If there are other questions I should ask, other than fees, please post them.

Thanks

[Eric P]

And one thing I don't quite understand. How is a faxed copy of the death certificate a hard copy, but a scanned and emailed copy is not? Both are scanned, electronically sent to the recipient and printed at the recipient's office.

Faxes are low quality, 150 dpi, and usually hard to read. Have the laws not caught up with 20 year old technology? We don't even have a fax machine in my office. All faxes go to an email account as a pdf.

[jerrymrc]

3. Can my sister and I be completely isolated from the estate's debts. All debts, the HELOC, credit cards, hospital bills, utility bills, taxes, ect.


Here is another couple of things. Depending on how it was handled that HELOC may be just another unsecured debt. If the proper paperwork was not filed then they may have no claim.

The credit cards just went poof no matter what the person on the other end says. they were in your moms name as an unsecured debt. Unless you signed to be responsible for the hospital bill..... Taxes and utility bills are tied to the house and if you have a thought about keeping it they will have to be dealt with.

As has been said you need a good person on your side.

[spqrzilla]

Here is another couple of things. Depending on how it was handled that HELOC may be just another unsecured debt. If the proper paperwork was not filed then they may have no claim.

The credit cards just went poof no matter what the person on the other end says. they were in your moms name as an unsecured debt. Unless you signed to be responsible for the hospital bill..... Taxes and utility bills are tied to the house and if you have a thought about keeping it they will have to be dealt with.

As has been said you need a good person on your side.

An estate in probate has to deal with unsecured debts.

Credit card collection agencies do like to call heirs and falsely claim that the heirs are responsible for those debts. However, a personal representative of an estate in probate does have to deal with them. There are strategies in probate to reduce them.

[Stone83]

This shit storm of a process took me 3.5 years to get through-
F'n Cocksmoker lawyer was $250 an hour......

Ya gotta get a lawyer, he'll get your questions answered, and take your $$$$$$$$

[Eric P]

Can the court appoint an attorney to the estate? One that my sister nor I have to pay for? But the estate is responsible for?

[jerrymrc]

An estate in probate has to deal with unsecured debts. I guess because the ones I have had a dealing with had little to nothing it was never an issue. By the time what little was there was given away the CC's were not an issue.

Sorry for the mis-information.

[spqrzilla]

Can the court appoint an attorney to the estate? One that my sister nor I have to pay for? But the estate is responsible for?

To do what? Attorney's fees are a priority expense for an estate. Your issue is whether or not the estate is economically worth administration.

[kidicarus13]

Run, run far and fast. "Split the rest 50/50" is a pipe dream. RUN FOREST!

[Dave]

My experience with probate and wills comes from my finance degree, not law. But, from what my professor said is that if there is real estate, but enough debts to cover more than the property is worth it's better to grab anything from the house the heirs want and let the creditors battle it out over the real property as that's about all they would be interested in auctioning off. Unfortunately, her brother sounds like a real a-hole and could tie up the probate process if you and your sister try to refi the house out of the probate. Consult with a lawyer though, even if you have to pay a small consultation fee to get your options.

[Eric P]

Ok, this is what we were told during a consultation:

My sister and I are the only living heirs with a claim on her estate based on her will. My dad forfeited his claim and duty as personal rep.

We need to open an account for the estate and have a FIEN assigned.

The priority of paying debts is:
1. Taxes, which there are none.
2. Attorney Fees - after the consultation fee, I hope there are none
3. Funeral Expenses - which I paid ~$10k
4. Secured Debt - only the HELOC 95-100% of the estimated value of the home. Utilities are being paid and current.
5. Unsecured Debt - hospital bills and CCs

We were told we could just assume or refinance the heloc in my sister's name and that takes care of the secured debt. The value of the house is about equivalent to the new mortgage. Have already talked to the bank and they are willing and ready to do this. He said my sister can not refinance the loan for more than the heloc value plus closing costs (ie. attorney fees), or other debtors would be able to claim the extra value until the probate is closed. But there is a little buffer since I would be the next in line for any assets to pay for the funeral and probate costs.

The car would be given to me or sold to pay for part of the funeral costs and for the probate filling costs. Its a 2002 high mileage car with some body damage. Not worth much according to KBB.

The savings bonds would be given to me or cashed to pay for part of the funeral costs. Less than $1k

Her 2013 tax refunds would be given to me to pay for part of the funeral costs.

All other claims from unsecured debtors would be denied, since it is likely the estate would have zero value after paying the heloc and reimbursing me for the funeral costs and for the probate filling costs.

He said I could also charge for the time I spend dealing with all this. Not sure how much I could charge per hour though. What is reasonable?

This sounds a lot simpler than when I first started looking into it, which likely means I am missing something.

Thoughts?

Thank You.

Its been a tough month and Christmas