Estate Administration Question

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FIREchief
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Estate Administration Question

Post by FIREchief »

Scenario:

Single person passes away, leaving modest estate requiring probate. All financial accounts (savings, checking, investment) have designated POD/TOD beneficiaries. Joe is named executor of the estate by the decedent’s will. Joe files the will with the probate court and receives “letters of office” authorizing him to take possession of, and act on behalf of, the probate estate’s assets. Joe soon discovers that the only assets within the probate estate are a paid-for house and an automobile. Next week, Joe receives bills for a) the annual home owners insurance premium, b) a six month auto insurance premium, c) last month’s electricity, d) last month’s water, e) last month’s natural gas. He also learns that a half year of property taxes are due next month. Joe also feels that he needs to hire an attorney to help him administer the estate. The attorney requires an initial payment and then will bill monthly. Since the financial accounts have named beneficiaries, I don’t believe that Joe has any access to monies within them. How does Joe pay the bills?
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.
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Re: Estate Administration Question

Post by bsteiner »

One more example of the problems that TOD designations can create.

Joe will have to advance the money, or get the beneficiaries of the estate, or the TOD beneficiaries, to advance the money.
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Re: Estate Administration Question

Post by Jack FFR1846 »

Sell the car....pay bills with proceeds....then sell the house....pay the rest....distribute.
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Re: Estate Administration Question

Post by BolderBoy »

Jack FFR1846 wrote: Tue Aug 29, 2017 1:39 pm Sell the car....pay bills with proceeds....then sell the house....pay the rest....distribute.
+1. This.
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Re: Estate Administration Question

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Jack FFR1846 wrote: Tue Aug 29, 2017 1:39 pm Sell the car....pay bills with proceeds....then sell the house....pay the rest....distribute.
Joe just discovered that there is an outstanding loan of $9000 on the car which has a low book value of $11,000. Looks like he can try to sell the car and pay $2000 to his lawyer to get things started. Now what to do with the current bills and the looming property tax payment?? Joe isn't sleeping very well, and the TOD beneficiaries are asking why Joe wants them to "give money back," when he should be distributing more money to them!
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Re: Estate Administration Question

Post by CAsage »

Most Executors are also beneficiaries, so in most cases... the TOD simplifies or eliminates probate and is still a very good thing. There are assets here, the plan proposed (sell car, then pay bills) is sound - no rush on paying the bills! I really don't see a need for a lawyer here. And, don't forget to take that executor fee!
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Re: Estate Administration Question

Post by prudent »

I would think the home insurance and utilities are pretty urgent, you can't have those cancelled.

This is a situation I might find myself in some day down the road, and it seems like a real mess. Perhaps if the TOD beneficiaries are snippy about the situation and don't want to advance any funds, then the executor could withdraw and let someone else deal with it. It's a thankless enough job without having to deal with that.
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Re: Estate Administration Question

Post by FIREchief »

CAsage wrote: Tue Aug 29, 2017 1:46 pm Most Executors are also beneficiaries, so in most cases... the TOD simplifies or eliminates probate and is still a very good thing. There are assets here, the plan proposed (sell car, then pay bills) is sound - no rush on paying the bills! I really don't see a need for a lawyer here. And, don't forget to take that executor fee!
Joe is a minor beneficiary of the estate, but not the TOD accounts. Is there really no rush in paying that homeowners insurance or property tax??

(Joe refuses to serve without a lawyer because the beneficiaries can tend to be a bit "contentious.")
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Re: Estate Administration Question

Post by 8foot7 »

FIREchief wrote: Tue Aug 29, 2017 1:20 pm Scenario:

Single person passes away, leaving modest estate requiring probate. All financial accounts (savings, checking, investment) have designated POD/TOD beneficiaries. Joe is named executor of the estate by the decedent’s will. Joe files the will with the probate court and receives “letters of office” authorizing him to take possession of, and act on behalf of, the probate estate’s assets. Joe soon discovers that the only assets within the probate estate are a paid-for house and an automobile. Next week, Joe receives bills for a) the annual home owners insurance premium, b) a six month auto insurance premium, c) last month’s electricity, d) last month’s water, e) last month’s natural gas. He also learns that a half year of property taxes are due next month. Joe also feels that he needs to hire an attorney to help him administer the estate. The attorney requires an initial payment and then will bill monthly. Since the financial accounts have named beneficiaries, I don’t believe that Joe has any access to monies within them. How does Joe pay the bills?
Joe must liquidate assets, advance the funds himself (with little guarantee of repayment), or receive advances from potential beneficiaries. Or Joe could turn the whole mess over to someone else.
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Re: Estate Administration Question

