20 Nov 2018

Videos & Blog

PROTECTING REAL PROPERTY WHEN SOMEONE IS STILL LIVING THERE

October 26, 2018

Hi, I’m Dan Collins – a Sacramento, California licensed real estate broker and serve as a Referee in Partition Actions. My expertise in real property matters, including brokerage sales, involving Probates and Trusts.  I’m also a California licensed general contractor and I act as court appointed Receiver administrator for the Superior Court.  If you have found yourself tasked with being an Executor administering a Probate or, a Trustee in an estate, I can help you effectively execute your duties that attorneys do not help you with. To learn more, please visit my website: www.collinsfiduciarybroker.com

Today I want to talk with you about what to do when you need to protect real property – typically a house or condo – but someone is still living there.

Especially for people who aren’t incapacitated but who need to be supervised, living in their own home (usually one that is paid for with no mortgage) with a caretaker or caregiver turns out to be a good compromise.  But problems occur because in such cases where the elderly have live-in help because there is hardly ever a rental agreement, and getting the care takers out of the house, if they’re not willing to leave on their own, will often require an ‘unlawful detainer’ also known as eviction proceedings.

So, what happens when you are the executor, personal representative, or trustee of an estate that has as its main asset a house that a care taker – whether a family member or unrelated person – is still living in?

Although it seems unfair and unjust, in situations where someone is living in the house of a decedent and was there at the request of that person before they died, getting them out often poses problems.  Unless and until you have legal standing to remove someone from a property, they have rights that will be protected.

In California, a person who resides in a legally designated housing unit for ten or more consecutive days is legally afforded rights of tenancy. Note that getting an unlawful detainer when there is no rental agreement will take even more time and expense than usual.

At a minimum, getting someone to leave a house who was living there to take care of a person who has since died, will take a minimum of 60 days’ notice to quit the property.  When they don’t quit the property, you can hire an attorney and file an unlawful detainer action, but that will also take time. In the meantime, you will probably be sitting there watching the house get pilfered, personal property being taken out and sold, as well as people going in and trashing the house.

Realistically, you should expect to have the property tied up in tenancy for 4 to 6 months before you obtain a judgement for eviction. And, if the ‘tenant’ is responsive to unlawful detainer court petition filings, it could take a year or more to legally evict an unwanted tenant. The process of removing unwanted tenants requires expertise, if you make mistakes in the eviction process you may have to start all over again from step one.

I highly recommend that you employ professional real estate managers, such as myself and attorneys who specialize in residential or commercial evictions to remove unwanted tenants.

Evicting unwanted tenants will be incredibly frustrating, and the practical reality is that there isn’t anything you can do but execute the necessary steps until the court issues a judgement in your favor to receive possession of your property.

If the property is in a trust, or if a property has a TOD (transfer of death) status and will not go through probate, a trustee or beneficiary can request that anyone still living there vacate the house, but proper notice would still need to be given.

Locking down the assets of an estate while beneficiaries have ready access to those assets, is a certain recipe for abuse.  Bad things can happen and usually do.

If all the above sounds bleak, unfortunately there is little that can be done. That said, it may help to at least know what you are likely to encounter.

My name is Dan Collins, I act as a “fiduciary broker” in probates and trusts that involve real property assets.  To learn more, please visit my website: www.collinsfiduciarybroker.com

DEALING WITH UNSECURED AND CREDIT CARD DEBT IN PROBATE

October 26, 2018

Hi, I’m Dan Collins – a Sacramento, California licensed real estate broker and court appointed Referee in Partition actions with expertise in real property matters involving Probates and Trusts.  I’m also a California licensed general contractor and I act as court appointed Receiver administrator for the Superior Court.  If you have found yourself tasked with being an Executor administering a Probate or a Trustee in an estate, I can help you effectively execute your duties that attorneys do not help you with. To learn more, please visit my website: www.collinsfiduciarybroker.com

Today I want to talk with you about what to do when you are settling an estate that has unsecured or credit card debt.

Some self-help books on probate recommend that if the decedent had credit card debt, you should cut up their cards and mail them to the credit card companies with a certified copy of the death certificate.  

