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Hope this is the appropriate forum to post this question.
My partner's uncle died recently (he had no wife / children) and he's the heir of his assets, which consists of a modest house (with mortgage), an old, beat-up van, and some personal effects. The uncle had a ton of credit card debt when he passed on, and the attorney told us not to worry about that debt - it'll just be written off.
My question concerns a claim by a dear friend of the uncle who apparently loaned him $10,000 a while back, and made it clear that he wants to be paid back. With almost no cash and the uncertain value of the assets, the money just isn't there to pay the $10,000. Is it within our right to say "sorry, no can do?" Legally, the guy doesn't have a claim - there's not even a note or anything. Is it ethical to renege on a debt that we did not incur?
Just want to see what folks think of this - although the decision has already been made to tell him that we're unable to pay his debt. I'd just like to know what to do (legally or otherwise) if he's a jerk and demands he gets paid back.
So, let me get this straight...
This "dear friend" of the deceased pops up out of the woodwork, claiming he loaned the deceased 10 grand, with no note, no security, no witnesses, no proof whatsoever that what he claims is true, and he wants the estate to pay him, is that right?
If I were the Executor of the Estate, I would require firm proof of the debt before I would worry about it.
As for the credit card debt, some companies are willing to "write it off", some aren't. The executor of the estate should send a copy of the death certificate to each of the companies that have a balance on the books, and wait to see what the responses are. If the company chooses to make a claim against the estate, the executor will have to figure out how to pay it. Who is the executor of the estate, by the way?
The "modest house, with mortgage" may be worth more than the mortgage balance. The heir(s) won't know until it is emptied, cleaned, and appraised. With any luck, the appraisal will come back showing considerably more than the balance owed. The payments on the mortgage must be paid until the house is sold! Keep in mind that the "personal effects" in the house may have some value. Catalog it, and what the heir doesn't want can be placed in an "Estate Sale" and sold. What doesn't sell can be donated to charity, for a possible tax deduction. Old cast iron cookware and Pyrex dishes are quite valuable these days, as is "Carnival Glass". Don't throw anything away without thinking of its possible value!
Make a very careful inspection of all the papers the uncle left. It is not unheard of to find forgotten insurance policies. Check with the mortgage holder to see if there was a life insurance policy attached to the mortgage. Look for pre-paid funeral expenses, some people have them.
There may be more of value in that estate than one would think. Be careful.
Good luck.
I think he's outta luck, especially with no proof that a $10k loan was ever even MADE.
Whether it's ethical or not, not to pay the person - well, if you knew about the loan beforehand and if there was cash at hand, I would say pay it, but that's really your call. Do I think you owe this person? No, but it's sort of a judgment call to me. For instance, if my inlaws or my dad had died owing a friend of theirs some money, and I knew about it beforehand, or found a note in their belongings, I would have felt obligated to pay it, but if some friend of theirs had just come up after they died and said, "Hey, so and so borrowed $10k from me a few years ago and I'd like to get paid back even though I don't have any documentation about this," I'd have to say, "Sorry, your loss."
Even in the face of documentation, you don't know if any of that was already paid back, right? So there's that issue.
Generally speaking, I'd say your significant other is not under any obligation to pay it back.
A lot of any full answer depends upon the state the uncle resided in. Credit card debt is "unsecured" debt. It may or may not be written off. If it is significant, and there are assets, that advice might not hold. Medical debt may be cleared by statute.
If the deceased has assets that rise above a certain threshold, the estate generally is required to go through probate, where debt claims can be made against it as part of "clearing" the estate before distribution by any will. That is the legal duty of the executor. In Alabama, the threshold is somewhere around $6,000 IIRC. To hold up, that loan of $10,000 would have to be clearly documented with a written and signed document and indication that it was in fact a loan, such as a payoff schedule, rather than a gift.
Real property is a separate issue, especially so if encumbered with a mortgage. Even a modest house can have enough equity to push an estate above the threshold, which is a major reason what joint ownership with right of survivorship is used by many couples to keep the property out of probate entirely.
What you think, and whether the person is or isn't a "jerk" are completely irrelevant. The person must be directed by the executor to the court to follow (and meet) the legal requirements to get the purported loan verified as binding and repaid from the estate if so and there are funds to do so. Without documentation, the words snowball and hell come to mind. With documentation and a clear indication of the debt your partner could end up with zilch.
The lesson is to discuss what will happen to your assets with a lawyer and/or accountant before you die, and recognize that any mis-step will burden the executor and delay or thwart any planned distribution. Those errors will, however, fatten the wallet of any attorney involved.
If the total of assets do not reach the level required for probate, there can still be a contesting of any will. In such case, where there truly is no money and the assets are worthless, it is better to be transparent and show the accounting than engage in a legal battle. If your partner is executor and does not follow legal protocol he would in all likelihood be personally liable. Countless people can tell you the woes of settling an estate. Do NOT be lulled into thinking "Because my uncle wanted me to have this, it is mine."
To clarify things, the house was put in my S.O.'s name a few years back, so the house is *his.* So was the bank account and the van, which is why we didn't have to do probate. He basically died with nary a penny to his name. This is in the state of Florida, btw. Thankfully none of the credit card debts exceed $5000, so I doubt we have to worry about being chased down for that debt. We might have to get an unlisted number, though, lol.