Post by Billionaire »

Joe refuses to serve as the executor and relinquishes his duties to the next in line, who should be named in the will.
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Re: Estate Administration Question

Post by JGoneRiding »

FIREchief wrote: Tue Aug 29, 2017 1:53 pm
CAsage wrote: Tue Aug 29, 2017 1:46 pm Most Executors are also beneficiaries, so in most cases... the TOD simplifies or eliminates probate and is still a very good thing. There are assets here, the plan proposed (sell car, then pay bills) is sound - no rush on paying the bills! I really don't see a need for a lawyer here. And, don't forget to take that executor fee!
Joe is a minor beneficiary of the estate, but not the TOD accounts. Is there really no rush in paying that homeowners insurance or property tax??

(Joe refuses to serve without a lawyer because the beneficiaries can tend to be a bit "contentious.")
Technically those TOD accts are actually part of the estate, they just don't require probate. They are however free game for debt and can and should be used to settle debts and keep the estate running. But this given scenario is why every time someone posts on here about how they want to avoid probate like a death sentence (pun fully intended) but then there is always something needed probated but the executor has been deprived of all easy access to funds, I suggest NOT putting everything in TOD. Plus if there are multiple beneficiaries it gets messy really fast.

I suggest Joe speak to the person now and suggest that there be a personal savings or checking acct that does NOT have a TOD on it that be specifically designated for the purpose of settling final affairs. Joe will need to get instated as executor to gain access to said acct but if all the paperwork is in order in most states that shouldn't take long. Joe and/or the other beneficiaries can front the estate money or simply wait to pay bills plus late fees once that money is released. at least that is what I would do. If going to be decedent refuses to set aside funs for this purpose Joe can always decline the position.
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Re: Estate Administration Question

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JGoneRiding wrote: Tue Aug 29, 2017 2:04 pm Technically those TOD accts are actually part of the estate, they just don't require probate. They are however free game for debt and can and should be used to settle debts and keep the estate running.
Are they "free game" for Joe? I don't think he has any access to them and will only be able to use them if the named beneficiaries agree to give or loan them to the estate. Am I mistaken about this?
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Re: Estate Administration Question

Post by CAsage »

I retract my comment! If the car is worth that little, sell it immediately and pay the insurance bill first. The property tax should be paid, but can be paid out of escrow when the house is sold. If the heirs are contentious, by all means get a lawyer (and I'm so sorry about that). Joe CAN claim an executor fee as well as paying the lawyer, and I would sure do that in his shoes. I thought the purpose of probate was to total up all the bills, and then pay them as cash flow permits. How quickly can Joe sell the house? Yes, ideally, having the heirs cough up to pay the bills out of the TOD funds would be nice, but I can see how that would get messy. Goodness! Poor Joe.

If Joe does advance the funds, can he not be repaid FIRST out of the house proceeds? Before it's distributed to other heirs?
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Re: Estate Administration Question

Post by dcdowden »

I went through a similar situation a couple years ago. One more issue that wasn't mentioned is money to pay for 'final expenses' - i.e., funeral and burial. I wound up having to put those expenses on my credit card. I asked the funeral home what happens if no one can do this, and they said that then there is no funeral or burial.They will not extend credit. My deceased cousin had named me executor in her will, and her two adult surviving children were in no position to loan the estate money, so I had to do that in order to pay the bills. It took two months for me to get 'letters of office' through probate that allowed me to sell her car and access her checking account. Fortunately, I had very good relationships with the two beneficiaries and there were sufficient funds in the estate from other sources such as insurance and brokerage accounts, for me to eventually get repaid. But having learned from this situation, I did have my parents had me as a co-signer on their checking account so when the time comes I will have access to those funds immediately for final expenses and typical monthly bills.
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Re: Estate Administration Question

Post by adamthesmythe »

If Joe is a beneficiary he may want to front the money. If not- and if the beneficiaries do not want to do this either- I don't think it is irresponsible to pile up late fees that would be paid by the estate before distribution.