Without meaning to be too judgmental, I think that is a silly idea and I would never recommend you do such a thing. You are a fiduciary when you act as a personal representative or, as a trustee. Your duty is to protect and preserve the estate’s assets, not the bank or credit card company’s assets. Do not do more than the minimum required by statute to notice credit card companies.

My recommendation is you take some time, if the deceased had credit card debt, to work to reduce the balances owed to the credit card company.  Sometimes, it is a simple as asking for a discount.  Sometimes, just by explaining the debtor is deceased will get you a 25% reduction in the balance.  Sometimes the credit card companies will forgive the debt, but if they don’t, the estate may be required to pay it in full. So, be sure to ask the question if the balance can be adjusted to a lower amount given the fact the person has died.

Every estate is required to provide notice to creditors or, potential creditors, when someone dies. In fulfilling your duty to notice creditors, my recommendation is to request your attorney’s firm mail required notices. In California, the probate courts often require the notice be prepared and mailed by a third party, you are not allowed to “self-notice”.   The PR or trustee can handle the required step to publish notices to creditors in a local public periodical, as duly required. In noticing creditors, absolutely do not do more than you are legally required to.

My recommendation; do not mail credit card companies death certificates, and don’t cut up the cards and mail them back.  All of that is just wasted effort.

You may not realize it but credit bureaus (Experian, Equifax and TransUnion) collect an enormous amount of information about you, whether you like it or not.  They regularly and routinely sift through and collect all court documents through a third-party company called Lexis-Nexis. As soon as a probate case has been opened, those credit reporting agencies will have access to probate court filings via Lexis-Nexis. That legal service information is available to all three credit bureaus, and they may note on the credit file that the owner is reported deceased before you even provide notice to them.

In the case of joint accounts, yes, you should contact the credit card company directly to report that a joint account holder has died.  The remaining person(s) on the account will still be liable for whatever outstanding balance exists. They may ask you to send a certified copy of the death certificate. Even just calling them is essentially a courtesy because they would find out sooner or later from the credit bureaus.

So, what happens if someone dies owing $20,000 in credit card debt, and you don’t contact the credit card company?  After 120 days of non-payment, the credit card company will write off the account and send it to collections. At that point, the deceased person’s credit score will drop quite dramatically…  

As it turns out, creditors typically have 120 days to file a claim against an estate after they have received notice from the PR or the trustee. After that date, if no claim has been filed, they’ll be out of luck — the estate will not be obligated to pay the creditor.  

Your obligation is to comply with the statutes and post the required notices.  That’s it.

So why would anyone notify a credit card company beyond the minimum statutory requirement?  If you call the company directly, of course they will tell you that the estate must pay any outstanding balance, but the reality is that it’s unlikely that a probate court will care.  

On undocumented debts owed to the deceased, once someone dies, that debt is, for practical purposes, uncollectible in 99% of cases.  If there is no legal requirement to call them, I suggest that you don’t bother, you will only serve to frustrate yourself.

Unsecured debts are lowest on the priority list for any probate estate, which means that there would be a lot of paperwork and possible legal expense to collect what might ultimately be pennies on the dollar.  

Here’s the bottom line: You should always let unsecured creditors be responsible for their own obligations after you have given proper notice.  You don’t need to go out of your way to help them. That said, if you’re talking about unsecured debts from the gardener or the pool cleaner, those are moral judgements, and I would say that those people should be paid ahead of any bank or credit card company.

Utilities can sometimes also fall into the category of unsecured debt, but the difference here is that you may need to keep paying them if you want to use them.  Utility companies are often quasi-government agencies, since most have monopoly status, and I have seen them be tenacious bill collectors. If you still need gas, electric or water/sewer services, you may need to make peace with them, and you should expect to pay them accordingly.

For claims such as gym memberships, or club memberships, where a 30-day notice to quit is usually required, I would tend to ignore those.  If you send such companies a certified copy of a death certificate with a letter stating that the member has died, few legitimate operators will press their claim.

My name is Dan Collins, I act as a “fiduciary broker” in probates and trusts that involve real property assets.  To learn more, please visit my website: www.collinsfiduciarybroker.com