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Probated estate questions

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DonnaC06

Junior Member
What is the name of your state (only U.S. law)? OH

I live in NY but my aunt passed away in June in Ohio. She owned a home and some stocks and IRA's. She died before her will was signed so her estate is in probate. I have met with a lawyer from the firm who was preparing her will. This lawyer is now the estate administrator, appointed mid-July. The estate, when closed, is to be divided between my brother and I. She had no other family.

I have just found out that he has not sold her stocks. He has not given me any accounting of her assets. Alot of money that her financial advisor told me existed (40k) is now gone. Her estate is worth only about 13K.

Does an administrator have to cash in the stocks in order to liquidate funds to cover costs of the estate? I mean, if he had cashed them in when he took control of her bank accounts, they would have totaled about 45k, todfay they are worth maybe 7k. And when I asked him about specifics, he skirts the questions. Do I have to worry about the ethics of this lawyer? I live out of state and have already taken 2 trips to Ohio to assist him in preparing the house for sale. I can't just stop by his office and bug him.

thank you for any help!
 


anteater

Senior Member
Unless the will specifies that the stocks should be liquidated, it is pretty much up to the administrator.

Personally, I feel that, unless the will specifies that securities be distributed in-kind, the administrator should liquidate as soon as practicable. Other members here disagree with me.

You can always check with another Ohio lawyer to explore whether there is any case law supporting a case against the administrator for not liquidating. But, I would not get my hopes up.
 

tranquility

Senior Member
It is easier to distribute money than stocks and an administrator's job is easier to do so. However, unless one gets an EXPERT'S OPINION regarding the financial choice, it is very likely to be considered a breach of fiduciary duties if the stock value goes in the way opposite of the administrator's choice.
 

anteater

Senior Member
It is easier to distribute money than stocks and an administrator's job is easier to do so. However, unless one gets an EXPERT'S OPINION regarding the financial choice, it is very likely to be considered a breach of fiduciary duties if the stock value goes in the way opposite of the administrator's choice.
Tranq -- We just got to disagree on this one.

There are tax experts. There are probate law experts. There are no experts that can tell an estate administrator whether stocks, bonds, mutuals funds, etc. are going to increase or decrease in value during the period that an estate is being administered. And any expert that contends that they can is blowing smoke.

The prudent course is to liguidate and distribute the proceeds as soon as practicable. And let the ditributees decide what level of risk they wish to bear.

(Just as an example, if the OP's aunt's portfolio value has decreased from $40K to $13K from June to now, then it is her "financial advisor" who should be accused of financial malpractice.)
 

tranquility

Senior Member
CAN a person sell stocks and turn it into cash? Sure, just like they can file the estate tax return, sell the property and cast the estate-owned dog's leg on their own without expert advice. Should they? No.

Although there are not an official listing of a fiduciary breach, in my estate and trust book from school it has many. One:
"Financial negligence in the handling of the estate's assets during the administration process including failure to properly invest and account for assets." This leads to two conclusions. One is that you generally have to earn interest on cash. At our office we tend to keep everything in CDs below FDIC limits (a lot easier now) at banks in a cascading series so we can always have access to some liquidity if we need it. Two is the "properly" part. When you look at fiduciary breaches, you find one defense is to seek the council of experts. You don't have to follow the advice, but you have to seek it if you don't have adequate training and expierence in the issue.

Investment decisions are measured by the then prevailing standards or practices of similar fiduciaries in like circumstances. The fiduciary must be aware of the consensus in the industry. You must know what the practice of the investment counselor industry is in like situations. The key question is, how do we measure fiduciary breach on investment situations? We cannot measure simply because the value went up or down as even the smartest can't predict that. But, we have to make sure our risk is appropriate and our investments are sound. Putting everything on pork belly futures is going to be a breach no matter if they make or lose money. (Either way you could remove the fiduciary but, obviously, the money damages will be different depending on the gain or loss.) No one in the financial industry would recommend that all a person's assets go into commodities. Asset allocation and diversification is all the rage. Fail to do so properly and you have a problem. What if the call is closer? While now may be strange times and the consensus would be to go to cash, how do you know if you don't ask? CAN you take that risk? Sure. Should you? It depends on how much you like to keep your money if you are sued.

Now, if we're talking about Grandpa Joe's 100 shares of GM he bought fifty years ago, that's one thing. I mean really, what is the risk to the fiducuary if he screws up? But, if we're talking hundreds of thousands or millions, well, I don't have anywhere near that much change in the cushions of my couch to pay that one off.

