What Happens when Homeowner Dies without Will?
When parents die suddenly, in this case due to COVID-19, and there is no will and no discussions have taken place, siblings are placed in an awkward, expensive and emotionally fraught situation. The article titled “My parents died of COVID-19 and left no will. My brother lives rent-free in their home and borrowed $35,000. What now?” from MarketWatch sums up the situation, but the answer is complicated.
When there is no will, or “intestacy,” there aren’t a lot of choices.
These parents had a few bank accounts, owned their home outright and left no debts. They had six adult children, including one that died and is survived by two living sons. None of the siblings agrees upon anything, so nothing has been done.
One of the siblings lives in the house rent free. Another brother was loaned $35,000 for a down payment on a mobile home. He now claims that the loan was a gift and does not have to pay it back. There are receipts, but the money was paid directly to the escrow company from the mother’s bank account.
How do you determine if this brother received a loan or a gift? What do you do about the brother who lives rent-free in the family home? How does the family now move the estate into probate without losing the house and the bank accounts, while maintaining a sense of family?
For starters, an administrator needs to be appointed to begin the probate process and act as a mediator among the siblings. In Louisiana, the person named as the administrator is a close familyi member by preference. Barring some huge change of heart among the siblings, this is the only option.
Another thing to keep in mind as to what happens when a homeowner dies without a will: If the parents failed to name a personal representative and the siblings cannot agree on who should serve, an estate administration lawyer is the sensible choice. The court may name someone, if there is concern about possible conflicts of interests or the rights of creditors or other beneficiaries.
Unfortunately, if the child that is living in the home digs in his heels, there is little that can be done to remove the child. After all, that child will be a co-owner of the home as an heir under Louisiana law. The other siblings would have to petition the court for permission to list the home for sale and sell it, but the child living in the home can oppose that motion. This possibility is not available, however, if the home is eventually placed into the possession of the children. If the other children want to sell the home, they may be forced to sue the child living in the home in a lawsuit known as “partition by licitation”, the goal of which is to sell the home at a sheriff’s sale. Not an attractive prospect at all, because sheriff’s sales usually result in receiving a fraction of the true value of the property (a high bidder at the sheriff’s sale must present cash to purchase).
A warning to all concerned about how the appointment of an administrator works, or sometimes, does not work. Working with an estate planning attorney that the siblings can agree upon is better, as the attorney has a fiduciary and ethical obligation to the estate. While state laws usually hold the administrator responsible to the standard of care of a “reasonable, prudent” individual, not all will agree what is reasonable and prudent.
One note about the loan/gift: Personal loans should always be recorded in a notarized agreement.
This family’s disaster serves as a good lesson for anyone who does not have an estate plan. Siblings rarely agree, and a properly prepared estate plan protects more than your assets. It also protects your children from losing each other in a fight over your property.
If you are concerned about litigation between your children, your estate planning documents need to be iron clad to avoid that eventuality. Contact Ted Vicknair today to BOOK A CALL to learn how you can avoid this disastrous outcome.
If you liked this article, “What Happens when Homeowner Dies without Will?” read these additional articles: Will I Be Ready for Long-Term Care? and What to Do with an Inherited IRA? and Handling Guilt When Moving Loved One to Assisted Living Versus Nursing Home and Do Grandchildren Get Some of the Estate If Their Dad Dies before Me?
Reference: MarketWatch (April 4, 2021) “My parents died of COVID-19 and left no will. My brother lives rent-free in their home and borrowed $35,000. What now?”