“Keep your eye on the ball,” and “don’t drop the ball” are two oft used phrases to warn people that bad things can happen if they do not pay attention and take prompt action. Such is the case when someone dies.
I have known of circumstances where a parent died owning real estate, and due to inaction by family members, the property was foreclosed upon by the mortgage lender thereby costing the family more money than was necessary. Indeed, even with distressed properties, with prompt action one may open an estate and sell the property at better terms than what one might recover after a foreclosure.
Another example is from a recent court case. In that case, it did not come to light until years after death that a disabled person’s guardian improperly transferred the disabled person’s house to himself, and the court, by means of an internal oversight, did not take action to protect the disabled person’s property. By the time the heir who was rightfully entitled to inherit such property became aware of the matter, it was too late to recover the asset. Again, prompt action would have resulted in a more favorable outcome.
It is important that you keep your eye on the ball to ensure that proper steps are being taken to administer the affairs of a loved one after that person dies. Even if someone else had been designated to take charge of your loved one’s affairs, if that person has done nothing, then you need to step up to take charge of the situation yourself.
The penalties for inaction can be harsh. Rightful heirs and those intended to inherit a deceased person’s property could lose out on the opportunity to inherit if prompt action is not taken to protect one’s rights.
William Gatesman stands ready to assist clients in taking such prompt action, and is prepared to assist clients to protect their interests even when much time has passed since the death of a loved one.
Maryland lawyers do not all agree as to whether a lawyer may hold funds belonging to a decedent’s estate in a general escrow account or a client funds account. While there may seem to be little guidance concerning the subject matter, there are at least two Maryland law cases that suggest that holding funds from a probate estate in a lawyer’s escrow account may be problematical.
In Attorney Grievance Commission v. Boehm, 293 Md. 476, 479 (footnote 2) (1982), the Maryland Court of Appeals states that “[i]t is the obligation of an attorney upon receiving funds representing the assets of an estate to deposit those funds in a separate estate account clearly identifiable by the name of the decedent. Such funds should not be commingled in an escrow account, general or otherwise.” Cf. Attorney Grievance Commission v. Owrutsky 322 Md. 334 (Md. 1991) .
In Attorney Grievance Commission v. Christopher, 383 Md. 624, 861 A.2d, 692, 699(2004), the same court noted with approval the conclusion of the lower court that made findings of fact, which lower court, in its “Conclusions of Law” stated that the lawyer violated the rules of professional responsibility when he, among other things, “mishandled estate funds when he closed the estate bank account . . . and transferred the funds into his trust account.”
I have written this article as a basis upon which I may continue to explore this issue with my colleagues.
— Bill Gatesman
More and more financial institutions are pushing their customers to forgo receiving paper account statements and instead receive all of their statements and account correspondence electronically. What happens, then, when the account holder dies?
In the age before digital communication, when someone died, if the identity and extent of the deceased person’s asset holdings was not apparent to the estate administrator, one simply had to wait a month or so to receive the decedent’s mail to discover most, if not all of the decedent’s financial accounts. Eventually, it would be apparent what accounts were owned by the deceased person.
All of that has changed for someone who does all of their financial business online, however. What happens, then, when a forward-looking, media-savvy loved one dies, and you discover that the deceased person received no paper financial statements, and kept all of her financial data on her computer rather than in paper files? Continue reading “Locating Deceased Person’s Assets in a Digital Age”
I often work with people who, in the administration of the estate of a deceased loved one, find themselves in the position of having to sell the deceased person’s house. Useful to such clients, and to anyone else who is selling a house, are these tips, the Steps to Selling Your House Quickly, which tips one of my mentors, who has much experience investing in and selling homes, shared with me.
Continue reading “The Steps to Selling Your House Quickly”
Mother dies with a will leaving all of her assets to her three children in equal shares. One of her adult daughters receives Medicaid benefits because her assets are less than $2,000 and she has a very low income due to a disability. Such daughter is expected to receive a distribution of $25,000 from mother’s estate. This will cause daughter to lose her public benefits, which will be disastrous for daughter given the very high costs of her medications.
While daughter could petition a court to create a special type of Supplemental Needs Trust, known as a “d4a trust” and once she receives the distribution from the estate, deposit the funds into such trust, there are significant costs to establishing such a d4a trust, and there are administrative burdens associated with such trust, including annual reporting to the State Medicaid authority. Moreover, a d4a trust requires payback to the state for any Medicaid benefits if there are funds remaining in the trust when the trust beneficiary dies. Given the amount to be distributed, one must weigh whether it is worth the cost of setting up a d4a trust if there are other less costly alternatives.
Fortunately, Maryland law provides an opportunity for a trust to be created in a simpler way. Under the Maryland Discretionary Trust Act, a trust may be established for a beneficiary, and the assets in the trust will not be considered to be available resources for Medicaid purposes. Moreover, unlike a d4a trust, there is no requirement to pay back Medicaid for benefits received during lifetime after the beneficiary dies.
While Mother in her will could have provided for a Maryland Discretionary Act trust for daughter, she failed to do so. Nevertheless, the Maryland Discretionary Trust Act provides that “any person having a right to transfer property to another person may create a trust as a transferor under [the Maryland Discretionary Trust Act].” Under this law, the term “person” includes any legal entity, and a probate estate is a legal entity.