The only essential immediate payment is house insurance. It would be a remarkable coincidence to have that due immediately after death.
Billionaire wrote: Tue Aug 29, 2017 1:57 pm Joe refuses to serve as the executor and relinquishes his duties to the next in line, who should be named in the will.
If he is not a beneficiary this might be a very good idea.
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Re: Estate Administration Question

Post by JGoneRiding »

FIREchief wrote: Tue Aug 29, 2017 2:11 pm
JGoneRiding wrote: Tue Aug 29, 2017 2:04 pm Technically those TOD accts are actually part of the estate, they just don't require probate. They are however free game for debt and can and should be used to settle debts and keep the estate running.
Are they "free game" for Joe? I don't think he has any access to them and will only be able to use them if the named beneficiaries agree to give or loan them to the estate. Am I mistaken about this?
Depending on the state, the court could order the return, I believe. But really Joe should a) get the grantor to set aside funds now b) inform them he wont act as executor if not named on tod accts c) decline the position when the time comes (he would still be entitled to his share of the house proceeds)

This is a weird hypothesis in the first place why would someone name someone as executor and part of the estate but a minor position and not name them as beneficiary elsewhere while at the same time having no direct heirs.
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Re: Estate Administration Question

Post by Jack FFR1846 »

FIREchief wrote: Tue Aug 29, 2017 1:45 pm
Jack FFR1846 wrote: Tue Aug 29, 2017 1:39 pm Sell the car....pay bills with proceeds....then sell the house....pay the rest....distribute.
Joe just discovered that there is an outstanding loan of $9000 on the car which has a low book value of $11,000. Looks like he can try to sell the car and pay $2000 to his lawyer to get things started. Now what to do with the current bills and the looming property tax payment?? Joe isn't sleeping very well, and the TOD beneficiaries are asking why Joe wants them to "give money back," when he should be distributing more money to them!
So the property tax is late. There's going to be a penalty added to the amount due. Not a big deal.

If you're paying a lawyer, ask what bills, if any to pay. Put the house up for sale.

If the beneficiaries are unhappy, hand in your resignation letter and let the will's next in line deal with it.
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Re: Estate Administration Question

Post by munemaker »

JGoneRiding wrote: Tue Aug 29, 2017 2:47 pm
This is a weird hypothesis in the first place why would someone name someone as executor and part of the estate but a minor position and not name them as beneficiary elsewhere while at the same time having no direct heirs.
Yes, if I was the designated beneficiary in this case, I would decline and suggest turning it over to whoever inherited the TOD accounts. Really strange to designate someone as beneficiary but not include them in distribution of TOD assets. "Here, take care of this for me. I am leaving my liquid assets to others."
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Re: Estate Administration Question

Post by Gill »

Most wills give the executor the power to borrow money. He could do this, perhaps even lending it himself and then paying the loan after the car and real estate are sold. As for resigning, that is often not easy once the appointment has been accepted and he would need approval of the court to do so.
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Re: Estate Administration Question

Post by Lastrun »

JGoneRiding wrote: Tue Aug 29, 2017 2:04 pm
Depending on the state, the court could order the return, I believe.
This is the correct answer.

Most states should allow this. Threaten the TOD takes with recovery and hope they pay some of it over. There may be limitations periods on filing the claim, so look into that. In VA, the executor has one year for TODs and joint accounts.

This is happening a lot more lately. It is particularity acute in blended families that use TODs. (house to 2nd spouse with debt and expenses) +(IRA and life insurance to kids from 1st marriage)=nightmare.
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Re: Estate Administration Question

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Thanks for all the responses. Joe is not the OP (fortunately he's not even a real person). You've confirmed my suspicion that anybody in a situation even close to Joe's would be absolutely nuts to accept the nomination as executor. I believe that Joe's submittal of a signed/notarized "declination of office" form to the probate court in Joe's state would allow him to just sit back and see if any residual benefits trickle out to him at the end. Since Joe doesn't really need more money, Joe will probably be much happier this way. I'm sure the court and Joe's other beneficiaries will figure things out (eventually).

More useful Bogleheads inputs here:

viewtopic.php?f=2&t=226235&p=3503312#p3503312
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Re: Estate Administration Question

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JGoneRiding wrote: Tue Aug 29, 2017 2:47 pm This is a weird hypothesis in the first place why would someone name someone as executor and part of the estate but a minor position and not name them as beneficiary elsewhere while at the same time having no direct heirs.
I think it was more of a premise (perhaps slightly flawed) than hypothesis. Unfortunately, nobody really knows what assets are available to settle an estate until they formally accept the position of executor and are granted full access to the decedent's affairs. To Gill's point, that means Joe may not know how badly screwed he is until it is too late. :oops:

Even if the nominated executor received benefits from one or more TOD accounts, it may not be prudent for him to immediately "loan" them back into the probate estate to pay expenses. If other beneficiaries are adversarial (and who really knows until the time comes), the accusations of mismanagement could become legion (perhaps followed by threats, fights, lawsuits and other such things for which life is simply to short to allow time for).
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Re: Estate Administration Question

