Estate Administration- Probate: Expect the Unexpected
Expect the unexpected. Cliche, but when we’re talking about the practice of law, the saying rings true. Our team was recently engaged on an Estate Administration matter that had all of the hallmarks of being “straightforward” – limited financial assets, a home, virtually no debt, and one beneficiary. We went through our standard process of discussing the need to double-check for assets and confirm how they were owned, we stressed the benefits of running a notice to creditors if the beneficiary (who was also the executor) thought she might sell the home owned by the decedent in the near future, and we touched base with the client before and after her qualification as the executor to make sure she hadn’t discovered any additional assets. All was well, and we carried on – business as usual.
Fast forward a few months and, having timely completed the proper filings and verifying there were no unknown creditors of the decedent, we prepared to close the estate. Client emails. She’s trying to sell her personal residence to a third-party. Her closing attorney contacted her and explained that, hidden in the public records, there was an outstanding mortgage on her home, and she was unable to close unless it were paid-off at closing or satisfied. The creditor – her mother. When client purchased her home, her mother had been “the bank” and a Deed of Trust had been filed. There was no information about the loan in mother’s files and client was entirely unaware of how much she still owed, if anything. Due to the passage of time, client did not recall signing the Deed of Trust, but had been paying her mother up until her passing. She only recalled a verbal agreement with her mother that she would keep paying until her mother passed away.
This outstanding Deed of Trust is an asset of the decedent’s estate. Client, now with hundreds-of-thousands of dollars hanging in limbo, is understandably upset. Her simple question: how can I sell this house without having this closing fall apart?
Fortunately, the estate was still open, and we were able to amend our filings to show the outstanding Deed of Trust. Working with the closing attorney, we were able to determine that client had paid her mother in excess of the original principal value and, though we had no indication of an interest rate, we determined that (at reasonable interest) client had likely paid the loan in full. We completed the necessary filings to document our findings and were able to complete the closing contingencies for our client to sell her home.
Expect the unexpected; calmly address it; and work to resolve it.