[WSBAPT] Estate Became Insolvent-Order of Payment-RP only asset

[Eric Nelsen]

You are correct, if the house is going to sold, the mortgage holder has to be satisfied. Whether that's a short sale or not is an important question. I'm guessing there is some equity in the house so there will be some positive net proceeds from sale, but the Estate is insolvent because the creditor claims total more than the net proceeds gained from sale of the house.

You are correct, secured debts prevail over the claims of unsecured creditors of the Estate.

To resign, the PR would need to petition the court to allow the resignation and get discharged. The PR can't just walk away--s/he has a duty to account for the PR's time in charge, which means giving an accounting of all assets etc., and usually that accounting is given to the successor PR. If there is no successor PR, I don't know how that would work. It's possible the court won't allow resignation without identifying a successor.

If the PR Is living there, I assume it's done as a tenancy, and PR's rights should be as any other residential tenant.

One thought--costs of administration and the PR's fee have priority over creditor claims. Maybe there are enough liquid assets not encumbered by security interests that would make it worth it to stay in and get the estate done? If costs of administration take all the money, the creditors then get nothing.

Sincerely,

Eric

Eric C. Nelsen
SAYRE LAW OFFICES, PLLC
1320 University St
Seattle WA  98101-2837
phone 206-625-0092
fax 206-625-9040



From: wsbapt-bounces at lists.wsbarppt.com [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of Jayne Gilbert
Sent: Monday, May 18, 2015 1:53 PM
To: WSBA Probate & Trust Listserv
Subject: [WSBAPT] Estate Became Insolvent-Order of Payment-RP only asset



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QP: does the mortgage company get the amount owing first? Or does the Mortgage get paid off in the class of Secured Creditors?

Common sense tells me that the sale of the RP entails paying off the Mortgage Lien so that the buyer takes the property free and clear of the lien.

Also when the Declaration of Apparent Insolvency is presented to the Court and the Creditors receive Notice-can the PR resign, quit or otherwise walk away from the Case at this point/if so what kind of Declaration, Petition, etc. does the PR present?

Or does the PR simply inform the Creditors of her intent to "walk away" or does this require a Court Order?

Would your answer change if the PR lives in the house at present with the Beneficiary's consent and the Mortgage Co. is initiating a foreclosure?

The PR is not a beneficiary or heir.

This is my first and hopefully, last Insolvent Estate.

Thank you very much for reading this request for guidance. I do appreciate it
[https://ssl.gstatic.com/ui/v1/icons/mail/profile_mask2.png]
Jayne Marsh Gilbert
Gilbert and Gilbert Lawyers, PS
(360) 336-9515
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