Post by NotWhoYouThink »

In your possibly related link, you mentioned 4 grandchildren. So it would seem that someone is going to need to step up and fund funeral expenses, out of TOD funds or from whatever source. Assuming the family wants a funeral, or at least a burial. Cremation would be cheaper if no one is willing to front the funds for a casket and plot. Or maybe that has been pre-paid?
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Re: Estate Administration Question

Post by celia »

munemaker wrote: Tue Aug 29, 2017 2:58 pm
JGoneRiding wrote: Tue Aug 29, 2017 2:47 pm This is a weird hypothesis in the first place why would someone name someone as executor and part of the estate but a minor position and not name them as beneficiary elsewhere while at the same time having no direct heirs.
Yes, if I was the designated beneficiary in this case, I would decline and suggest turning it over to whoever inherited the TOD accounts. Really strange to designate someone as beneficiary but not include them in distribution of TOD assets. "Here, take care of this for me. I am leaving my liquid assets to others."
I don't think it is weird and I don't recall the OP saying there weren't any direct heirs. In fact, part of the purpose of the will IS TO NAME the beneficiaries, not to have no-one inherit your assets! The TOD beneficiaries could be minors, those with cognitive decline, charities, or someone who is Special Needs. In other words, it could be those who wouldn't/can't be a good executor.

Munemaker, I think you meant if I was the designated executor.
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Re: Estate Administration Question

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NotWhoYouThink wrote: Tue Aug 29, 2017 6:16 pm In your possibly related link, you mentioned 4 grandchildren. So it would seem that someone is going to need to step up and fund funeral expenses, out of TOD funds or from whatever source. Assuming the family wants a funeral, or at least a burial. Cremation would be cheaper if no one is willing to front the funds for a casket and plot. Or maybe that has been pre-paid?
Nobody will know anything for sure until the time comes. Unfortunately, there are still people in this world that refuse to talk to their adult children about anything like this. While many of us bogleheads greatly value open communication and trying to make things easier on our heirs, others in this world are just in another place. FIREchief (not Joe) will readily pull out his wallet and fund a decent burial, but he won't allow himself or somebody close to him to be drawn into this insanity that can occur within our legally sanctioned probate process. Again, thanks for all the helpful responses. 8-)
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Re: Estate Administration Question

Post by NotWhoYouThink »

Sounds like you have your priorities right - do what lets you sleep at night, but stay out of the muck.

It's hard to know how much to share. Our relative finally started sharing some after dementia settled in, and one of the in-laws went right for the bank accounts and did some damage once she realized where and how full they were. So maybe he had been right all that time playing it close to the vest. I didn't see that one coming. After his death, the sibling that was named executor conducted his business with more secrecy than you would expect from someone outside the national intelligence community. We could try to fight it, but probably won't.
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Re: Estate Administration Question

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From my brother's experience handling several family members' estates as executor, if the executor can handle most issues and needs advice and a small amount of actual attorney work, I would find another attorney.
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Re: Estate Administration Question

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NotWhoYouThink wrote: Wed Aug 30, 2017 8:15 am It's hard to know how much to share. Our relative finally started sharing some after dementia settled in, and one of the in-laws went right for the bank accounts and did some damage once she realized where and how full they were.
Did that "in-law" have power of attorney?
NotWhoYouThink wrote: Wed Aug 30, 2017 8:15 am After his death, the sibling that was named executor conducted his business with more secrecy than you would expect from someone outside the national intelligence community. We could try to fight it, but probably won't.
Sounds like an estate that was below the threshold for probate. I realize that in many situations avoiding probate can provide benefits but, in other scenarios, I like the transparency that probate provides.
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Re: Estate Administration Question

Post by NotWhoYouThink »

She got him to write the checks, so she didn't need POA. A little bit passed through probate, the rest through the trust in a black box process. The trust and state law say the trustee should document the transactions to the beneficiaries, but if the trustee doesn't follow the trust and the law you don't get anything without filing suit, which we won't do. No real reason to suspect fraud or theft (because we knew approximately what the assets were), but the lack of communication was frustrating.

Anyway, for every greedy grabbing heir there is a lazy, incompetent, or greedy trustee/executor. Many families manage to make it through this process with no hard feelings, I hope yours will be one.
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Re: Estate Administration Question

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prudent wrote: Tue Aug 29, 2017 1:53 pm I would think the home insurance and utilities are pretty urgent, you can't have those cancelled.

