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Monday, October 18, 2010

Disbursements before probate

Can a person in charge of an estate pay expenses or bills before receiving the Grant of Probate from the court?

The answer to this question depends in large part on whether that person in charge is an executor or an administrator. If he or she is an executor named in a Will, then yes, it is alright to pay expenses and bills before receiving probate. In fact, in many situations it's the smart thing to do in order to avoid penalties and interest on amounts owing.

If the person is, on the other hand, applying to be an administrator of the estate, then he or she doesn't have the legal authority to do anything on behalf of the estate. Whereas an executor appointed in the Will derives his or her authority from the Will document itself, an administrator has no authority whatsoever until the court says that he or she does. An administrator-in-waiting is just going to have to wait, and the creditors or beneficiaries will simply have to be patient. It's not the fault of the administrator if the deceased didn't make a Will.

As I've often said on this blog, the question in law is generally not "can I do this?" but "should I do this?" Even where there is a Will naming an executor, it might not be a good idea for the executor to start paying bills for the deceased if he or she plans to renounce the executor appointment and let someone else handle the estate. It may have an effect on whether the executor is allowed by the court to renounce. While paying one or two bills is probably not enough to cause a court to refuse a renunciation, things get trickier if the executor is calling himself the executor and making decisions about the deceased's bank accounts while paying those bills.

Sometimes an executor uses his or her own money to pay expenses before probate. This can happen when estate assets are frozen while waiting for probate. If this should happen, the executor is entitled to reimburse himself from estate funds once he or she has access the funds. If the executor makes those payments assuming that there are funds, and it turns out that there are none, the executor is going to be out of pocket with no way of reclaiming the loss.

2 comments:

  1. I looked after my mother for years, when she died I had the utilities on her house and mine, plus trying to pay for the taxes. We did have a joint bank
    account so I took care of her funeral. I then sold my house and asked the rest of the family for a price on the house of my mothers, so I could buy it. This went on for almost 7 yrs and I finally got a price. I took out a mortgage and paid them off but now I want to be reimbursed for the
    taxes and utilities I paid before hand. I believe these bills should be split 7 ways just as the amount of the estate was split. I have emailed and sent copies of the bills to my brother, he has paid everyone their portion and my one brother that paid taxes for one year. I have not been reimbursed and have had no response except for him saying that there was not much left, except maybe $600 each. I am upset as the bills I paid are almost 7000.00.

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  2. There's a lot I don't understand about this question. Mostly I don't understand why anyone would wait 7 years for people to come up with a number. I'd have made an offer in writing, with a time limit on it. I also can't tell who is the executor of your mom's estate. Is it you or your brother? On the one hand, it sounds like it's not you or you would have just taken care of the bills and the sale of the house long ago. On the other hand, it sounds like it can't be your brother because he wouldn't have let the house sit in the estate for seven full years just because nobody could come up with a selling price. When you say you want to be reimbursed for the bills you paid "beforehand", are you talking about before your Mom passed away? If so, those should have been repaid as a debt of the estate before anyone received a share of the estate. If you're talking about the seven years you waited to buy the house, that's different. Who lived there during that time? You said you had sold your own house, so were you living in your Mom's house? If so, you should pay those bills yourself. Surely the house was not vacant all that time? What executor would allow that, and more to the point, why didn't the beneficiaries say something?

    Lynne

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