When we want to estimate the price to list an estate's house, we ask a realtor. (And an appraiser for estate tax purposes.) We rely on our own expertise on the preparation of the estate tax return. When the next step in a legal dispute comes up, we ask a lawyer. And, when we have an investment decision to make well...
 

seniorjudge

Senior Member
What is the name of your state (only U.S. law)? OH

I live in NY but my aunt passed away in June in Ohio. She owned a home and some stocks and IRA's. She died before her will was signed so her estate is in probate. I have met with a lawyer from the firm who was preparing her will. This lawyer is now the estate administrator, appointed mid-July. The estate, when closed, is to be divided between my brother and I. She had no other family.

I have just found out that he has not sold her stocks. He has not given me any accounting of her assets. Alot of money that her financial advisor told me existed (40k) is now gone. Her estate is worth only about 13K.

Does an administrator have to cash in the stocks in order to liquidate funds to cover costs of the estate? I mean, if he had cashed them in when he took control of her bank accounts, they would have totaled about 45k, todfay they are worth maybe 7k. And when I asked him about specifics, he skirts the questions. Do I have to worry about the ethics of this lawyer? I live out of state and have already taken 2 trips to Ohio to assist him in preparing the house for sale. I can't just stop by his office and bug him.

thank you for any help!
She died before her will was signed so her estate is in probate.

This makes it intestate. An estate may have to be probated will or no will.
 

seniorjudge

Senior Member
Ohio Intestate Succession Laws

If any part of an Ohio decedent's estate is not effectively disposed of by will, the intestate share will be distributed in the following order and manner:

1. Surviving spouse. A surviving spouse is generally first in line to get any assets from the intestate estate. However, the amount a surviving spouse is entitled to varies as follows:

* If there are no children of decedent or their lineal descendants, or if all of decedent's children are also children of the surviving spouse, the surviving spouse is entitled to the entire intestate estate.
* If there is one child of the decedent or the child's lineal descendants survive and the surviving spouse is not the natural or adoptive parent of the decedent's child, the surviving spouse is entitled to the first $20,000 plus one-half of the balance of the intestate estate. The remainder goes to the child or the child's lineal descendants, per stirpes.
* If there is a spouse and more than one child or their lineal descendants surviving, the surviving spouse gets the first $60,000 if the spouse is the natural or adoptive parent of one, but not all, of the children, or the first $20,000 if the spouse is the natural or adoptive parent of none of the children, plus one-third of the balance of the intestate estate. The remainder goes to the children equally, or to the lineal descendants of any deceased child, per stirpes.

2. Heirs other than surviving spouse. Any part of the intestate estate not passing to the surviving spouse as indicated above, or the entire intestate estate if there is no surviving spouse, passes as follows to:

1. Decedent's children or their lineal descendants, per stirpes.
2. Decedent's parent or parents equally.
3. Decedent's brothers and sisters or their lineal descendants, per stirpes.
4. One-half to the paternal grandparents of the decedent equally, or to the survivor of them, and one-half to the maternal grandparents of the decedent equally, or to the survivor of them.
5. One-half to the lineal descendants of the deceased grandparents, per stirpes. If there are no such lineal descendants, then to the surviving grandparents or their lineal descendants, per stirpes. If there are no surviving grandparents or their lineal descendants, then generally to the next of kin of the decedent.
6. Stepchildren or their lineal descendants, per stirpes.

3. State of Ohio. If there is no taker under any of the above provisions, the intestate estate escheats (i.e., reverts or passes) to the state of Ohio. Personal property is collected and paid over to the county treasurer of the county where the estate is administered for use in the county's school fund. Any real property located within the state is sold and the proceeds are split between state and local coffers.

Ohio Intestate Succession Law Fun Facts

* Decedent's descendants conceived before his death, but born thereafter, inherit as if they had been born in decedent's lifetime and survived him. Others, however, must be alive at the time of decedent's death if they hope to inherit anything.
* A parent that has abandoned his or her minor child, who subsequently dies intestate, cannot inherit the real or personal property of the deceased child. Under Ohio's laws, the bad parent is treated as if he or she predeceased the deceased child.
* On a similar note, any person who is convicted of, pleads guilty to, or is found not guilty by reason of insanity of murdering the decedent (either directly or as an accomplice) is prohibited from benefiting by the death in any way. All property of the decedent, and all money, insurance proceeds, or other property or benefits payable or distributable due to the decedent's death, will pass or be paid or distributed as if the person who caused the death of the decedent had predeceased the decedent.
* Ohio's intestate succession laws, as well as other related laws, can be found in Title 21 of the Ohio Revised Code.