This is a situation I might find myself in some day down the road, and it seems like a real mess. Perhaps if the TOD beneficiaries are snippy about the situation and don't want to advance any funds, then the executor could withdraw and let someone else deal with it. It's a thankless enough job without having to deal with that.
My husband and I lent the estate money until one of the properties got sold and recorded a second (and third!) mortgage against the property in order to pay property taxes, insurance and fix up costs to sell. I charged a nominal amount of interest. My brother (the other beneficiary) has chronic financial problems and wasn't in a position to either help or turn down my offer. The other alternative would have been to let the property go into foreclosure and lose whatever equity there was. I got my money when the property sold.
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Re: Estate Administration Question

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Carefreeap wrote: Wed Aug 30, 2017 6:04 pm The other alternative would have been to let the property go into foreclosure and lose whatever equity there was. I got my money when the property sold.
Wouldn't the estate have still received some money if the foreclosed property was ultimately resold for more than the amounts on any outstanding mortgages and other liens?
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Re: Estate Administration Question

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FIREchief wrote: Tue Aug 29, 2017 1:45 pm
Jack FFR1846 wrote: Tue Aug 29, 2017 1:39 pm Sell the car....pay bills with proceeds....then sell the house....pay the rest....distribute.
Joe just discovered that there is an outstanding loan of $9000 on the car which has a low book value of $11,000. Looks like he can try to sell the car and pay $2000 to his lawyer to get things started. Now what to do with the current bills and the looming property tax payment?? Joe isn't sleeping very well, and the TOD beneficiaries are asking why Joe wants them to "give money back," when he should be distributing more money to them!
You are mistaken. Joe should not be distributing money to them. The estate is essentially worthless. He is not responsible for distributing the funds that are not in the estate. He is just the executor of an essentially worthless estate.

Joe should apologize to the beneficiaries for asking for money, that was a stupid move.

Joe should resign as executor.

There is almost nothing to salvage in the estate.

The court will appoint an executor.

Joe should focus on determining if he is the beneficiary of any funds not in the estate.
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Re: Estate Administration Question

Post by JGoneRiding »

tadamsmar wrote: Wed Aug 30, 2017 8:48 pm
FIREchief wrote: Tue Aug 29, 2017 1:45 pm
Jack FFR1846 wrote: Tue Aug 29, 2017 1:39 pm Sell the car....pay bills with proceeds....then sell the house....pay the rest....distribute.
Joe just discovered that there is an outstanding loan of $9000 on the car which has a low book value of $11,000. Looks like he can try to sell the car and pay $2000 to his lawyer to get things started. Now what to do with the current bills and the looming property tax payment?? Joe isn't sleeping very well, and the TOD beneficiaries are asking why Joe wants them to "give money back," when he should be distributing more money to them!
You are mistaken. Joe should not be distributing money to them. The estate is essentially worthless. He is not responsible for distributing the funds that are not in the estate. He is just the executor of an essentially worthless estate.

Joe should apologize to the beneficiaries for asking for money, that was a stupid move.

Joe should resign as executor.

There is almost nothing to salvage in the estate.

The court will appoint an executor.

Joe should focus on determining if he is the beneficiary of any funds not in the estate.
There is a house worth presumable a reasonable amount of money it just needs to be dealt with. Of course a lot of homes just fall apart after the death of their elderly occupant bec upkeep has been poor anyway for a while and now it is worse and as stated elsewhere there is fighting over who is going to pay for what when
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Re: Estate Administration Question

Post by NotWhoYouThink »

There is almost nothing to salvage in the estate.
What about the paid for house?

It looks like the challenge is liquidity, not solvency.
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Re: Estate Administration Question

Post by tadamsmar »

JGoneRiding wrote: Wed Aug 30, 2017 8:56 pm There is a house worth presumable a reasonable amount of money it just needs to be dealt with. Of course a lot of homes just fall apart after the death of their elderly occupant bec upkeep has been poor anyway for a while and now it is worse and as stated elsewhere there is fighting over who is going to pay for what when
You are right. I overlooked the house.

If the estate is truly good for loan, the Joe should arrange for a legal loan. A quick, legal, personal loan that at least meets the IRS regulations could be arranged quickly. He could loan the the estate money or a willing relative could.

If he cannot get a loan, the the utilities will be turned off and the house will end up selling for less. It could even burn down with no fire insurance. The heirs should be willing to make a personal loan to protect the house if they have any money.

