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My Niece Is Having Issues With Her Parent's Estate

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What is the name of your state (only U.S. law)? CA

My niece is the beneficiary of a rather complicated estate and has asked me some rather complex legal questions that I have no clue about! :)

First off, her mother passed away shortly after her father and the estate of her father hadn't been properly settled by the time of her mother's death.

Her mother died with sole ownership of an $800,000.00 dollar property (that was placed in an irrevocable family trust), 2 savings accounts that totalled$20,000.00, and some furnishings/jewelery that has been appraised and total $10,000.00. In addition, her mother was to receive a $10,000 life insurance claim from her father that wasn't processed by the date of her mother's death. Her mother was also going to receive a pension of roughly $2,000.00 a month from her father's company. That claim hadn't been processed either by the time of her mom's passing. Total, the company owes about 6 months of pension that her mother never received which comes to $12,000.000. Her brother was named executor and is doing a horrible job according to her.

Her siblings (3 total) had over the years amassed $250,000.00 in credit card debt on her parents credit cards and that amount is still owed.

The house is in need of repairs and renovation that will likely cost at least $50,000.00 before the property is sold. In the mean time, the credit card companies have NOT been informed of the deaths of my niece's parents. They assume that her parents are simply not paying on the balances and have sent notices informing of legal action if the matters aren't resolved. My nephew the executor refuses to do anything about it. The late charges and finance charges are adding up...is my nephew responsible for paying them since he has refused to use the estate money to keep up with the payments? He has also spent the entire savings on some very badly done "repairs" by his friends to the property and the rest on fees for him "consulting" with the estate attorney.

The life insurance and pension is going to be arriving shortly and my nephew has stated that he simply plans on splitting it 4 ways and giving to himself and his siblings without paying any of the credit card debts or making more much needed repairs to the property.

My niece wants to know what she can do. I told her that I believe what my nephew is doing can be labeled as fraud. He is not informing the credit card companies of their passing and has not used the money that was in the estate correctly.

She is demanding that he use the life insurance and pension money to begin paying off the balances of the credit cards and complete the repairs needed to the house rather than divide it up and give it to her and her siblings...and I believe that it would be illegal for him to distribute funds to beneficiaries when there is so much debt still and the estate is not settled...right?

Any information would be appreciated. :)
 


Dandy Don

Senior Member
Best thing you can advise her to do is to hire an attorney experienced in probate and in trusts, for consultation purposes. As of right now you don't have enough evidence to make accusations of fraud, which is a very specific legal term, but she may have reason to be concerned.

If the life insurance and pension did not have beneficiaries named, then they do go into the estate for the executor to distribute.

If your niece is a beneficiary of the irrevocable trust, she has the right to request a copy of the trust and an accounting statement for each year the trust has been in existence, by sending (or having her attorney send) such request by certified letter to the trustee asking for the information. Does the trust allow the $800,000 property to be sold or not?

She can also ask the attorney about LEGAL grounds for removal of an executor. He may be guilty of self-dealing and that may be grounds enough.

The attorney also needs to look at BOTH estates paperwork to see if they were handled properly and may be able to suggest a solution to the fact that one has not been settled yet.

Were the cards used WITH the permission of the parents? If there aren't enough assets in the estate to pay off the debt then it unfortunately will not get paid. If probate was officially filed at probate court, then supposedly there should have been notification by an ad placed in a local legal publication or newspaper about the estate so that creditors could file a claim with the estate, but maybe the credit card company did not see it. So the honest thing for niece to do is ask her attorney whether she should inform the credit card companies about the open estate or not.

DANDY DON IN OKLAHOMA ([email protected])
 
Dandy Don:

First of all, thank you for replying. :)

The trust specifies that the trustee (my nephew) has total discretion over the trust assets and yes, that includes the ability to sell the property (which he is planning on doing but since the market has tanked, he is holding off and also because it's in need of a lot of repairs/renovation).

The life insurance and pension was to go to my niece's mother as the surviving spouse, but seeing as she died before her claims were processed, the insurance and pension is to be paid to the estate of her mother. The estate specifies that all monies are to be divided equally among my niece and her 3 siblings...but seeing as there is so much debt that isn't being paid...she and I don't think it's legal for all that money to be divided up when it belongs to the estate first and the estate has sooo much unsettled debt. That is why she is telling my nephew to not distribute any funds because the estate does have enough to pay off the $250,000.00 in debts...the property will sell for at least $700,000.00 if $50,000.00 in repairs is made. That is why she is also saying to use the insurance and pension monies to do the repairs so they can put it on the market, sell it, and then settle all the debts. My nephew has shown that he doesn't care anything about paying the debts and wants to just pocket everything they can (i.e. the insurance and pension). So basically, my question now is: seeing as the estate has enough money to pay back the debts..the pension and insurance money should NOT be distributed to the beneficiaries, right? The money should be applied to resolving the debts, correct?

