[WSBAPT] Spouse died with HELOC and left interest in home to children

Fri Oct 16 08:39:48 PDT 2020

Nick's practical solution sounds reasonable to me; better to cooperate and find a compromise than duke it out in court.

Nick also raises a good point about the ouster rules under which a cotenant can become responsible for all expenses-but I do think ouster is harder to invoke than it sounds. I don't think it's sufficient for the kids (actually, each and every kid, they each have a separate interest) to make a pro-forma "I want to live there" demand when none of them have any actual intention of living there. And if the kids have reasonable access to the property and the spouse doesn't deny them that right to inspect, etc., to protect their property interest, then I don't think there is ouster. When there are multiple cotenants to a residential property, there has to be sole occupancy coupled with a very clear repudiation of cotenancy-a denial of the ownership interest, of any rights relating to the property-to reach ouster.

I think it just ends up being a fact-intensive argument, and the facts have to really show a clear intention to completely exclude a non-occupying cotenant.

Sincerely,

Eric

Eric C. Nelsen
Sayre Law Offices, PLLC
1417 31st Ave South
Seattle WA 98144-3909
206-625-0092
eric at sayrelawoffices.com<mailto:eric at sayrelawoffices.com>

Covid-19 Update - All attorneys are working remotely during regular business hours and are available via email and by phone; please call the Seattle office. Videoconferencing also is available. Signing of estate planning documents can be completed and will be handled on a case-by-case basis; please call the Seattle office.

MAIL AND DELIVERIES can be received at the Seattle office. For any other needed arrangements, please call the Seattle office.

From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> On Behalf Of Nicholas Pleasants
Sent: Thursday, October 15, 2020 8:15 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: Re: [WSBAPT] Spouse died with HELOC and left interest in home to children

I generally agree with Eric that the debt is 50/50. There are other issues that need to be resolved as well. If a Life Estate was not reserved for the Spouse, then the step-children have a claim for occupancy and use as tenants in common equal to the Spouse. What about property taxes and maintenance? Are the step-kids paying half of all of the costs of ownership? If you make the kids pay half of all the expenses, then they are entitled to live there. If Spouse bars the children from living there, he commits ouster.  "'Generally, a cotenant's sole possession of the land becomes adverse to his fellow tenants by his repudiation or disavowal of the relation of cotenancy between them, and any act or conduct signifying his intention to hold, occupy, and enjoy the premises exclusively, and of which the tenant out of possession has knowledge, or of which he has sufficient information to put him upon inquiry, amounts to an ouster of such tenant." Fritch v. Fritch, 53 Wash.2d 496, 503, 335 P.2d 43 (1959).
Also consider that the HELOC requires interest-only payments until it matures. The interest-only payment on a $50,000 balance is going to be about $100-$200/month. This is not enough to split hairs over. My opinion is that if the Spouse is living there, he can make the interest-only HELOC payments, pay the property taxes and do the maintenance, and step-kids will allow him to live there and not file a partition action. Leave the HELOC until it matures, then make the kids contribute $25,000 to pay it off after Spouse dies. You can memorialize this in a written agreement, perhaps an NJBA.
Best,
Nick

From: <wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com>> on behalf of Eric Nelsen <Eric at sayrelawoffices.com<mailto:Eric at sayrelawoffices.com>>
Reply-To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Date: Thursday, October 15, 2020 at 12:37 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: Re: [WSBAPT] Spouse died with HELOC and left interest in home to children

Any gift of property by Will that is subject to a secured debt, is received by the beneficiary subject to that debt. RCW 11.12.070<https://app.leg.wa.gov/RCW/default.aspx?cite=11.12.070>. So I would say yes, after date of death, the obligation to pay the HELOC is 50% on the kids. Post-death, they are effectively tenants in common with the spouse.

I don't think that spouse needs to file a creditor claim against S's estate, though, as I think you are talking about the spouse's equitable right of contribution from the kids, for post-death payments on the HELOC. That's not an estate debt.

Of course the debt secured by the HELOC originated as a pre-death debt, but again, spouse doesn't file a creditor claim because the spouse wasn't owed money by S pre-death. If the HELOC lender files a creditor claim, the debt is preserved as a general debt of the community. If not, then the lender retains its secured interest but can't pursue payment of the debt from the estate generally. RCW 11.40.135<https://app.leg.wa.gov/RCW/default.aspx?cite=11.40.135>.

If the probate of S is still open, then the PR has to decide what to do about the community debt secured by the HELOC. There's no obligation to pay it in full under the loan terms, I assume. So if the estate doesn't pay it, I would argue that the kids and the spouse have to each pay 50% of the debt going forward. The spouse is obligated anyway, and the kids have an equitable obligation because they now own half the property as tenants in common.

I suppose the PR has the option of paying it in full, using community assets subject to the probate. But in that case, the situation gets more complicated, because that would be voluntarily paying a debt that isn't due yet. It might set up a potential conflict between S's Will, which probably says that debts should be paid from residue of the estate, and RCW 11.12.070, which says that the kids receive 50% of the house subject to the debt. So if the estate pays off the HELOC, one could argue that it should only do so if the kids agree to pay 50% of the debt.

Sincerely,

Eric

Eric C. Nelsen
Sayre Law Offices, PLLC
1417 31st Ave South
Seattle WA 98144-3909
206-625-0092
eric at sayrelawoffices.com<mailto:eric at sayrelawoffices.com>

Covid-19 Update - All attorneys are working remotely during regular business hours and are available via email and by phone; please call the Seattle office. Videoconferencing also is available. Signing of estate planning documents can be completed and will be handled on a case-by-case basis; please call the Seattle office.

MAIL AND DELIVERIES can be received at the Seattle office. For any other needed arrangements, please call the Seattle office.

From: wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com> <wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com>> On Behalf Of David Faber
Sent: Thursday, October 15, 2020 11:52 AM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: [WSBAPT] Spouse died with HELOC and left interest in home to children

List,

(C)lient and deceased (S)pouse co-owned real property with a HELOC of about $50,000 secured against title. S died in 2019 and left S's interest in the real property to children from a prior marriage. C has been paying on the HELOC since 2019. Can C file a creditor claim for the 1/2 of the HELOC attributable to S?

Best,
David J. Faber
Faber Feinson PLLC
210 Polk Street, Suite 1
Port Townsend, WA 98368
(360) 379-4110

*** NOTICE: ATTORNEY CLIENT COMMUNICATION - PRIVILEGED & CONFIDENTIAL.  This communication may contain privileged or other confidential information. If you are not the intended recipient, or believe that you have received this communication in error, please do not print, copy, retransmit, disseminate, or otherwise use the information. Also, please indicate to the sender that you have received this communication in error, and destroy the copy you received.***
-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://mailman.fsr.com/pipermail/wsbapt/attachments/20201016/04e57858/attachment.html>