If the estate is not good for loan, then resign as executor.
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Re: Estate Administration Question

Post by daveydoo »

Having just recently been through this, I floated lots of my own cash as executor to deal with estate expenses, funeral expenses, etc. Joe needs to set up an estate account, perhaps with the proceeds of the car plus whatever else there is. (There must be a cash account somewhere that the deceased was using to pay property taxes, etc.) Maybe Joe knows less than he should about the contents of the estate, or others are concealing assets. Once Joe's on the estate account, he can easily reimburse himself for his expenses. He just needs to keep good records and be honest. And if there are heirs, then they need to get together with Joe and talk about expectations and the contents of the will -- even more so if there really is just a house and zero cash.
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Re: Estate Administration Question

Post by FIREchief »

daveydoo wrote: Wed Aug 30, 2017 10:12 pm (There must be a cash account somewhere that the deceased was using to pay property taxes, etc.)
POD/TOD checking/savings at the local bank. Joe has zero access.
daveydoo wrote: Wed Aug 30, 2017 10:12 pm Maybe Joe knows less than he should about the contents of the estate, or others are concealing assets.
Person who nominated Joe as executor refused to discuss anything with Joe. Oddly enough, willing to trust Joe to administer the estate after death; just not willing to answer questions Joe may have about things like this (non-TOD assets to pay current bills, etc.). Ignorance of probate process also highly influential in putting Joe in the position he is in.
daveydoo wrote: Wed Aug 30, 2017 10:12 pm Once Joe's on the estate account, he can easily reimburse himself for his expenses.
There will not be any estate account unless Joe funds it with his own assets. Other beneficiaries are suspicious/paranoid/etc. and they have little assets to "kick in."
daveydoo wrote: Wed Aug 30, 2017 10:12 pm He just needs to keep good records and be honest. And if there are heirs, then they need to get together with Joe and talk about expectations and the contents of the will -- even more so if there really is just a house and zero cash.
If only other heirs were always level headed, professional and reasonable people. Sometimes they are highly suspicious "predators" just waiting to spot an opportunity to "pounce."

(ongoing disclaimer: Joe is not a real person and, while his story may be based upon potentially future facts, this thread is for educational discussion only. So far it has been enlightening and actionable.)
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.
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Re: Estate Administration Question

Post by daveydoo »

FIREchief wrote: Wed Aug 30, 2017 10:42 pm (ongoing disclaimer: Joe is not a real person and, while his story may be based upon potentially future facts, this thread is for educational discussion only. So far it has been enlightening and actionable.)
Ah. Missed the disclaimer, if it appeared earlier -- was just trying to help. I assumed like others that the estate account would be car proceeds, etc.

But the new details make this super-easy: refuse executorship, have estate handled by court-appointed third-party one (presumably for an outrageous fee), and to heck with the greedy/useless/ungrateful heirs.
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Re: Estate Administration Question

Post by FIREchief »

daveydoo wrote: Wed Aug 30, 2017 11:10 pm
FIREchief wrote: Wed Aug 30, 2017 10:42 pm (ongoing disclaimer: Joe is not a real person and, while his story may be based upon potentially future facts, this thread is for educational discussion only. So far it has been enlightening and actionable.)
Ah. Missed the disclaimer, if it appeared earlier -- was just trying to help. I assumed like others that the estate account would be car proceeds, etc.

But the new details make this super-easy: refuse executorship, have estate handled by court-appointed third-party one (presumably for an outrageous fee), and to heck with the greedy/useless/ungrateful heirs.
Thanks daveydoo! While fictitious, the story of Joe described a very real potential future scenario (for the OP and apparently several other bogleheads). It is based upon facts as they are known at this time.

I think your conclusion is correct. The other heirs are just huge variables at this point. I could easily see them ranging from nice/reasonable/cooperative people to heirs-from-hell. Sometimes (maybe most times), you just don't really know other people. You can collect clues, and try to put the puzzle together, but there is no assurance that you are seeing the correct picture until it may be too late. Joe may be slow, but he's not an idiot. He'll avoid this whole thing like the plague if and when it happens.
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Re: Estate Administration Question

Post by tadamsmar »

If it is in Joe's interest to make a loan and he has the money, then he could make a personal loan to the estate.

It is in his interest if and only if the estate is good for the loan and he is a significant enough heir to the estate that he will likely lose inheritance if the insurance and/or utilities lapse.

If he does not have the money to make a loan, then he might find a bank or someone who would make a loan.

If Joe makes a diligent effort to get a loan and cannot get a loan, then he has a perfect right to let the bills go unpaid and sell the property as is.

The OP writes:

"If only other heirs were always level headed, professional and reasonable people. Sometimes they are highly suspicious "predators" just waiting to spot an opportunity to "pounce.""

This is not particularly important. Joe just needs to concentrate on his own integrity in this task. He should act the same way even if the heir is a baby.

