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Old 05-09-2019, 08:21 AM
 
1,301 posts, read 3,565,938 times
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My dad passed away a few weeks ago. He died intestate, which means his estate has had to go through probate. He had a small estate consisting of a few bank accounts and vehicles. In our state, the surviving spouse automatically gets up to $50,000 of an intestate person's estate, so my mom definitely qualifies as the sole inheritor as his estate was less than $50,000.


I am about to be named executor of the estate, and will sign letters at lawyer's office next week. However, I'm wondering if we somehow screwed up. You see, my dad incurred about $10,000 of medical expenses (he was uninsured, only had Medicare which didn't pay for everything) which I covered through my own funds, with the unspoken understanding that I would be reimbursed for these expenses. (The expenses and payment trail have been thoroughly documented.) My whole family is in agreement on this, so there's no dispute. My mom is anxious for me to be repaid, and is aware of the amount. (I paid for all the expenses myself because we feared it would take months for his estate to get through probate and we didn't want creditors harrassing us)



However, it was my sister who set up the probate process (though she didn't want to get involved to be executor), and in all the hurry and confusion, we really didn't consider that *I* am basically the main creditor of my dad's estate. (When you think creditors, you think of credit card companies, other debts, etc, none of which my dad had... I just didn't think of myself as a "creditor" although technically I am.) I don't know if this will be considered a conflict of interest... can an executor pay themselves for (documented) expenses against the estate? What should I tell the lawyer next week?


An easy solution to this might be to just let my mom have all the assets (once any other creditors have been paid off) and for her to transfer the $10,000 to me... but we're worried about the impact that might have on the Medicaid "look back" period. My mom is in generally OK health for her age, but you never know what might happen in five years. So, while we have the expenses documented, if Medicaid ever wanted to review this "gift" which would not be a gift (but a legitimate reimbursement for my dad's expenses), we're worried that it would be a hassle or perhaps impossible to prove that this really wasn't a "gift."


Does anyone have any advice for me here? What should I do? I'd prefer to not have my mom make me a $10,000 "gift" but guess I don't know if it's legally proper for me to "pay" myself (as executor paying a creditor). Did we screw up and someone else should have been made executor? (the papers haven't been signed yet)
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Old 05-09-2019, 08:23 AM
 
10,498 posts, read 6,969,919 times
Reputation: 32325
I understand your concerns. But given you already have an attorney, I think that person would be the best person to ask. We're just a bunch of dumb goobers on a message board.

Last edited by MinivanDriver; 05-09-2019 at 08:36 AM..
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Old 05-09-2019, 08:39 AM
 
Location: NJ
31,771 posts, read 40,549,770 times
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id imagine that if there is an attorney involved and there is a probate process; that you could get reimbursed for his documented expenses that you paid for. i dont expect you to have a problem.
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Old 05-09-2019, 09:20 AM
 
Location: Dallas
206 posts, read 169,135 times
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A creditor is not automatically ineligible to serve as the representative of the estate. It would be for the court to decide on the potential conflict of interest.

I was once an executor and a beneficiary, and I paid some of the deceased’s bills (car, house, utilities) until the estate was opened. I reimbursed myself from the estate, with the advice of my lawyer.

Last edited by Cd225; 05-09-2019 at 09:32 AM..
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Old 05-09-2019, 09:29 AM
 
Location: Wonderland
67,652 posts, read 60,487,843 times
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I agree with everyone else - ask the attorney.

That being said, even IF it is not kosher (and I'm not saying it's not) for you to reimburse yourself as both a creditor and the executor, someone would have to contest it - the court isn't going to just come after you from what I understand. If all the heirs are OK with it, that problem isn't likely to surface.
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Old 05-09-2019, 10:48 AM
 
Location: Florida
6,600 posts, read 7,277,453 times
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I have no expertise but I would run this by the attorney. You submit the bill to the estate and the estate pays your. You pay all the other estate expenses and give the balance of the assets to your mother and close the estate.


Even if you were wrong to pay yourself, if no one complains, you have no problem. I do think you would be correct paying yourself.


