Posted by John Merchant on September 02, 2010 at 11:01:17:
I’d say proceed if admin’r will give you clear title policy and your cash price is well below what you know to the market value.
Good luck.
Is Exec./Admin. of Estate Personally Reponsible? - Posted by IB (NJ)
Posted by IB (NJ) on August 26, 2010 at 21:51:17:
Is Exec./Admin. of Estate Personally Reponsible for debts when they don’t handle their fiduciary responsibility and pay off creditors? What happens when an Exec. probates an estate but fails to take care of the debts of that estate? I imagine they get harrased by bill collectors but can they be held personally responsible for those debts? Generally speaking, of course.
Ib
Re: Is Exec./Admin. of Estate Personally? - Posted by IB (NJ)
Posted by IB (NJ) on August 29, 2010 at 11:09:32:
Thanks everyone. Excellent info here! I have a situation here where I am under contract to purchase 3 properties from an estate that is under water. This looks like one of those situations where someone probated the estate and probably shouldn’t have. I typically see estates under water where the heirs decide its not worth it and decide to walk away. The heirs I’m dealing with didn’t and now want to just get rid of the properties without receiving a dime (I have some short selling to do here).
I usually have close contact with my sellers but in this instance, due to the seller’s preference, everything is going through the attorneys so I have no way of knowing what prompted these folks to probate the estate or to decide they want to sell and just walk away. I’m imagining that, and I guess I’ll check with my attorny on Monday, that there may be some personal liability or perhaps even some bill collectors calling? I don’t know. The only liens against the estate that are showing up on the title search are a VA loan, huge tax lien ($99k) and about $184k judgments by the state. They’re not typically known to call debtors or their reps demanding to be paid. Just trying to see a pattern here and perhaps another way of finding leads for potentially good deals.
Thanks.
Re: Is Exec./Admin. of Estate Personally - Posted by Frank Chin
Posted by Frank Chin on August 27, 2010 at 18:45:06:
IB:
I read your question more carefully again, originally I took it as “is the executor/administrator personally responsible for the decedant’s debts”?? The answer to that is NO.
By looking further, the question asked is if “can he be held responsible for negligience”. Anyone can be sued for negligience for any activity, but the plaintiff would have to prove the negligience.
From what I can see though, in estate cases, it’s chincanery that is usual issue, which may come down as negligience.
Right now, we’re handly my dad’s estate, and my wife is the executor for her mom’s. From what I can see, the basic issue is whether or not the executor absconds with the funds. and if so, he would be sued.
We did not do an awful lot of estate planning, but we had wills done, and redone, and the one thing that had been a constant is lawyers wanted an executor who would be living in the same state as the decedant. Why, I haven’t figured out yet.
Re: Is Admin. of Estate Personally Reponsible? - Posted by Kristine-CA
Posted by Kristine-CA on August 27, 2010 at 11:39:19:
Interesting responses you’ve gotten so far. As someone who has been
sued as Administrator and made settlements with estate creditors in
CA, my answer is a little different. Yes, the Administrator is
responsible to a degree. That’s one of the reasons bonding exists.
If an Admin. handles the estate differently than how a creditor or heir
would like it be handled, it’s their job to object and/or petition the
court for a change. I see this all the time. Administrators can and are
replaced by the courts regularly. I disagree with Frank Chin that an
attorney can protect one in this case. The Admin, with our without
legal help, is held to certain standards.
I’m currently the Admin of one estate where I own the whole thing, and
am the only bene. Medi-Cal, the state Medicaid program, sued me as
Administrator, to get a judgment, even though there was an accepted
payment plan and partial payment (50%) had already been made. I was
told, in no uncertain terms, that it is the attorney general’s policy to
sue for judgment whenever an estate sells any real property. I was
able to get them to release the case via a settlement (the same
payment plan as before). The settlement states that I am personally
liable. I was told by my attorney before we even got the settlement
docs that there was no way they were going to go into settlement
without personal liability on the part of the Admin.
I’m involved in other probate deals that have similar complications. I
get calls from heirs that are unhappy with the Admin/Exec and want
to sell their part now. Or, they’re OK with everything but one of the
other heirs or creditors is holding it up…for what can seem pretty near
forever. I’m involved with one estate and we are on year four because
of one objector.
I’d say, as John Merchant does, that it’s state specific and complicated.
Yep - Posted by Rick the Probate Guy
Posted by Rick the Probate Guy on August 27, 2010 at 10:44:38:
Of course, it’s a hassle to re-open probate and sue them, but that’s generally what’s done.
Check the pbt file to see if P/R got order for discharge of duties. Many attornies forget to do this and it’s easier to haul them back into court on an order to show cause.
Mr. Merchant got an opinion?
Re: Is Exec./Admin. of Estate Personally … - Posted by Frank Chin
Posted by Frank Chin on August 27, 2010 at 06:16:58:
IB:
Generally no.
My dad handled many estates for friends and relatives many years back who spoke no Engkish, and once checked on this point. And wills generally speak of paying “known debts”, and as my dad does not personally know the details of their finances, it is possible he does not know of all of the decedant’s debts.