If Joe wants to make a personal loan, then he should write up a loan agreement with a duration and an interest rate. The interest rate should conform to the IRS requirements. Since Joe thinks he needs a lawyer (or rather, God the OP stipulates that he needs a lawyer), writing up the loan agreement could be the lawyer's first task.
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Re: Estate Administration Question

Post by Carefreeap »

FIREchief wrote: Wed Aug 30, 2017 8:22 pm
Carefreeap wrote: Wed Aug 30, 2017 6:04 pm The other alternative would have been to let the property go into foreclosure and lose whatever equity there was. I got my money when the property sold.
Wouldn't the estate have still received some money if the foreclosed property was ultimately resold for more than the amounts on any outstanding mortgages and other liens?
If there was any equity left. The back payments, late charges and accumulated interest, property taxes, lender imposed insurance, and foreclosure charges would have added up quickly. One complication was that my mother failed to deed this property into her Trust. We had to go through an expedited probate process (still took six months in CA) to get a judge to authorize me to sell the property. I was able to keep the existing tenant in the property until we got an acceptable offer and ultimately netted about $25k out of the sale. Had I just walked away the estate MIGHT have gotten a few thousand.

I have no doubt that my active management in the estate/Trust was the right way to handle it on a few levels. I turned around an estate that was -$400,000 into $20k for my brother and ultimately a $300k profit for me when I sold her other property last month. (I reinvested my share and gambled that her condo would appreciate once the market recovered.). I think I'm most proud of that fact that I didn't contribute to the foreclosure mess in 2008 by letting these properties get foreclosed on and affect her neighbors and friends.
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Re: Estate Administration Question

Post by FIREchief »

tadamsmar wrote: Thu Aug 31, 2017 9:32 am The OP writes:

"If only other heirs were always level headed, professional and reasonable people. Sometimes they are highly suspicious "predators" just waiting to spot an opportunity to "pounce.""

This is not particularly important. Joe just needs to concentrate on his own integrity in this task. He should act the same way even if the heir is a baby.
I certainly agree with this once Joe has been issued letters of office. The time for Joe to consider the potential behaviors of heirs is before he agrees to take the job. But that's a different discussion.
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Re: Estate Administration Question

Post by Ged »

dcdowden wrote: Tue Aug 29, 2017 2:39 pm I went through a similar situation a couple years ago. One more issue that wasn't mentioned is money to pay for 'final expenses' - i.e., funeral and burial. I wound up having to put those expenses on my credit card.
I think this is a common scenario. At the time of a funeral there is a good chance that one can't get money out of the estate in time even if there are TOD's in place. In the case of my father he had nothing with a TOD on it so everything went into the estate. It took a few weeks to get the letters of probate created and processed by the financial institutions involved so that as executor I could access the estate's funds to pay expenses.

This is why I have a TOD account set up to provide some money while the rest of my estate is being probated and assets sold.

One learns a lot from serving as an executor.
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Re: Estate Administration Question

Post by pennywise »

Jack FFR1846 wrote: Tue Aug 29, 2017 1:39 pm Sell the car....pay bills with proceeds....then sell the house....pay the rest....distribute.
When I inherited the estate of a friend, the car and 2 motorcycles (all paid for, no loans outstanding) had to have the titles transferred by court order before anything could be sold.

Took several months and repeated trips to the courthouse by the estate lawyer :oops:

As others will surely confirm, dealing with estate administration is a lengthy, frustrating and often expensive process regardless of what legal arrangements are in place or how simple or uncomplicated the estate may seem to be at first. Another nudge to putting assets in trusts and making any possible fiscal/legal arrangements in advance to avoid probate with its myriad incredibly annoying issues. Voice of experience speaking here.
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Re: Estate Administration Question

Post by aristotelian »

Even if not a beneficiary, Executor can charge the estate a reasonable rate according to state limits. Some states might give a % of the estate or allow an hourly rate. Not sure if that includes the TOD accounts or not, but it would at least include a % the house. I don't think it would be crazy for Executor to take this on, especially if he really wanted to carry out the wishes of the deceased.

I would sell the car to free up cash, and perhaps look into an HELOC loan that could be done quickly.
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Re: Estate Administration Question

Post by dbr »

munemaker wrote: Tue Aug 29, 2017 2:58 pm
JGoneRiding wrote: Tue Aug 29, 2017 2:47 pm
This is a weird hypothesis in the first place why would someone name someone as executor and part of the estate but a minor position and not name them as beneficiary elsewhere while at the same time having no direct heirs.
Yes, if I was the designated beneficiary in this case, I would decline and suggest turning it over to whoever inherited the TOD accounts. Really strange to designate someone as beneficiary but not include them in distribution of TOD assets. "Here, take care of this for me. I am leaving my liquid assets to others."
Yes, I am thinking one might take care that the executor is also one of the TOD beneficiaries.