The cards were only to be used to "help" my niece's siblings...but her parents had no idea $250,000.00 had been accumulated on all their different card accounts. My niece already looked into if she could sue her siblings and unfortunately too much time has lapsed since the cards were used to try to sue for repayment and they could argue that their parents allowed them to use them..and since they are now deceased, no case really.

I know for a fact my nephew hasn't run any ads or taken any steps to inform the card companies. The property and assets were all placed in a trust that for some reason does not have to go through probate which is why my nephew has been able to get away with not informing the companies I'm assuming.
 

BlondiePB

Senior Member
Dandy Don:

First of all, thank you for replying. :)

The trust specifies that the trustee (my nephew) has total discretion over the trust assets and yes, that includes the ability to sell the property (which he is planning on doing but since the market has tanked, he is holding off and also because it's in need of a lot of repairs/renovation).

The life insurance and pension was to go to my niece's mother as the surviving spouse, but seeing as she died before her claims were processed, the insurance and pension is to be paid to the estate of her mother. The estate specifies that all monies are to be divided equally among my niece and her 3 siblings...but seeing as there is so much debt that isn't being paid...she and I don't think it's legal for all that money to be divided up when it belongs to the estate first and the estate has sooo much unsettled debt. That is why she is telling my nephew to not distribute any funds because the estate does have enough to pay off the $250,000.00 in debts...the property will sell for at least $700,000.00 if $50,000.00 in repairs is made. That is why she is also saying to use the insurance and pension monies to do the repairs so they can put it on the market, sell it, and then settle all the debts. My nephew has shown that he doesn't care anything about paying the debts and wants to just pocket everything they can (i.e. the insurance and pension). So basically, my question now is: seeing as the estate has enough money to pay back the debts..the pension and insurance money should NOT be distributed to the beneficiaries, right? The money should be applied to resolving the debts, correct?

The cards were only to be used to "help" my niece's siblings...but her parents had no idea $250,000.00 had been accumulated on all their different card accounts. My niece already looked into if she could sue her siblings and unfortunately too much time has lapsed since the cards were used to try to sue for repayment and they could argue that their parents allowed them to use them..and since they are now deceased, no case really.

I know for a fact my nephew hasn't run any ads or taken any steps to inform the card companies. The property and assets were all placed in a trust that for some reason does not have to go through probate which is why my nephew has been able to get away with not informing the companies I'm assuming.
Forrester, if your niece does not have a copy of the entire probate file, she can obtain a copy at the courthouse. The trust document may also be there too. Unless the trust specifies that final expenses be paid by the trust, the assests in trust are to be distributed according to the terms of the trust and are not part of probate.

Insurance etc. with designated beneficiaries are to go directly to the beneficiaries for them to do with the monies as they choose. No one can force a beneficiary who receives monies that pass outside probate to pay for any outstanding debts of the decedent. Your niece sounds very responsible for wanting the debtors paid. Most just stick the creditors.

You can find CA probate code here: [url=http://www.leginfo.ca.gov/cgi-bin/calawquery?codesection=prob&codebody
 
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Dandy Don

Senior Member
Just because you THINK the property may sell for a certain amount doesn't necessarily mean that it WILL sell at all, although that is certainly a possibility.
 
Forrester, if your niece does not have a copy of the entire probate file, she can obtain a copy at the courthouse. The trust document may also be there too. Unless the trust specifies that final expenses be paid by the trust, the assests in trust are to be distributed according to the terms of the trust and are not part of probate.

Insurance etc. with designated beneficiaries are to go directly to the beneficiaries for them to do with the monies as they choose. No one can force a beneficiary who receives monies that pass outside probate to pay for any outstanding debts of the decedent. Your niece sounds very responsible for wanting the debtors paid. Most just stick the creditors.

You can find CA probate code here:

The trust did not have to go through probate. There was a will and trust but the trust is what is being followed, I don't know the language though, but I'll be sure to tell my niece to see what it says about settling final costs and debts (she does have a copy thankfully).

I assumed that since the estate had enough assets and money combined to pay off the debts that the estate was legally obligated to settle them since my niece's parents did not die insolvent. Whatever is left after the debts are settled would be distributed to the beneficiaries as an inheritance. I didn't know that if the trust/will specifies that the monies be paid directly to beneficiaries that the estate would be able to get out of resolving the debts.

Thank you for your reply. :)
 
Just because you THINK the property may sell for a certain amount doesn't necessarily mean that it WILL sell at all, although that is certainly a possibility.
I'm aware that thinking and getting are two different things. :p

There were a handful of different appraisers that inspected the property shortly before the economy went to hell, and they all guaranteed a minimum of $800,000.00 on the then current market with repairs and a bit of renovating.

