No Funds In Estate - Who Pays Lawyer?

[rfs]

I reside in Arizona but my question relates to New York. Who is legally responsible to pay attorney fees for handling the estate & probate when there are no funds in the estate? My wife is executrix of her late brother's estate and has received billings from the attorney. Since he obviously knew there was never any money in the estate we assumed his billing was a formality to demonstrate an attempt to collect before declaring a bad debt to write off with the IRS. However, unknown to us he also billed the beneficiary of the deceased's Certificate of Deposit and an IRA - both assets we were told are NOT part of the estate and cannot be touched. The beneficiary is an elderly lady who, we learned today, borrowed the money to pay the $6,000+ attorney fees. This is a lady who lives on Social Security, which barely covers her prescription drug bills, and up until this modest enheritance had been on Medicaid for 20 some years. Am I wrong or is this lawyer ethically and morally challenged?

 

[Litigation!]

I reside in Arizona but my question relates to New York. Who is legally responsible to pay attorney fees for handling the estate & probate when there are no funds in the estate? My wife is executrix of her late brother's estate and has received billings from the attorney. Since he obviously knew there was never any money in the estate we assumed his billing was a formality to demonstrate an attempt to collect before declaring a bad debt to write off with the IRS. However, unknown to us he also billed the beneficiary of the deceased's Certificate of Deposit and an IRA - both assets we were told are NOT part of the estate and cannot be touched. The beneficiary is an elderly lady who, we learned today, borrowed the money to pay the $6,000+ attorney fees. This is a lady who lives on Social Security, which barely covers her prescription drug bills, and up until this modest enheritance had been on Medicaid for 20 some years. Am I wrong or is this lawyer ethically and morally challenged?

My response:

What was in the Estate to be probated - - beyond what you mentioned, above?

IAAL

 

[rfs]

There was a home in a depressed area barely worth the outstanding mortgage.

 

[Litigation!]

There was a home in a depressed area barely worth the outstanding mortgage.

My response:

Oh. I was wondering why you didn't mention this fact in your initial post?

The attorney is entitled to be paid.


IAAL

 

[rfs]

That was my original question - but who is legally obligated to pay the attorney when there are no funds in the estate?

 

[Litigation!]

That was my original question - but who is legally obligated to pay the attorney when there are no funds in the estate?

My response:

That's your misunderstanding. There is money in the Estate - - it's called the house and property. It needs to be sold, if it hasn't already. It's not a matter of who is obligated. It's a matter of someone, anyone, paying the attorney's billing. It appears the "elderly lady" chose to pay it for some reason. So, sell the property and pay her back.

IAAL

 

[rfs]

In my original post I said there was no money in the estate. The house was transferred and there is NO money left in the estate. There was a leased vehicle turned back in with money due that could not be paid. There were others who also did not get paid.
I have not included all the details for the sake of brevity. I'm sorry if that was confusing, it was not my intent to mislead.

 

[justalayman]

In my original post I said there was no money in the estate. The house was transferred and there is NO money left in the estate. There was a leased vehicle turned back in with money due that could not be paid. There were others who also did not get paid.
I have not included all the details for the sake of brevity. I'm sorry if that was confusing, it was not my intent to mislead.

So why would you hire an attorney without intending to pay him? I'm not sure who is the morally and ethically challanged one here.

 

[rfs]

Sir, the lawyer was hired by the deceased not by me nor my wife - we live thousands of miles away from NY. It was obvious 15 minutes into our first (and only) meeting with the lawyer there would not be enough assets to pay all the bills. Perhaps he was legally obligated to perform? I have no idea since I am not a lawyer. I thought I might get an answer to my question on this site but apparently I was mistaken. Sorry to have taken so much of your time.

 

[justalayman]

Sir, the lawyer was hired by the deceased not by me nor my wife - we live thousands of miles away from NY. It was obvious 15 minutes into our first (and only) meeting with the lawyer there would not be enough assets to pay all the bills. Perhaps he was legally obligated to perform? I have no idea since I am not a lawyer. I thought I might get an answer to my question on this site but apparently I was mistaken. Sorry to have taken so much of your time.

Maybe you do need to explain things a bit more. You keep tossing in info as you go along.

What did the deceased hire the attorney to do and what arrangements did the deceased make to pay the attorney?

As executrix, your wife should be aware of what was going on. She should have inqired as to payment and such if she was aware of the poor financial situation.

 

[rfs]

Maybe you do need to explain things a bit more. You keep tossing in info as you go along.

What did the deceased hire the attorney to do and what arrangements did the deceased make to pay the attorney?

As executrix, your wife should be aware of what was going on. She should have inqired as to payment and such if she was aware of the poor financial situation.

I was trying to be brief

Only the lawyer and the deceased before his demise can answer your questions.

In a perfect world you are correct. However it was the lawyer who informed the executrix of the 'poor financial situation'. A grieving family member who does what the lawyer advises without questions is probably fairly typical. For all she knew the lawyer would be first in line to be paid.

I thought my question was fairly straightforward. Regardless of how the attorney performed or if his fee is appropriate, at the end of the day if there is no money in the estate who is legally responsible to pay the attorney?

 

[Dandy Don]

It's difficult to provide a direct answer to your question because it is somewhat illogical.

If there truly was no money in the estate, then there should have been no estate proceedings to begin with. The beneficiary can not exactly plead poverty since you admit she supposedly did receive (or will be receiving--has she received the proceeds of the IRA and CD yet?) the proceeds of the assets that were outside of the estate (why did she have to borrow to pay this debt?)--she did the responsible thing by paying her brother's debts. If she wanted to ask for a refund or partial refund, she should file a complaint with the state bar association, although I doubt she would do that.

Was this attorney the executor of the estate and therefore billing for his services on an hourly basis or did he charge a percentage fee as allowed by state law?

DANDY DON IN OKLAHOMA ([email protected])

 

[rfs]

It's difficult to provide a direct answer to your question because it is somewhat illogical.

If there truly was no money in the estate, then there should have been no estate proceedings to begin with. The beneficiary can not exactly plead poverty since you admit she supposedly did receive (or will be receiving--has she received the proceeds of the IRA and CD yet?) the proceeds of the assets that were outside of the estate (why did she have to borrow to pay this debt?)--she did the responsible thing by paying her brother's debts. If she wanted to ask for a refund or partial refund, she should file a complaint with the state bar association, although I doubt she would do that.

Was this attorney the executor of the estate and therefore billing for his services on an hourly basis or did he charge a percentage fee as allowed by state law?

DANDY DON IN OKLAHOMA ([email protected])

I don't think logic applies when it comes to probate law in NY. Apparently the fact that the deceased owned real estate triggered the need for probate - never mind that there was essentially no equity given the outstanding mortgage.

The sole heir / beneficiary did receive the CD and IRA but, again, we were told those two assets are not part of the estate. The deceased was not her brother; they were not related. As to why she borrowed money to pay the lawyer, she thought it better than to have to pay tax on money taken from the IRA even though at her age there would be no penalties involved... and certainly little if any tax due given her minimal income level. As I stated previously this is an elderly woman who had been on Medicaid for years before this modest inheritance. She seems to have little knowledge of money and how to handle it as evidenced by her actions to borrow money to pay a debt that is not hers.

The executrix (my wife), did not receive an itemized bill from the attorney, just an invoice with a bottom line number so I cannot answer the question of how the amount was determined.

 

[Dandy Don]

She should be consulting with a local CPA or tax accountant to find out NOW if there is any tax liability regarding the IRA--it would be a shame if she spent monies that were due for a tax debt.