The house is worth more than the mortgage, but the market is quite soft in the area that it's located in, so now is not a good time to sell. We plan on renting it out until the value improves (and the mortgage is reduced.)
We're just gonna let everything else ride and let the chips fall where they may. Hopefully Mr Ten Grand will understand that he ain't getting paid and go on about his way.
To clarify things, the house was put in my S.O.'s name a few years back, so the house is *his.* So was the bank account and the van, which is why we didn't have to do probate. He basically died with nary a penny to his name. This is in the state of Florida, btw. Thankfully none of the credit card debts exceed $5000, so I doubt we have to worry about being chased down for that debt. We might have to get an unlisted number, though, lol.
The house is worth more than the mortgage, but the market is quite soft in the area that it's located in, so now is not a good time to sell. We plan on renting it out until the value improves (and the mortgage is reduced.)
We're just gonna let everything else ride and let the chips fall where they may. Hopefully Mr Ten Grand will understand that he ain't getting paid and go on about his way.
Then the house and van are completely out of the picture, since they were "gifts" from long prior to the death. The bank account might be a different story, but that is too complex to discuss and likely not relevant if the amount in it was minimal. Since you have current documentation, I urge you to gather it, including deed, title, credit card debts, the mention of the loan as described to you, make notarized copies and do a spreadsheet, and lock them in a safety deposit box. You never know if around the time that the statute of limitations comes up there will be a renewed effort to collect. Having that readily available could quash any efforts along those lines.
My question concerns a claim by a dear friend of the uncle who apparently loaned him $10,000 a while back, and made it clear that he wants to be paid back. With almost no cash and the uncertain value of the assets, the money just isn't there to pay the $10,000. Is it within our right to say "sorry, no can do?" Legally, the guy doesn't have a claim - there's not even a note or anything. .
My opinion? This man is lying.
And even if he's telling the truth, nobody loans ten grand without a promissory note or something in writing. That's just stupid.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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A few years ago a sibling died after being in a coma for several days, racking up a huge bill at the hospital that was not covered by her insurance. As a next of kin I received a call from the billing department inquiring about payment. I told them that there was no executor because there were no assets other than a beater car that was being donated to charity, and she said "OK, we'll write it off." A few years before that an elderly relative passed and we received a call from a credit card company that she owed on, same thing. Creditors must file a deceased claim on the estate, if there is no estate, they write it off. As they saying goes, "you can't bleed a turnip".
A lot of any full answer depends upon the state the uncle resided in. Credit card debt is "unsecured" debt. It may or may not be written off. If it is significant, and there are assets, that advice might not hold. Medical debt may be cleared by statute.
If the deceased has assets that rise above a certain threshold, the estate generally is required to go through probate, where debt claims can be made against it as part of "clearing" the estate before distribution by any will. That is the legal duty of the executor. In Alabama, the threshold is somewhere around $6,000 IIRC. To hold up, that loan of $10,000 would have to be clearly documented with a written and signed document and indication that it was in fact a loan, such as a payoff schedule, rather than a gift.
Real property is a separate issue, especially so if encumbered with a mortgage. Even a modest house can have enough equity to push an estate above the threshold, which is a major reason what joint ownership with right of survivorship is used by many couples to keep the property out of probate entirely.
What you think, and whether the person is or isn't a "jerk" are completely irrelevant. The person must be directed by the executor to the court to follow (and meet) the legal requirements to get the purported loan verified as binding and repaid from the estate if so and there are funds to do so. Without documentation, the words snowball and hell come to mind. With documentation and a clear indication of the debt your partner could end up with zilch.
The lesson is to discuss what will happen to your assets with a lawyer and/or accountant before you die, and recognize that any mis-step will burden the executor and delay or thwart any planned distribution. Those errors will, however, fatten the wallet of any attorney involved.
If the total of assets do not reach the level required for probate, there can still be a contesting of any will. In such case, where there truly is no money and the assets are worthless, it is better to be transparent and show the accounting than engage in a legal battle. If your partner is executor and does not follow legal protocol he would in all likelihood be personally liable. Countless people can tell you the woes of settling an estate. Do NOT be lulled into thinking "Because my uncle wanted me to have this, it is mine."
Another thing to consider is how long the estate has been in probate (if there were any assets to probate). There is usually a specific period within which creditors of the deceased must provide proof of a debt owed. This is announced by the court. If that period is past, they are SOL.
Hope this is the appropriate forum to post this question.
My partner's uncle died recently (he had no wife / children) and he's the heir of his assets, which consists of a modest house (with mortgage), an old, beat-up van, and some personal effects. The uncle had a ton of credit card debt when he passed on, and the attorney told us not to worry about that debt - it'll just be written off.
My question concerns a claim by a dear friend of the uncle who apparently loaned him $10,000 a while back, and made it clear that he wants to be paid back. With almost no cash and the uncertain value of the assets, the money just isn't there to pay the $10,000. Is it within our right to say "sorry, no can do?" Legally, the guy doesn't have a claim - there's not even a note or anything. Is it ethical to renege on a debt that we did not incur?
Just want to see what folks think of this - although the decision has already been made to tell him that we're unable to pay his debt. I'd just like to know what to do (legally or otherwise) if he's a jerk and demands he gets paid back.
I lent that uncle $10,000 also, plus the van! Can I have the van back, and enough cash for a hamburger? I'll gladly pay you back on Tuesday!
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