William M. Gatesman presently is working with clients to come up with creative solutions to allow estate beneficiaries to retain their essential public benefits where the decedent’s will did not provide for asset protection in light of those public benefits. Establishing a Maryland Discretionary Trust Act trust is one of the tools in Mr. Gatesman’s tool kit to achieve the objective of protecting a beneficiary’s eligibility for public benefits.
Some workers who have received judgments in their favor from their former employers for work related disease or injury, such as asbestos related injuries or coal mining related diseases, find that the judgments are paid out over time, sometimes in the form of small amounts paid now and then over a period of many years. Some of these individuals have died and their probate estates have been wrapped up and closed. Then, out of the blue, another check arrives with a payment on the injury or disease settlement.
Once such check arrives, notice must be given to the Register of Wills in the county in which the estate had been opened, a supplemental inventory and account filed, and distribution made (with the payment of an additional probate fee in some circumstances). If a lawyer assists with this process, there will be legal fees as well. This is a cumbersome and costly endeavor, sometimes for a very small amount of money.
This continuous process of reopening the estate each time a settlement check arrives can be avoided with the proper assignment of future settlement payments to the beneficiaries of the estate when the final estate administration account is filed and the estate closed. Such assignment can grant the Personal Representative of the estate continuing authority to transact checks to make the distributions to the beneficiaries.
The Gatesman Law Office assists clients with the process of simplifying life for estate beneficiaries by arranging for the distribution of such settlement awards that might be received after an estate is closed without the necessity of continually filing supplemental inventories and accounts year after year.
In general, a Personal Representative of a decedent’s estate may not pay legal fees out of the probate estate without first getting approval from the Orphan’s Court overseeing the estate administration. A Personal Representative has to be careful about this rule. For example, if the Personal Representative hires a lawyer to prepare a deed, oftentimes, the deed preparer will simply send a bill for services without notifying the Personal Representative of his or her duty to get court authorization to pay that bill. It would be improper for the Personal Representative to simply pay that bill without obtaining court authorization to do so.
Similarly, a Personal Representative should get court authorization to pay any legal fees incurred before death. There are two exceptions to obtaining such prior authorization. Some might argue that such authorization would not be required if the lawyer whose fees are being paid files a claim in the estate for such fees, and the Personal Representative pays the claim, which payment is reflected on an estate administration account (the argument being that such payment is the payment of a claim and not payment of legal fees, per se); however, the conservative way to do so would still be to obtain court authorization, or to pay such amount using the method discussed in the paragraph below.
Another method for paying legal fees incurred by the decedent before death is for the Personal Representative to provide all interested persons and all unpaid creditors with a Notice of the Personal Representative’s intention to pay such legal fees. That notice will provide the interested persons and unpaid creditors with a time period in which such persons could object to such payment, and if such objection is properly and timely made, the Orphans Court will hold a hearing to determine how much of such fee is to be paid using estate funds. If no objections are made within the allowable time, however, then the Personal Representative may pay such legal fees incurred before death with no further court action. There is a particular rule of court that allows legal fees to be paid in this manner.
William M. Gatesman is skilled in the various methods of paying legal fees from a probate estate and assists clients with the proper administration of estates, including the payment of legal fees using estate assets. As stated elsewhere on this website, these article are of general interest and readers should not consider these articles to constitute legal advice. William M. Gatesman stands ready to give legal advice to particular clients in jurisdictions where he is licensed to practice law. Please contact Mr. Gatesman if you would like to obtain legal advice regarding the matters addressed on this website.
Mom is in a nursing home. As part of an asset preservation plan, Mom’s house will be transferred to her children and she will apply for Medicaid benefits.
In digging into the matter, however, the family discovered that “Mom’s house” actually is titled in Dad’s sole name (Dad died in 1989) and Dad’s former wife, as co-owners. Mom and Dad have resided in that house since they were married and everyone assumed that when Dad died, Mom owned the house (as is typical when a husband and wife live in a property that they own together). However, Mom never was on the deed.
To make matters worse, Dad died without a will and nobody bothered to open a probate estate in 1989 to deal with the real property. Even more complicated is the question as to whether Dad’s former wife survived him, which would mean that the house belonged to someone else, and not to Mom.
Continue reading “Solving a Thorny Property Ownership Problem”
There are several new laws affecting probate in Maryland that became effective October 1, 2012. This article will address those statutory changes.
Continue reading “October Brings New Laws Affecting Probate in Maryland”
Several lawyers have been pondering whether it is illegal for a Personal Representative to bring a legal action without a lawyer because doing so would be considered the unauthorized practice of law.
This office was involved in a case a few years ago in which the Maryland Court of Special Appeals ruled that a Personal Representative (who was not also an estate beneficiary) may not pursue a legal action in Circuit Court without a lawyer. The Appellate Court ruled that doing so constitutes the unauthorized practice of law. The Court ruled also that an estate is not a person who can pursue a legal action “pro se”.
When an individual goes to court without a lawyer, such person is said to be acting “pro se”. Only individuals are allowed to pursue legal actions in court on a pro se basis. Parties who are not individuals, such as corporations, may not do this, but rather, must be represented by a lawyer.
According to the Court of Special Appeals in this unpublished opinion, an estate likewise must have a lawyer to pursue a legal action in Circuit Court.
You may click here to read the case.