Tuesday, September 17, 2013

FOUR PROBATE MISTAKES THAT LEAD TO LITIGATION


When someone dies, administering the person's estate can be a frustrating and an aggravating process.  Everyone seems to want or need something—beneficiaries—government—courts—creditors—etc.  The pressure causes people to make mistakes.  In my practice, I have noticed four common mistakes that increase heartache, administrative time, and cause unnecessary litigation.  The mistakes are as follows:
1.                   Keeping Secrets.  Sometimes personal representatives resent providing information to beneficiaries. Instead, the personal representatives want to keep estate business secret and frequently refuse to provide information.  This is a mistake.  Testamentary documents, the status of the administration, as well as the expenses of the administration are not secrets.  To the extent reasonable, information regarding the estate should be made available to the beneficiaries in a timely manner.  Providing the information assures the beneficiaries that the assets are properly managed.  Moreover, secrets create suspicion while disclosure creates trust.
2.         Comingling Funds.  Too often personal representatives put the deceased’s money in the same account as their own accounts.  Moreover, personal representatives sometimes pay personal expenses from the estate.  This is a breach of fiduciary duty and creates problems for administration.  Commingling creates an accounting nightmare as the money must be tracked.  It gives the appearance that the personal representative has stolen the money.  Lastly, even if the personal representative had no mal-intent, the appearance of impropriety may invite a lawsuit from the beneficiaries. 
3.         Avoiding the Estate Business.  Avoidance of the estate business is common place and creates problems down the road.  Prompt attention to financial and legal issues of the estate is imperative as deadlines to perform the work frequently loom.  Failing to adhere to the deadlines often increases the cost and complexity of the administration.   
4.         Following the Deceased’s Oral Instructions.  A personal representative cannot guess at what the deceased wanted to happen with the property.  I often hear clients say that "Mom told me before she died that she wanted me to have the house."  While I understand that mom may have said that, it has absolutely no bearing on who receives the property at death.  If the testator wants to control assets after death, he/she must make a valid written testamentary document.  Without such, the state intestacy statutes will determine who receives the property.  Absent agreement from all the heirs/beneficiaries, a personal representative cannot use oral instructions from a parent to decide who receives the estate property.     
If you recognize any of the actions above in yourself or others, you should contact an attorney to discuss the matter.  Probate of an estate is hard work, but does not need to cause heartache. 

No comments: