[WSBAPT] Decedent Forgiveness of Debt

Thu Oct 15 10:13:40 PDT 2015

Great. Thanks, Eric.
That has been mine and the client's analysis; good to have some other confirmation of our thinking.

We have been particularly concerned about your 1st paragraph.  [when were those debts incurred, before or after dad's death? Who were they incurred by? Why was the debt considered "forgiven"?]  We have asked and gone unanswered of course by removed AIF.  Given our facts, it is hugely unlikely that dad ever used the credit cards or was probably not even aware of them.  Other issue is that no probate for dad, so Gdn for mom has not been able to get data about dad's assets and debts.  We could start a probate now (more than 2 years since dad died), but with what $ is at issue, we just can't be throwing good money after bad.  So it has been an uphill battle digging into the background details of the actual debt.

We will see where it shakes out.  Another thing to add to the court petition seeking further liability on removed AIF.  The data and accounting on dad's assets and debts since 1/1/2011 was already in the May 2015 court order against removed AIF.  Of course we are not getting the documentation or much of anything from her.  And, again, trying to get contempt or sanctions will be throwing good money after bad most likely.

Thanks for the reply!
Alexis
____________________________
Alexis R. Singletary
Attorney at Law
Singletary Law Office, PLLC
253.833.8855
www.SingletaryLawOffice.com<http://www.singletarylawoffice.com/>

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From: wsbapt-bounces at lists.wsbarppt.com [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of Eric Nelsen
Sent: Wednesday, October 14, 2015 2:04 PM
To: WSBA Probate & Trust Listserv
Subject: Re: [WSBAPT] Decedent Forgiveness of Debt

Law school exam for sure. I think there are too many moving parts for an easy answer. Regarding the forgiven credit card debt - when were those debts incurred, before or after dad's death? Who were they incurred by? Why was the debt considered "forgiven"? All of that will interact with creditor claim rules if dad was actually involved.

If Dad opened the credit card accounts and daughter fraudulently used them after his death, then that is a defense by the estate from having to pay, which implicates a defense against any argument about "forgiven" debt.

If the credit card debt was actually from prior to death and was incurred by the dad, then it is presumed to be community debt, and so its forgiveness (if legitimately forgiven) might arguably be reportable on mom's tax return.

However this shakes out, if it is not reportable on mom's return, then it may still end up being reportable on dad's estate income tax return (Form 1041), and liability might thereby be distributed to dad's heirs.

I do not think the date of issuance of the 1099 and dad's SSN provides a sufficient defense by itself. I think the guardian's duty is to determine what must be reported on mom's return, and that means digging into the background details of the actual debt, sufficient to determine whether or not the "forgiveness" was legitimately so, and if so to what extent it is actually reportable on mom's tax return.

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> [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of Alexis Singletary
Sent: Tuesday, October 13, 2015 2:56 PM
To: WSBA Probate & Trust Listserv
Subject: Re: [WSBAPT] Decedent Forgiveness of Debt

Hi everyone.
Re-post the below here.  No thoughts from the collective?  Too much of a law school exam question?
Thanks!
Alexis

From: wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com> [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of Alexis Singletary
Sent: Wednesday, October 07, 2015 12:37 PM
To: WSBA Probate & Trust Listserv
Subject: Re: [WSBAPT] Decedent Forgiveness of Debt

Dad dies in 4/2013.  Since 2011-2012 daughter acting as Atty-in-Fact for Dad and then Mom.  2013 tax return prepared by AIF for deceased dad and for living mom.

Dad/Mom Community Property Agreement.  Daughter starts Notice Agent/Non-Probate Notice to Creditors July 2014 for Dad's estate.  CPA recorded finally 2015.

After Dad's passing, Daughter not forthcoming to Brothers on Dad's estate to mom and Mom's care and financial status.  They successfully have daughter removed as AIF in 2015.  Daughter not providing AIF accounting as required in Court Order; turns over some docs, some bank info, etc, but spotty, sparse info.  Gdn/Son getting lots of docs and info on his own as Gdn, from Mom credit reports, etc., including discovering unknown but cashed out assets, unknown debt, etc. never disclosed by removed AIF.  Removed AIF non-responsive (and as is becoming more typical), we are not likely to be able to get any blood from that turnip, but Gdn is compiling the data and spreadsheets for Daughter/removed AIF liability.  Mom's estate now very modest (less than $200,000 and now more likely appearing that she will be insolvent as more debts are discovered).

Now, Gdn trying to do Mom's 2014 tax return because Removed AIF not do before she was removed.  Turns out Removed AIF giving tax preparer documents and data never heard of by Gdn even though requested multiple times by Gdn, including 2014 1099s for Forgiven Credit Card debt of over $30,000.  BUT- 1099s issued under deceased Dad's name and not issued until more than a year past his death.  Not issued in Mom's SS# or name.  No evidence that mom was credit card co-owner (or even a co-signer as she was living in Adult Family Home for the last few years) and Gdn suspects that removed AIF simply opened CC in Dad's name and ran them up for her own benefit and then didn't pay.  Requests by Gdn for accounting of credit cards and statements of the CC are ignored by removed AIF.

With that background, Question: what is Gdn's duty here?  Tax preparer says that the 1099s must be included on Mom's 2014 tax return.   I say No, 1099s issued to Dad only and for 2014 under his SS# long after he deceased.  Not even proper 1099 because credit card company should have made claim against Dad's Estate.  Mom's return is filing Single because as of 12/31/2014, she was no longer married.  Yes, Comm Ppty Agreement, but 1099s issued a full year after Dad's death.  Of course we can try and go after removed AIF for this potential tax liability, but there is nothing there to get from this removed AIF.  Gdn does not even know where is sister is living right now.  PO Box that was prior service/notice address is now closed.

I welcome all thoughts and feedback!
Thank you!
Alexis
____________________________
Alexis R. Singletary
Attorney at Law
Singletary Law Office, PLLC
253.833.8855
www.SingletaryLawOffice.com<http://www.singletarylawoffice.com/>

This message is from an attorney, so it's confidential and may be protected by attorney-client privilege and/or the work-product doctrine.  If you are not the intended recipient, it's too late to stop reading this message, but you may not use it for any improper purpose. Huge Disclaimer available upon request.

CLIENT ADVISORY:  A spam filter is in use in our IT system.  If you have not received a Reply to an e-mail message within seventy-two hours, please call or leave a voice mail message with the receptionist at 253.833.8855.
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