Potential neglect by executors

[aikman59]

undefinedWhat is the name of your state?
PA

I am one of nine brothers & sisters (includes executors) who will share equally in my father's estate. My brother and sister were appointed co-executors.

My father owned a vacation property in Florida that was one of his estate assets. It was appraised in June 2004 as part of the estate procedures. A couple months later Florida was hit by a series of hurricanes. We found out after the incident that my brother & sister inadvertantly allowed the property insurance to lapse. Unfortunately the hurricane damage was not covered.

Myself and a couple of other siblings requested that the property NOT be sold for a substantial loss, but the executors proceeded to liquidate the property for about one half the 6/04 appraised value.

I feel that my brother and sister should forego some of their fees as retribution for their error, but it doesn't appear they are willing to do that. I get the impression that they want the remaining seven to simply forgive their error with no compensation.

The estate will settle within 30 days, and I want to know if I have any legal claim to the negative difference created by their failure to keep the homeowners insurance policy current.

1. Should I contest the will?
2. Could they be forced to compensate for their negligence?

Please help!

aikman59

 

[aikman59]

need help fast

PA

I thought this was a site which offered advice

Apparently my question is too difficult to answer, or there isn't any advice to be given.

 

[lwpat]

Should I contest the will?

On what grounds?

Unfortunately the hurricane damage was not covered.

Would it have been covered under the original insurance policy and are the excecutors bonded?

Myself and a couple of other siblings requested that the property NOT be sold for a substantial loss, but the executors proceeded to liquidate the property for about one half the 6/04 appraised value.

Did you put that in writing?

Could they be forced to compensate for their negligence?

The real question is do you and the others want to force the issue and is the money involved worth the effort and legal fees? Your post indicates that your opinion is singular and without the backing of the others I doubt it is worth the problems.

Has the lapse in insurance been investigated? Are you sure that there is no recourse against the insurance company?

If you wish to press the issue then all seven of you should meet with an attorney and let him advise you.

 

[aikman59]

thanks

I'll try and address in the same order

I would contest on the grounds that the property was sold for only 50% of it's value, due to a failure to keep afire insurance policy current.

Yes it would have been covered 100% under the lapsed policy. I'm not sure if they're bonded.

Nothing is in writing, but shouldn't they be responsible for basic duties such as insurance? There was a policy in place. It was always in place since he owned the property. He died in 10/03. The policy was current through 6/04. Hurricanes occured in 9/04 and 10/04.

I'm not sure if everyone wants to force the issue at this point, but shouldn't they at least forego thier executor fees in an effort to compensate? I would have thought they had some responsibilities to protect assets until the estate settled.

 

[BlondiePB]

Something else to consider

Nothing is in writing, but shouldn't they be responsible for basic duties such as insurance? There was a policy in place. It was always in place since he owned the property. He died in 10/03. The policy was current through 6/04. Hurricanes occured in 9/04 and 10/04.

Due to the fact that your father passed in 10/03, the home was unoccupied. Therefore, even if the policy did not lapse, the insurance company may not have covered it anyway. I have found it impossible to obtain insurance for an unoccupied residence unless there is central security system installed (like ADT, Brinks, etc.). Ever since hurricane Andrew in 1992, it has been a nightmare with insurance companies in FL. The hurricanes last year has made it even worse.

 

[aikman59]

Thanks again

I appreciate your response. You're right about insurance difficulty, as getting a new policy is next to impossible.

Yes the policy would have covered the property. My father had it insured as a "part time" or vacation home, with the understanding that it would not be occupied for a good portion of the year. There is no doubt about that.

They simply failed to make the insurance payment (I believe it was semi-annually). It was absolutely unintentional. It wasn't for lack of funds. My opinion is simply because both were too busy with their own personal lives.

All that is understandable, but still does nothing for the 50% loss when liquidated. The closing was completed within the last two weeks. That was the only holdup to estate settlement, so I'm expecting it to happen very soon.

Are you saying that I should just forget this substantial loss? Do nothing? Or should I object to the settlement?

 

[BlondiePB]

Yes the policy would have covered the property. My father had it insured as a "part time" or vacation home, with the understanding that it would not be occupied for a good portion of the year. There is no doubt about that.

There's a big difference between a "snowbird" that is alive (part-time occupancy) and a "snowbird" that is deceased (not occupied).

Are you saying that I should just forget this substantial loss? Do nothing? Or should I object to the settlement?

Do what you must. The property is sold. Take into consideration the delay in closing the estate and the cost of attorney fees for something that may not have even been covered regardless if the policy had not lapsed.

 

[aikman59]

Thanks again

Once again I appreciate your response, BUT.....................

There is no question about coverage. The property had the correct policy, and that has been verified by the insurance company. The bills, and notices that the policy was lapsing have also been tracked through the postal service as verification that they were delivered. There is no dispute about that.

The only dispute at this time is responsibility

The only question is whether or not I have a claim to the substantial loss of this asset. Is it the responsibility of the executors to protect "large assets" like a property? It doesn't seem right to me that they could allow that type of loss, with no recourse. That would mean that as a beneficiary, we have no protection from the time of death until the settlement.

