First, the disclaimers: Although this question is inspired by a non-hypothetical situation, I understand that most of you are not lawyers, and even those of you who are, probably do not specialize in the relevant area, and probably are not licensed to practice in the state in question. You are not my lawyer, and I am not your client. Responses will not be construed as legal advice, and are for educational purposes only. We already have a lawyer who is qualified in this area working on this matter.
OK, then, with that out of the way: My dad died recently, and we believe that his estate is underwater: That is to say, his debts are worth more than the sum of his assets. It’s my understanding that when his house is sold, the proceeds will go to his creditors in some order of priority, and some creditors will simply be out of luck.
However, our lawyer has told us that it’s OK if, in the meantime, we (the heirs) go through the house and remove any personal possessions we like. These possessions will then be ours, clear, and have no bearing on the estate as a whole.
What I don’t understand is what the legal limits on this are. What’s the dividing line between a “personal possession”, which goes straight to the heirs, and a part of the estate, on which creditors have a claim? Does it make any difference if items are mentioned in the will, either specifically or by general category? What, in principle, would stop a person at the end of their life from running up as many credit cards and loans as they could in order to buy personal possessions they could leave to their heirs?
Our particular situation is in the state of Ohio, but I’d also be interested in hearing more general answers, or for other states.
This is for the executor to decide. Are you the executor? Is the lawyer?
IANAL, but I was the executor of my uncle’s estate. What cause a bit of a kerfluffle for us was a Rolex watch, until I got it appraised and people realized it wasn’t worth nearly as much as they thought.
Oh, yeah, if your dad didn’t leave a will and specify an executor…
Is your mom also gone. If not, it’s all hers.
If she’s not available, you surviving siblings have to agree among yourselves who will administer the estate and have the lawyer do the paperwork.
The only general advice I can give you knowing what I do – if you think an item has a substantial value (say, more than a thousand dollars) I wouldn’t take it if I were you. I wouldn’t let someone drive off in a car, or take a piece of art that you know is from a well-known artist.
There is an undisputed will, and it does designate an executor, but the guy designated as the executor has decided that it’s too much work, and declined. My uncle (Dad’s brother) has volunteered to act as executor instead, and has hired the lawyer we have working on it right now. My question is mostly just a matter of curiosity, since being out of state I don’t have much direct control over what’s happening anyway.
By any chance was most of your father’s debt mortgages? or debt secured by the house? It’s possible that much personal property cannot be subject to those debts. Think about it. If he defaulted while alive they couldn’t repo his clothes. His death doesn’t give then greater rights to compensation than they had to begin with. They could only take from the proceeds of the sale of the clothes, and used clothes have basically no value, so anything you take away doesn’t deplete the estate.
Warning: I am pulling this out of my ass from half-remembered bar exam review mixed with wild-ass-but-facially-reasonable guessing.
And I’m not sure how this theory would apply to items of personal property with particular value (ie, a Rolex).
Some of the debt was mortgages, some of it was secured by his car, and some of it was unsecured. I’m not sure what the proportion of each is, though.
That’s a good point, though, that I’m sure none of it was secured by miscellaneous personal possessions, so that would be a logical distinction between those two categories.
Well, unsecured debt is just that, unsecured, so those creditors will probably end up sucking hind teat.
I think this is a matter of conscience as much as anything else. As Hello Again suggests, many of your father’s personal possessions will have little or no monetary value. If they have sentimental value, then by all means dig in. Even decent-condition used furniture is pretty much not worth anything, sometimes even Goodwill won’t take it.
But if he had a giant diamond pinkie ring, an old master painting, or a stash of gold coins, then it would be fair to leave those for the estate to divvy up among the creditors.
Roddy