That’s why if there all any doubtful issues. he would hire an attorney, and have him or her handle the details. As I can recall, but don’t recall all the details, the executor can publish and make a legal announcement about the death of the decedant in the legal sections of local newspapers, to establish a deadline for debtors to come foreward to make claims, and after satisfying this requirement, cannot be held liable.
Of course, relying on the attorney to follow the rules would doubly insulate the executor.
I’m talking about legally recognized debts, not gambling or such debts where some of these creditors can get ugly.
You’d be buying “subto”, right? - Posted by John Merchant
Posted by John Merchant on August 29, 2010 at 19:49:29:
Just as you’d want to buy any property, subject to and not assuming any debt, that’s what you’d be doing here it seems to me.
So no personal liability on your part and if anybody demands that of you I’d say walk or run to another deaal.
Re: Is Exec./Admin. of Estate Personally - Posted by Dave T
Posted by Dave T on August 29, 2010 at 08:33:37:
My Mom died in 2005 and my father who was a resident of the state received court appointment as executor when her will went through probate.
In the case of my dad’s estate, I was named in his will as executor but I did not live in the state. The Probate and Estate Division of the NC court in the county where he lived required a personal representative who is a resident of the state who would be able to receive service if the estate were sued.
Our family estate planning had been fairly heavily emphasized in the five or so years before my parents death so my parents had no significant assets in their own name. Nearly everything they owned was held in individual trusts except the family home and the car. My dad sold the house a couple years after my mother died and moved into an assisted living facility.
Settling the trusts did not require court appointment, so since the size of my Dad’s estate was so small that it did not really require administration under state law, I only filed the necessary documents with the court to put them on notice that I (an out of state resident) was acting as executor without seeking court appointment.
Incidently, if the probatable estate had been large enough to require me to be appointed by the court as executor, my brother who is a resident of NC could have served as the personal representative to receive service.
State by state & complex - Posted by John Merchant
Posted by John Merchant on August 27, 2010 at 11:13:30:
You’re getting into very complex area and every state will have different rules and standards and procedures for dealing with this.
I’ve seen way too many very poorly managed “administered” estates where the court appointed Administrator (no last will was found or filed)was doing a terrible job and was really screwing things up and the heirs were being mistreated.
In most no-will Administrations, the court appointed Administrator has had to post a bond so that might be a point of pressure to force that Adm’r to shape up and perform.
This is an area that generates big attorney fees and costs so be prepared to spend some money.
In Seattle a few years back, some heirs found that the Administrator, a big local bank (!) had basically, without notice to the heirs, let some other customers of that bank almost steal a big downtown office building from their estate.
They did file suit and managed to beat the bank and recover damages but it was an expensive and stressful fight.
This is why we all need to plan our estates and think ahead as to what we want our survivors to do when we’re gone.
Not a popular topic to bring up and I well remember last time I did so at an REI meeting I was met with hostility and indifference when I reminded everybody of the need to make a last will. Two or three of those indifferent guys have since died and at least one left his wife in a very poor condition financially and the poor lady in her '60s has had to go to work to make a living. Her deceased spouse was a CPA so you’d think of all of us he’d have been the most careful about his affairs, but apparently not so.
Re: You’d be buying “subto”, right? - Posted by IB (NJ)
Posted by IB (NJ) on September 02, 2010 at 24:32:52:
Thanks John. But No it’s not subject to. Everything will be paid at closing. I’m just trying to figure out why the Admin of the estate would first probate an estate that most heirs usually walk away from and then sell everything with nothing in return?
Re: You’d be buying “subto”, right? - Posted by Kristine-CA
Posted by Kristine-CA on September 08, 2010 at 19:37:48:
Hi IB. I missed the rest of this thread as I was out of town for the past
10 days…with no internet (can you believe it?). I wanted to respond to
your question about administrators and/or heirs starting a probate
action when there is nothing in it for them.
There are lots of things that could have prompted the probate action.
The administrator/executor may or may not have known that there
were additional debts besides the mortgages. There may be personal
property that was to be distributed per a will (not sure if the decedent
was intestate in your deal here). By getting the probate started, the
heirs may have then discovered all the real property issues and debt
issues. One heir can wreak havoc. Heirs who think that the properties
are worth more than they are, or one who thinks that the admin/exec
is trying to cut them out of the deal will force the issue.
Creditors, who also are entitled initiate probate action, may have
pressured one of the heirs into believing they were required to do so.
Again, the creditor wouldn’t have known the entire debt picture, but it
would make sense to them for someone to initiate a probate so that
they could then be a creditor of record with the courts.
I’ve seen secured trust deed lenders in first position file a creditor’s
claim, even though here in CA, they are entitled to foreclosure as
remedy. I have worked with heirs on two estates where the the heirs
were told by the state, in writing, that they were responsible for the
debts of the decedent (Medi-Cal, CA’s Medicaid program). One of the
estates had an heir that actually signed an agreement/lien that made
them personally liable. It was crap, and I got it released.
I hope your deal is going well and that you’ve gotten a contract that’s
in escrow by now. I’d like to think that a short sale where the borrower
is deceased might motivate the lender. 
Sincerely, Kristine