[WSBAPT] Estate Became Insolvent-RP Only Asset-Just above Water

[Eric Nelsen]

PR can resign but remains liable unless "discharged" by the court, after submitting an accounting. RCW 11.28.290<http://app.leg.wa.gov/rcw/default.aspx?cite=11.28.290>. So the PR can't just walk away without accounting for the assets and making sure they are in a proper person's hands. It'd be a Motion to Discharge Resigning PR (and appoint successor PR?) and Approving Accounting.

BUT--PR and PR's attorney can most likely take that entire $2500 - $4000 that could come from sale, as PR fees and attorney fees, and creditors will get zip. Costs of administration are priority claims against the Estate, well above general creditors. RCW 11.48.210<http://app.leg.wa.gov/rcw/default.aspx?cite=11.48.210>, RCW 11.76.110<http://app.leg.wa.gov/rcw/default.aspx?cite=11.76.110> preamble sentence. (Caveat: Federal tax debt and Medicaid recovery technically defeat even administrative costs, though in practice the IRS usually doesn't push it that far.) In that scenario, I have sometimes been successful in contacting the creditors, explaining the situation, and getting all creditors to withdraw their claims, so I can maintain Nonintervention Powers. Sometimes not successful, but it does work more often than not in my experience. I am slow to file a Notice of Insolvency until I have contacted the creditors and seen if anything can be worked out.

You also mention that PR lives there with "beneficiary's approval." The Beneficiary is usually the mortgage lender, but your post implies they are different? If this is a private loan, maybe there is more opportunity to negotiate a short sale and extract a bit more money from the house, at least to get fees and administrative costs paid in full. Harder to do with institutional lenders, but still possible. But when confronted with a choice between taking a property back versus getting, say, 90% or 95% of their loan back, you might be able to convince them.

A Deed in Lieu might work, but it sounds like the Estate could be giving up some money by doing it, if it's truly likely to pay off in full via a sale. Instead, on these limited facts, I am thinking that listing for sale and negotiating a short sale with the lender could work better.

If you represent the PR in her fiduciary capacity, then typically best not to represent her in her individual capacity at the same time. If there is no realistic conflict of interest it can be done, but best to avoid. Sounds like a potential conflict here, so best to pick a side--advise on her fiduciary duties, or advise on her personal interests.

Also, is PR an actual tenant under a rental agreement, or just occupying? Tenants have some rights in a foreclosure scenario.

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: Wednesday, May 27, 2015 11:21 AM
To: WSBA Probate & Trust Listserv
Subject: [WSBAPT] Estate Became Insolvent-RP Only Asset-Just above Water

I posted something similar to this last week and only got one response. Dear
listserv people if you have any thoughts, please respond:

QP: There is not enough equity to pay General Creditors. PR will be filing a Notice of
Apparent Insolvency. After the mortgage has been paid and the cost of a sale has
been paid, there will be between $2,500-$4,000.00 left for Creditors at best

When the Creditors have all received Notice of Insolvency and Notice is Filed with
the Court can the PR resign, quit or otherwise walk away from the Probate? If so
what kind of Motion does the PR bring?

Or does the PR simply inform the Creditors of her intent to "walk away" or does
it 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 Company is initiating Foreclosure?

The PR is not a Beneficiary or an heir

Would a Deed in Lieu for the Benefit of the Estate be a possible answer or
does that conflict with my duties as attorney to the PR and attorney to the
person who happens to be the PR?




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
--
*************************************************
Jayne Marsh Gilbert
Gilbert and Gilbert Lawyers, PS
(360) 336-9515
*************************************************
-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://mailman.fsr.com/pipermail/wsbapt/attachments/20150527/1383d0de/attachment.html>