Is Manufactured Home Proceeds Part of Estate?

[JEmlay]

Mother passed away. All she had was a manufactured home. It's now been sold (after 40 days/California). Check is made out to me. So now the question I have is do I deposit this into her Trust Account or because this personal property bypassed probate is it now mine? I'm the one that will be paying taxes on it. The sale is attached to me (my social) not the trust tax ID or her.

I want to do things by the book and want to make sure if I'm required to use this money to pay off her debts. Everything I see on the internet tells me these proceeds are not part of her estate but then again...internet! So far I haven't needed a lawyer for anything. I'd hate to have to start paying one for just this. But I don't want legal trouble down the road.

 

[Zigner]

Did SHE own the mfg home? Were YOU on title in any way (ie: Joint tenant or Transfer on Death)? Did you use California's Small Estate process by signing a affidavit/declaration? What "trust account" are you talking about? Did she have a trust? Did the trust own the trailer, or did she own it personally?

 

[JEmlay]

Many thanks for your time Zigner!

She owned the home, personally. I was not on the title in any way. She willed it to me. I believe the California small estate affidavit is what rules over the after 40 day deal. I did not fill out that paperwork, instead the mortgage company did it via PoA from me. Escrow handled all that.

With the trust account....no one knew what they were doing towards the end. To guarantee no probate she had the house put into a trust to make sure all ends were covered but come to find out she failed to change the title to include the trust. Because of that I guess the trust in invalid or rather has no baring on the titled property. So escrow ditched the trust and took the will. As for her trust account, I've simply been using that as a record of all her estate transactions. She doesn't actually have anything that requires the account seeing as how nothing was physically transferred to the trust outside of the legal trust document created.

So I guess the question isn't so much as does the money need to go into her trust account specificly, the question is do the proceeds belong to her virtual "estate" and need to be used to pay off her debts.

 

[not2cleverRed]

Many thanks for your time Zigner!

She owned the home, personally. I was not on the title in any way. She willed it to me. I believe the California small estate affidavit is what rules over the after 40 day deal. I did not fill out that paperwork, instead the mortgage company did it via PoA from me. Escrow handled all that.

With the trust account....no one knew what they were doing towards the end. To guarantee no probate she had the house put into a trust to make sure all ends were covered but come to find out she failed to change the title to include the trust. Because of that I guess the trust in invalid or rather has no baring on the titled property. So escrow ditched the trust and took the will. As for her trust account, I've simply been using that as a record of all her estate transactions. She doesn't actually have anything that requires the account seeing as how nothing was physically transferred to the trust outside of the legal trust document created.

So I guess the question isn't so much as does the money need to go into her trust account specificly, the question is do the proceeds belong to her virtual "estate" and need to be used to pay off her debts.

That complicates things.

While this alone should not invalidate the trust, it might affect how the home is viewed.

It would be worth it to consult a lawyer.

Why do you think that the proceeds of the sale of an asset of her estate should be not be used to pay the debts of the estate? People routinely sell property to cover the taxes/debts of an estate. You can't have it both ways.

 

[Zigner]

While I agree that it can't hurt to consult with an attorney, I believe that it actually simplifies things if the manufactured home (trailer) was not included in the trust.

 

[not2cleverRed]

While I agree that it can't hurt to consult with an attorney, I believe that it actually simplifies things if the manufactured home (trailer) was not included in the trust.

If the manufactured house is not part of the trust, then isn't it pretty straightforward that the proceeds from the sale should first be used toward unpaid debts/taxes of the estate before the remainder is dispersed among the heirs?

The debts of an estate are supposed to be satisfied first. If there's not enough to satisfy those debts, then, oh well, regardless of what a will says, you get nothing.

 

[JEmlay]

Correct, according to California Department of Housing and Community Development it was never entered into the trust.

Which just leaves, are the house proceeds mine or the estates?

If it's mine then that leaves her estate with a massive negative balance (stuff I've paid for out of pocket, with and without proceeds). If it's her estates then that leave her state with about 13k. Did I read correctly that people have 2 years to attempt to collect from date of death? I guess I could just put that in a saving account somewhere and wait for that time to pass.

 

[JEmlay]

proceeds from the sale should first be used toward unpaid debts/taxes of the estate before the remainder is dispersed among the heirs?

That's what needs to be answered first. Do these proceeds belong to the estate in the first place? This personal property was transfered to me outside of probate, ie non-probate asset.

 

[Zigner]

You should speak with an attorney.

 

[LdiJ]

That's what needs to be answered first. Do these proceeds belong to the estate in the first place? This personal property was transfered to me outside of probate, ie non-probate asset.

HOW did the property transfer to you outside of the estate? How did the title get into your name so that the house could be sold in your name? Something had to happen for that to occur. Many of the previous questions you were asked were trying to get to that information.

 

[Zigner]

HOW did the property transfer to you outside of the estate? How did the title get into your name so that the house could be sold in your name? Something had to happen for that to occur. Many of the previous questions you were asked were trying to get to that information.

The OP used California's Small Estate process.
https://www.courts.ca.gov/10440.htm

 

[JEmlay]

HOW did the property transfer to you outside of the estate? How did the title get into your name so that the house could be sold in your name? Something had to happen for that to occur. Many of the previous questions you were asked were trying to get to that information.

I believe the California small estate affidavit is what rules over the after 40 day deal. I did not fill out that paperwork, instead the mortgage company did it via PoA from me. Escrow handled all that.

Manufactured homes do not require probate. Just like a car you wait 40 days then transfer title to either yourself or a new owner through sale.

I have no problem if the proceeds belong to her estate but if that's the case then so do the taxes from it. That's what I'm trying to get straight in my head because ultimatly my social is what sold the house as far as the IRS knows or will know.

 

[LdiJ]

The OP used California's Small Estate process.
https://www.courts.ca.gov/10440.htm

That wasn't entirely clear to me. He said that he didn't fill out that paperwork, that the mortgage company somehow made it happen. If that is what happened, fine, but he is the one who is going to be reporting the income on his personal tax return, not the estate.

 

[Zigner]

That wasn't entirely clear to me. He said that he didn't fill out that paperwork, that the mortgage company somehow made it happen. If that is what happened, fine, but he is the one who is going to be reporting the income on his personal tax return, not the estate.

They filed in on his behalf using a power of attorney.

 

[JEmlay]

That wasn't entirely clear to me. He said that he didn't fill out that paperwork, that the mortgage company somehow made it happen. If that is what happened, fine, but he is the one who is going to be reporting the income on his personal tax return, not the estate.

Exactly. So if I'm going to be paying the taxes on it I don't see how the money belongs to "someone else".

Unless, I'm not going back far enough in the process. She had debt therefore I shouldn't have sold the house this way? Therefore now leaving me on the hook for unpaid debt. Which again is fine, I have no problem using said proceeds for that. There's enough to pay off everyone but unsecured debt in this order:

Debts owed to the United States or State of California.
Expenses related to the administration of the estate.
Secured debt such as mortgages and loans secured by other liens or deeds of trust.
Funeral expenses.
Expenses related to the decedent’s last illness. (this is where it would run dry)
Family allowances.
Wage claims.
General or unsecured debts such as credit card debt.