My father recently died intestate. His life and property were in Illinois, which is where the court proceedings will take place. He appears to be upside down in his finances (owes more than he has assets). It is my understanding that in his situation the court will sell the assets at auction and divide the money amongst the various claimants. Is this correct? My ultimate question is, is it worth my time to hire an attorney and work this all out? What happens if I just walk away? I haven’t been able to find any Life Insurance policies for him, nor did he mention any in the last few weeks he had. I don’t want to pay an attorney thousands of dollars if all I am doing is making it easier for the IRS, his creditors and the hospitals to pick the estate clean. For what it’s worth, he was unmarried and had one other child that is going along with whatever I do.
Your best answer is going to be from a lawyer of course–you might be able to find one who would do a brief consult of 1-2 hours for perhaps $250 to $500.
That said, there should be nothing that prevents you from just “walking away” as long as you haven’t co-signed for any of his debt (e.g., medical or mortgage payments). Obviously I would make pretty certain that he is significantly in the red before you do this.
Lastly, remember that you and your sibling are NOT responsible for ANY of your father’s debts (unless you signed something saying you were). Unscrupulous creditors may try to get you to pay, or to trick you into agreeing to pay for his debts. If you get any phone calls, just say that’s not my debt, do not call me again, and any future contact from you must be in writing per the Fair Debt Collection Practices Act.
If you and the other child walk away, one (or more) of the creditors will likely ask the court to appoint a representative to handle the probate, if indeed there are assets that require probate administration. At that point, it is Somebody Else’s Problem.
If you are not a co-signer or co-debtor, and if there are no jointly owned assets to muddy the waters or possessions you really want, your best bet may be to walk away. However, you really should discuss this with an attorney; your local or state bar may be able to refer you to somebody for a free/low-cost consultation.
Note that most states (and I don’t know Illinois law specifically) allow reasonable probate costs, including attorney’s fees, to be paid out of the estate BEFORE the creditors/hospitals/IRS/etc., so you really shouldn’t be paying the bills yourself anyway.
My father and my uncle both died intestate in Illinois. I was the executor of my uncle’s estate.
How do you know he is “upside down”? Where is this information coming from? You should think about the source of this information and whether the provider of this information may have some reason to mislead you.
Like other said, you absolutely have no responsibility to the estate, unless your assets or debts are intermingled with his.
If you are confident and correct that he owed more than he had, it really doesn’t matter what the court does. Just walk.
Well I’ve seen bank statements, letters from the IRS, bills from hospitals, etc. He didn’t have any money to speak of.
Seems to me that if he’s intestate and upside down, unless you have some sort obligation for the debts (co-signed or something), your best bet may be to walk away- you’re not a creditor, so you’re unlikely to actually end up with anything when it’s all auctioned off.
OP, I suggest you give us a better idea of his exact financial situation, both assets and debts. Creditors do things like write off debt rather than spend big money trying to collect relatively small sums of money, may be willing to accept pennies on the dollar for sure immediate payment. Hospitals and the IRS may have different types of policies than other creditors.
So if you give us this type information, someone here is probably knowledgeable enough to provide better advice.
PS. Did he have a will? Major points?
No home or car or other property that could be sold?
You might want to check for other POD* assets besides life insurance, such as bank accounts, retirement funds, or savings bonds. Those are not part of the estate. You may be listed as a beneficiary, but with an old enough address that you weren’t notified. That’s the good news. The bad news is that the amounts are therefore income and taxable. This does not apply to Social Security or retirement death benefits. Those are meant to defray the cost of burial and/or cremation.
I don’t know about the attorney, but it might be worth your while to visit his house or apartment. Neither of my parents got to the point of using twenties or documents as book marks, but there were many little stashes here and there. And actually looking through his papers is the only way to know for sure that he’s upside down. If, for instance, his house is upside down, but he’s been paying insurance on the mortgage, the insurance should pay the balance.
One of the reasons that I don’t know about the attorney is that some states allow small estates to be handled without probate or with expidited probate. You can check that out online. I’d be inclined to get involved to the point of notifying creditors (and Social Security and any other retirement fund) of his death, but might not go much beyond that.
*Pay on Death - basically any asset that can be assigned a beneficiary. I was surprised that Dad’s retirement was still paying out on his pay-in alone. It released a little more than $3k to beneficiaries.
Medical bill are tricky. Just because they were sent to him doesn’t necessarily mean that he was responsible for paying them in their entirety. Dunno how old he is, but possibly Medicare or even MedicAid (or some other insurer if he had one) could be paying the bulk of those bills.
Before you make any assumptions about his financial status, you might be surprised by how many people get talked/tricked into buying life insurance to cover their debts.
I have never financed a car, but I have accompanied people to the car dealer to pick up their new car. Invariably, the F&I guy (finance and insurance) will slip life insurance into the papers and imply that the lender required it or gave a better rate because of it and that if you insist on declining it, it will take him all day to re-draw the papers. Then he gives you the speech about how it’s only a few dollars and it will protect your loved ones. At this point, most people just want to drive off in their new cars as quickly as possible and sign on the dotted line.
Credits cards, mortgage loans, and other debts often come with similar offers.
OP, are YOU in Illinois? Do you have time to sift through the paper and other stuff in his home? You might find some of this stuff people are suggesting like insurance policies.
My uncle had more than $8,000 in cash on a closet shelf. He didn’t own the home, but he had an aged Mercury land yacht that still sold for 4 grand.
But his bank book was way more positive. He had 90 grand.
And for my executor’s fee, I took a Rolex Submariner that I found in a kitchen drawer.