Estate Liabilities

Jonathan Craig Reed

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Estate Liabilities

What happens if Uncle Joe leaves you a house in a trust or a will, but the mortgage owed on the house is for more than the house is worth? What if there are additional assets in the estate that do have value? Is there a way to legitmately cut off creditors of an estate? Or what if you are the successor trustee of a trust that has several properties. Some of them have valuable equity and some are underwater. You want to dump the underwater properties and distribute the valuable properties to the trust beneficiaries. How do you do that without running the risk of being liable to the lenders on the underwater properties?

As a general rule the administrator or executor of an estate or trustee of a trust must pay off legitimate creditors. A probate lawyer can help you navigate the exceptions. Here are three exceptions:

1) In general, under Nevada law, the creditors will be in danger of being cut-off if the administrator or executor or trustee gives actual notice to known creditor and publishes notice of a deadline to unknown creditors in a probate proceeding. The creditors then have 60 to 90 days to submit claims. (In the case of a will see, NRS 145.060, http://www.leg.state.nv.us/NRs/NRS-145.html#NRS145Sec060, NRS 147.040 http://www.leg.state.nv.us/NRs/NRS-147.html#NRS147Sec040 ; and NRS 155.020 http://www.leg.state.nv.us/Nrs/NRS-155.html#NRS155Sec020 . In the case of a trust see N.R.S. 164.025 http://www.leg.state.nv.us/nrs/NRS-164.html#NRS164Sec025 .) If the creditor does not submit a claim within that time period, the creditor loses the claim. A creditor may decide it is not worth the expense and hassle to submit a claim, or a creditor may not be able to organize its claim and supporting documents within the specified period of time*. Here in Las Vegas we pay $70 to Nevada Legal News to publish required notices to creditors.

2) These days it is very common for real estate to have a bigger mortgage than it is worth. We work with a realtor who has a good track record of getting mortgage companies to accept a short sale without going after the borrower for a deficiency judgment. He is Steve Segal; his website is: www.ItsSold.com and his phone number is 702-496-0853

3) For estates under $100,000.00, NRS 146.070(1) http://www.leg.state.nv.us/NRS/NRS-146.html#NRS146Sec070 allows the court discretion to deny creditors if necessary so that the estate can provide support to the surviving spouse and/or minor children.

*The line between playing cute games to try and cut creditors off (which courts don't like) and using statutory time periods to foreclose claims legitimately can be a bit tricky. There is just room here to discuss two examples. On the one hand, courts expect funeral homes to be paid and expect administrators, executors, or trustees to make inquiry to make sure the funeral bill gets paid. On the other hand, if an executor gives an underwater house back to the mortgage company, the mortgage company will only have the statutory period to try and make and justify its claim for a deficiency judgment. Especially in cases in which an estate has both negative and positive assets it can be essential to hire an experienced Nevada probate attorney to avoid exposing the estate administrator to liability.

Contact:

Reed & Mansfield

6655 W. Sahara Ave., Suite B-200

Las Vegas, Nevada 89146

e-mail: lawlv@cox.net

phone: 702-343-0494

regular business hours: 9am-5pm (Pacific Coast time) M-F

most days: We will also take your call between

7am-9pm including weekends and holidays

Web Pages and Informational Text (c) Copywright 2010, 2011,Jonathan C. Reed

The Law Firm of Reed & Mansfield

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