Sunday, May 18, 2014
Does my sibling still inherit even though I paid all the bills?
Posted by Lynne Butler
"My father passed away in July. Before that he was too sick to work so I paid the mortgage and all the bills for 2 years. After his passing I continued to pay everything. My brother and I have been named executors of his estate and beneficiaries. We decided that the house was too much for me to pay alone so we probated the will and sold the house and the closing date is next month. My question is: if one of the beneficiaries has not helped pay any bills and doesn't work and is home all day does he/she lose their right to half of the money that is left once property taxes, lawyers, realtors, and outstanding mortgage is paid?"
The quick answer to this question is no, but let's look at the situation a little more closely.
Both of you are residuary beneficiaries, meaning that you are equally entitled to share your father's estate. Your brother doesn't lose any rights because of his lifestyle. Inheritance is a legal right provided by the will, and is not contingent on whether a beneficiary "deserves" the right because he doesn't work or chip in. You must split the residual estate equally.
However, this doesn't mean that you can't recover some or all of what you've spent. The residual estate includes whatever is left after all bills and debts have been paid. You may decide that the amounts you paid are a debt to you from the estate. If they are, then they would be reimbursed to you before the balance (if any) is split. In theory, this makes perfect sense. You paid the mortgage and bills to keep the house in good standing so that it could be passed on to the beneficiaries.
You will have to have consent of your brother to the repayment of the bills that you paid after your father's passing, not because he is an executor, but because he is a residuary beneficiary. All executors must have the approval of the beneficiaries to the financial transactions of the estate. This is normally done by presenting an accounting to them. Beneficiaries can object if expenses seem extravagant. Even though your brother is also an executor, you can still present him with your accounts. Claim the full amount of the mortgage and bills in writing. Ask him to sign off in writing.
He may not like the idea of receiving an inheritance that is significantly smaller because you are claiming repayment. I can't imagine why on earth you continued to pay bills for almost a year after your father died. In most estates, an executor who continues to pay the bills on a parent's home for a year and then wants to be repaid is going to have an uphill struggle, but in your case I think it's reasonable.
I can't tell from your question who lives in your father's house, but I get the impression that both you and your brother live there. If so, it's going to be pretty darn hard for him to argue that you should not have paid the very bills that allowed him to continue to live there. Your chances of getting that repayment should be good.
The expenses that you paid before your father died are in a different situation legally, but will require more or less the same solution. As executors, you and your brother would have prepared an inventory of the estate as it stood at the date of your father's passing. This is part of the probate process. On this inventory, you should have made a list of your father's assets and a list of his debts. As executors, you two would have decided which debts to include. You should have added up the amounts you paid prior to your father's passing and asked that this be added to the list of debts. At that point, your brother, in his position as co-executor, would have had the chance to assess whether this was a reasonable claim or not.
If the amounts you paid prior to your father's death were listed there, then go ahead and reimburse yourself.
If you didn't include those expenses at that time, you can still ask your brother if he will agree to you being repaid. The difference is that if he doesn't agree, I believe that your chances to reclaim those expenses will be smaller than your chances of recovering the post-death debts. After all, when you and your brother signed off on the inventory, you swore that those were all of the debts owing, so you are on shaky ground if you now come up with another one.
If you and your brother are getting along well, and it sounds as if you are, you may be able to make all of this happen without too much trouble. The part that worries me is that you say your brother doesn't work, so he may feel that he needs every cent of his inheritance to stay afloat. This may make him stubborn about agreeing to your repayment.
If this issue turns into a dispute between you, you can try mediation to resolve it. If that is not available, you can ask the court to pass your accounts and give you permission to reimburse yourself for the amounts you spent.