Correct me if I'm wrong, but it almost seems to be the equivalent of someone helping themselves to a bank account. And then be allowed to do so. If I were in their position, I would forego my executor fees because I failed to properly handle the responsibility. I would NEVER ask my siblings to accept that kind of error with no attempt to rectify.

 

[aikman59]

BlondiPB

PA

This is an excerpt from a free legal area on the internet describing the duties of the representative of an estate.

During this time period, the Personal Representative has to identify and collect assets of the Estate. To do this, the Personal Representative finds all bank and security accounts, debts owed to the Decedent, property owned by the Decedent, etc. The Personal Representative also has to maintain the assets in good condition, and to collect income for the Estate. This consists of maintaining insurance coverage, collecting rent, protecting assets from theft or damage, etc. The Personal Representative may also liquidate assets such as cars, real estate, etc.

This is where the basis of my question comes from. Is the representative responsible to maintain assets in good condition? It appears the answer to that question is "YES"

Now, what do I do? The money that I would have received had the coverage been maintained is significant as an individual portion, and substantial as a whole. My feelings have been that someone needs to accept responsibility for (in my opinion) "NEGLECT" in the insurance issue.

I'm just not sure of the proper procedure. Do not hire a lawyer. Could I simply say that I contest the settlement based on a substantial loss in property value? Under that assumption, would a judge (or someone) have to review the case? Do I not have the right to question something so basic?

 

[aikman59]

One More Thing

I believe that what I'm saying here is called “fiduciary duty” which says that the executor must act immediately to preserve and protect the assets as though they were dealing with their own affairs.

I've even seen this on another website;

An executor is never personally liable on claims or lawsuits against the deceased person or the estate itself, unless he or she was negligent or engaged in some sort of wrongdoing. For example, if estate funds were available, but the Executor neglected to pay a theft insurance bill covering property owned by the estate, and a theft loss resulted, he might well be held liable to the beneficiaries. But if a general economic downturn decreases the value of a “blue chip” estate portfolio of stocks and bonds, the law wouldn’t hold an executor responsible.

The underlined & bold section above would be a direct reference to my situation. I simply need to know the best way to proceed.

 

[BlondiePB]

I believe that what I'm saying here is called “fiduciary duty” which says that the executor must act immediately to preserve and protect the assets as though they were dealing with their own affairs.

Explaining "fiduciary duty" is not necessary because I am a fiduciary for estates and am extremely well versed with the duties and responsibilites of a fiduciary.

I simply need to know the best way to proceed.

As posted by Iwpat "If you wish to press the issue then all seven of you should meet with an attorney and let him advise you."

 

[aikman59]

Thanks Blondie

I appreciate your response.
I guess I would follow by asking what my chances are if I decide to proceed.
From what I've gathered it appears that the executors would bear responsibility.

Here is how I understand the proceedings to occur, and perhaps you could add some advice where necessary;

**They will gather us all for an "informal accounting". This will happen to save money, and is usually done with the understanding that everyone knows what's happening. Basically they are counting on no objections from anyone.

**I assume that is when I would object/contest on the basis of lost value due to neglect (or something like that)

**If that happens, I understand that the estate would move to a "formal accounting" in the presence of a judge (is that correct?)

**If the above is true, then perhaps I wouldn't even need an attorney. I say that because it looks like a "slam dunk" in my favor. Any judge would have to rule against the executors. It just seems so logical & simple. I don't want to involve my brothers & sisters in the objection simply because all of them have indicated that they don't really care. They just want to "close the chapter" and move on. My motivation is not money-oriented, but I honestly feel someone needs to take responsibility. I guess it's primarily because they have never even addressed their neglect. Instead they have tried to circulate that "market conditions" are responsible for the 50% loss in value. That has angered me from the start, and they continue to say the same thing when I confronted them about the neglect.

Thanks

 

[BlondiePB]

I guess I would follow by asking what my chances are if I decide to proceed.

No one can tell you what your chances are if you decide to proceed. Please, consult with an attorney. This is something that cannot be dealt with in cyberspace.

 

[aikman59]

Blondie

I hear what you're saying loud & clear.
I certainly wouldn't allow an internet discussion board to affect my decisions.
I have felt from the moment I knew of the lapsed insurance policy that I wouldn't necessarily need an attorney, and here's why............

Technically speaking we have an attorney who is handling the estate procedures. Like my siblings, I have received communications from him stating that he is there in the event we have any questions. I feel he works for "all of us" in this matter.

On the other hand, attorneys cost a great deal of money ($150/hour and up) so I don't feel I should be asking numerous questions to him directly. I'm certainly intelligent enough to research the matter on my own, long before I start paying directly for answers. He has told me about the "informal accounting" so I know that's what to expect in the coming weeks. He also said that would be the time to get past any differences.

I am trying to envision what happens after I make the objection. Will it be heard by a judge? If so, I feel comfortable enough at letting he/she make a ruling on the issue. I do believe it is obvious who's responsible for this very costly error. The amount of loss (my share) is enough to pay two years of my daughter's college expenses. Not a huge amount of money, but not bad either considering I have three children.

You know what I mean? That's why I'm on this board. I'm looking to get a clear picture of what happens after I object.