Copyright 2002 - 2008, CCH Incorporated, a Wolters Kluwer business. All Rights Reserved.

http://www.finance.cch.com/pops/c50s10d190_OH.asp
 

anteater

Senior Member
One is that you generally have to earn interest on cash. At our office we tend to keep everything in CDs below FDIC limits....
Eminently reasonable.

Investment decisions are measured .... how do we measure fiduciary breach on investment situations?.... And, when we have an investment decision to make well...
You see, my problem is that use of the word "investment." The administrator of an estate is not an investor. Sure, there are probate cases that go on for years. But the timeframe for most administrators is, maybe, 6 - 18 months. That is not a timeframe in which one makes investments. An illustration of the dispersion of all one-year returns on equities for the last 75 years should be enough to persuade any administrator that the prudent course is to hold cash and equivalents and then let the beneficiaries make the investment decisions when they recieve the funds.

Asset allocation and diversification is all the rage. Fail to do so properly and you have a problem. What if the call is closer? While now may be strange times and the consensus would be to go to cash, how do you know if you don't ask?
Again, you are ignoring timeframe. When you face the short timeframe that an administrator faces, proper asset allocation is cash - CD's, money market funds, etc.

All times are strange. Where does one find this "consensus?" Any "financial advisor" (of whatever stripe) that advocates anything other than cash and equivalents for this kind of timeframe is a knucklehead. And I am not influenced by recency. My position was the same five years ago, when the recent dearly-departed bull market was beginning, and 10 years ago, when the market boom was in full fury.

I mean really, what is the risk to the fiducuary if he screws up?
The advantage of liquidating is that it eliminates the possibility of a screw up.
 
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nextwife

Senior Member
Personally, in such a down market, I'd far rather be transferred the shares of a stock, and make my own decision about whether to liquidate or ride out the market. Additionally, any IRA or 401K funds would be better served as a rollover, when possible,, rather than a liquidation. Of course, this would depend upon whether other assets are available from which to pay estate expense, taxes and creditors.
 

Dandy Don

Senior Member
What the financial adviser said about $40K of MONEY existing does not exactly give details about time frame (before or at the time she died) so you have no real proof as to what he is saying is true or not. Is he saying she had this much money in a bank account?

Ask the adviser if he happens to know what stock brokerage she used to purchase and trade her shares in, and then contact the brokerage to see what her account activity has been.

Have you been informed of the date of any upcoming probate hearings? You need to let the probate process play out to give him time to handle/manage the assets and take care of the estate. At some point he WILL provide an official accounting.

Out of curiosity you could ask to see recent and/or current bank statements about her account and the estate account to see what the balances are and what deposits/withdrawals have been made, and just to see how he reacts and whether he complies or offers excuses.

DANDY DON IN OKLAHOMA ([email protected])
 

tranquility

Senior Member
The advantage of liquidating is that it eliminates the possibility of a screw up.
Not if the stock goes up. If you sell without advice, you could very well be sued and lose.

You see, my problem is that use of the word "investment." The administrator of an estate is not an investor.
But you are an investor. You need to tend towards safety and towards having enough liquidity to meet the estate's needs, but, short term is still an investment. The nature of short term v. long increases variability.

All times are strange. Where does one find this "consensus?" Any "financial advisor" (of whatever stripe) that advocates anything other than cash and equivalents for this kind of timeframe is a knucklehead. And I am not influenced by recency. My position was the same five years ago, when the recent dearly-departed bull market was beginning, and 10 years ago, when the market boom was in full fury.
If you are putting out your training and experience as being within the requirements of knowing industry consensus, that is an entirely different thing. Keep a good record of your expertise as it may be called on some day. As I said, we consider ourselves expert on the handling of the tax matters of an estate and we don't seek outside guidance on such things. If you hold yourself out to that expertise on financial matters, more power to you. If you're advising others within that expertise to always change to cash or equivilants WHENEVER the time frame is short, OK. I don't think that is right, but I'm not an expert. By the by, you might want to pray that the particular probate you're talking about does in fact not develop any glitches which would extend time to distribute. You might want to see a lawyer for his advice before estimating the time frame of a probate.
 

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