California's real estate market has dramatically been hit by the recession/depression/housing market crisis so no one's really buying and everything it seems is being put on the market.

$700,000.00 is going below what its market price should be but in these times, the value will keep going down as everything that is selling in these parts are being sold for much less than they are actually worth.

In a fairly healthy market, the property would sell for more than enough to settle the debts and have some left over to distribute to my nieces and nephew.
 

anteater

Senior Member
$700,000.00 is going below what its market price should be but in these times, the value will keep going down as everything that is selling in these parts are being sold for much less than they are actually worth.
Not beating up on you in particular since this is the prevalent thinking. But look at the phrases you use: "..what its market price should be.."; "...much less than they are actually worth."

Something is worth what a buyer is willing to pay for it. No "should be's." No "actually worth's."
 
Not beating up on you in particular since this is the prevalent thinking. But look at the phrases you use: "..what its market price should be.."; "...much less than they are actually worth."

Something is worth what a buyer is willing to pay for it. No "should be's." No "actually worth's."
I don't really understand what your post is supposed to contribute :confused:...but the reason there is a market price is that everything is assigned a value that it is actually worth...not really a different way to phrase it. You can take something (anything) and put any price tag you want on it....does that make it the price it's actually worth? No...which is why there is a value system and things are evaluated to see where they fall on the scale...nothing would be worth anything if we didn't have a system in place to calculate its actually price tag....what the buyer is willing to pay for it factors into it, of course, i.e. supply and demand...but to say that a buyer's willingness to pay denotes the actual value of something...no I don't agree.
 

BlondiePB

Senior Member
The trust did not have to go through probate. There was a will and trust but the trust is what is being followed, I don't know the language though, but I'll be sure to tell my niece to see what it says about settling final costs and debts (she does have a copy thankfully).
Though trusts don't go through probate, some trust documents are filed in courthouses. Not knowing whether or not your niece had a copy of the trust is why the suggestion was made to check the courthouse for a copy of the trust.

I assumed that since the estate had enough assets and money combined to pay off the debts that the estate was legally obligated to settle them since my niece's parents did not die insolvent. Whatever is left after the debts are settled would be distributed to the beneficiaries as an inheritance. I didn't know that if the trust/will specifies that the monies be paid directly to beneficiaries that the estate would be able to get out of resolving the debts.
Please separate the estate & trust. If no property is to be probated, there will be no estate to abide by probate code. Thus, the only way final debts can be taken care of is via the terms of the trust. The trustee has a legal obligation to follow those terms. Not following the terms of the trust is cause for legal action against the trustee, including removing the trustee. I don't remember if CA probate code had trust info in it. Typically, probate code does include trusts.
Thank you for your reply.
You're welcome.
 

tranquility

Senior Member
The usual complaint is a lack of facts and here we have all these fact put out. The problem it twofold. One, many of these "facts" are mere suppositions. Two, we don't have any of the important facts. The end result is niece should see an attorney. Once everything is laid out and documented (one thing the attorney will do is get a real accounting of the trust), then next steps can be considered.

Thinking and supposing is just going to make what is probably a very simple thing into something far more complicated then it needs to be. See a professional who can cut through the rubbish and emotion.
 

anteater

Senior Member
I don't really understand what your post is supposed to contribute :confused:....
Oh, it was the end of a long, hard day of work and I felt the need to make an irrelevant post.

but the reason there is a market price is that everything is assigned a value that it is actually worth...not really a different way to phrase it. You can take something (anything) and put any price tag you want on it....does that make it the price it's actually worth? No...which is why there is a value system and things are evaluated to see where they fall on the scale...nothing would be worth anything if we didn't have a system in place to calculate its actually price tag....what the buyer is willing to pay for it factors into it, of course, i.e. supply and demand...but to say that a buyer's willingness to pay denotes the actual value of something...no I don't agree
When you hang a dollar sign on an object, "..what the buyer is willing to pay.." does not just "factor into it." What an arms-length buyer is willing to pay is the only measure of its value. That is the "system in place to calculate its actually price tag." Everything else is tinfoil hat speculation.
 
Oh, it was the end of a long, hard day of work and I felt the need to make an irrelevant post.



When you hang a dollar sign on an object, "..what the buyer is willing to pay.." does not just "factor into it." What an arms-length buyer is willing to pay is the only measure of its value. That is the "system in place to calculate its actually price tag." Everything else is tinfoil hat speculation.
Well since this is a thread meant for legal advice, I won't continue debating what constitutes price...I'll just agree to disagree.
 

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