But what happens if the executor is a bank or law firm and there are no funds?
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Re: Estate Administration Question

Post by FoolStreet »

FIREchief wrote: Tue Aug 29, 2017 1:20 pm Scenario:

Single person passes away, leaving modest estate requiring probate. All financial accounts (savings, checking, investment) have designated POD/TOD beneficiaries. Joe is named executor of the estate by the decedent’s will. Joe files the will with the probate court and receives “letters of office” authorizing him to take possession of, and act on behalf of, the probate estate’s assets. Joe soon discovers that the only assets within the probate estate are a paid-for house and an automobile. Next week, Joe receives bills for a) the annual home owners insurance premium, b) a six month auto insurance premium, c) last month’s electricity, d) last month’s water, e) last month’s natural gas. He also learns that a half year of property taxes are due next month. Joe also feels that he needs to hire an attorney to help him administer the estate. The attorney requires an initial payment and then will bill monthly. Since the financial accounts have named beneficiaries, I don’t believe that Joe has any access to monies within them. How does Joe pay the bills?
What interest rate should Joe charge? My credit card charges as much as 30%.
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Re: Estate Administration Question

Post by Broken Man 1999 »

When I settled my Dad's estate I was able to do everything EXCEPT sell his condo. Fortunately I had kept enough funds in reserve to pay insurance and homeowners fees. But it took a very long time to sell, and ultimately I ran out of reserve and had to retrieve $$ from brother and sister. They weren't surprised as I had given monthly reports on the situation. We could have done a fire sale, but none of us wanted that.

I can only imagine, and sympathize with estate executors who have their hands tied, and face contentious inheritors. :shock:

My father's estate was divided equally three ways, and all of us knew that before his death, so no drama. I already was acting as successor trustee for his trust, so had no issues with paying final bills and such. Very clean, tidy estate closing.

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Re: Estate Administration Question

Post by afan »

Ged wrote: Thu Aug 31, 2017 2:41 pm At the time of a funeral there is a good chance that one can't get money out of the estate in time even if there are TOD's in place. In the case of my father he had nothing with a TOD on it so everything went into the estate. It took a few weeks to get the letters of probate created and processed by the financial institutions involved so that as executor I could access the estate's funds to pay expenses.

This is why I have a TOD account set up to provide some money while the rest of my estate is being probated and assets sold.
All of this would have been avoided if the deceased had created and funded a living trust.

The assets would have been in the trust and the trustee could continue paying bills and managing trust affairs with no interruption. By having the assets in the trust, rather than TOD, no transfer is necessary. No need to present a death certificate in order to do the transfers. And of course, no possibility of transferring all the funds by TOD while leaving a mess in the remainder of the estate as postulated by the OP.
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Re: Estate Administration Question

Post by bayview »

Broken Man 1999 wrote: Sat Sep 02, 2017 10:42 am When I settled my Dad's estate I was able to do everything EXCEPT sell his condo. Fortunately I had kept enough funds in reserve to pay insurance and homeowners fees. But it took a very long time to sell, and ultimately I ran out of reserve and had to retrieve $$ from brother and sister. They weren't surprised as I had given monthly reports on the situation. We could have done a fire sale, but none of us wanted that.

I can only imagine, and sympathize with estate executors who have their hands tied, and face contentious inheritors. :shock:

My father's estate was divided equally three ways, and all of us knew that before his death, so no drama. I already was acting as successor trustee for his trust, so had no issues with paying final bills and such. Very clean, tidy estate closing.

Broken Man 1999
Oh boy. :oops: I don't think I'm in for anything as dramatic as the hypothetical OP, but I will presumably be executor (and sole beneficiary) of my mother's estate one day. She does not want to talk about anything involved with all this (including a trust, etc.). In fact, a one point, she said "It will be your problem to figure out." Once upon a time, I was a co-signer on her checking account, but she has since changed banks.

At least there's no mortgage or other loans, and I'm reasonably sure that the actual burial etc is prepaid, but I think I need to start a list of what I might be having to cover during probate. What besides these items is likely to pop up?

- insurance on house
- property taxes
- insurance on car (we'll probably be driving it when in town)
- utilities
- $$$ to get house ready to sell
- copays etc on final medical
- oh Lord, income taxes
- ???
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