I think you are correct in identifying the "gifting" of the expenses as a problem and I would avoid that.
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Old 05-09-2019, 01:16 PM
 
Location: on the wind
23,030 posts, read 18,380,588 times
Reputation: 74508
Quote:
Originally Posted by Jeromeville View Post
I am about to be named executor of the estate, and will sign letters at lawyer's office next week. However, I'm wondering if we somehow screwed up. You see, my dad incurred about $10,000 of medical expenses (he was uninsured, only had Medicare which didn't pay for everything) which I covered through my own funds, with the unspoken understanding that I would be reimbursed for these expenses. (The expenses and payment trail have been thoroughly documented.) My whole family is in agreement on this, so there's no dispute. My mom is anxious for me to be repaid, and is aware of the amount. (I paid for all the expenses myself because we feared it would take months for his estate to get through probate and we didn't want creditors harrassing us)

However, it was my sister who set up the probate process (though she didn't want to get involved to be executor), and in all the hurry and confusion, we really didn't consider that *I* am basically the main creditor of my dad's estate. (When you think creditors, you think of credit card companies, other debts, etc, none of which my dad had... I just didn't think of myself as a "creditor" although technically I am.) I don't know if this will be considered a conflict of interest... can an executor pay themselves for (documented) expenses against the estate? What should I tell the lawyer next week?


An easy solution to this might be to just let my mom have all the assets (once any other creditors have been paid off) and for her to transfer the $10,000 to me... but we're worried about the impact that might have on the Medicaid "look back" period. My mom is in generally OK health for her age, but you never know what might happen in five years. So, while we have the expenses documented, if Medicaid ever wanted to review this "gift" which would not be a gift (but a legitimate reimbursement for my dad's expenses), we're worried that it would be a hassle or perhaps impossible to prove that this really wasn't a "gift."
If you've already thought this through I apologize. A couple of things that may help how you think about this.

The "you" as executor is a separate financial entity from "you" as a private person or creditor. Estate assets, unpaid bills and expenses are dealt with by the executor, not you as a person. Probate records of asset distributions or liquidation, bills paid, etc will show the distinction. The estate will have it's own tax ID number. Tax filings required for the estate will be totally separate from your personal tax filings for the year (you'll use your SSN as usual). The court will announce the probate process for your dad's estate through a public notice. If the estate is small there may be less formal public notice requirements depending on the state. Anyway, the estate as an entity has a formal name. The executor is also recorded and announced using a specific form of your name. When you pay an estate creditor what is owed, you'll pay it as:

"Joe Doaks (or whatever your formal executor name is),
acting or representing for the estate of Joe Doaks Sr. (whatever the formal name for the estate is)".

You as a person are not paying these bills.

Another thing to remember. There's a specific period during probate when all potential creditors must present their bills for payment. If you are one of these creditors you would have to present your bill during that time in order for the estate to pay it. You don't present this bill as the executor, you present it as an individual.

About the Medicaid aspect...your probate attorney will be the best person to ask.

Last edited by Parnassia; 05-09-2019 at 01:55 PM..
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Old 05-10-2019, 08:07 AM
 
19 posts, read 10,252 times
Reputation: 18
It's been 5 years or so since I was an Executor.

You have the documentation to prove you paid the medicare bills for your father
You are executor of the estate thus entitled to be paid per whatever the norm is (I've forgotten now) for your services there

Paying for his medical care, taking physical care of him, etc..

Write yourself a re-imbursement check for the amount he owes you. That is what I would do.

BUT... keep in mind Medicaid can at any time, send a letter wanting info.

Most folks don't willfully disclose anything regarding that letter. It's voluntary.

Ensure if you get it, do your diligence using google and you should repeatedly find out the same answer.

10K isn't that much money for Medicaid to Bother with going after you.

Also your State laws make a difference, such as pertaining to the Medicaid Estate Recovery Act

California won't, due to a fairly new law, bother with going after you though they send a letter to try to trick

you into volunteering the info. Then they'll bully you into forking over the $$ possibly

The bank accounts have beneficiaries on them so that is who the money goes too. It's very easy, and you should immediately, have that person go down and obtain the funds. I was named already so it was easy for me. That person will need to show a death certificate.

Good luck
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