There's really no easy way to open this post, given the subject matter and the circumstances. So I'll just be blunt. My BIL was murdered on April 23. Since then, I've been dealing with what the DH calls "estate triage." I've now learned more than I wanted to know about things like probating a will, handling debts and creditors in such an event, and dealing with anger at the departed for being f-ing STUPID when it came to finances and leaving a new widow to deal with it all. Said widow, my DH's sister (aka SIL), has been leaning on my DH and me for handling the administrative details; more on that later.
Here's what SIL is facing:
(1) When BIL died, he and SIL had only about $100 in their bank account. And six figures of debt. On top of that, they were looking at about $20,000 in capital gains taxes owed for the 2006 tax return. BIL had his own company and was, the week he died, supposed to start new jobs that would've put money in the bank and brought all of their debts (which they were behind in payments on) current. He died, and those jobs will never be completed.
(2) BIL owned his own business as a sole proprietorship. There's nothing wrong with that, of course, but what it means is that not only his personal assets, but his business assets are now locked in the probate process. SIL would like to sell one or more of the company vehicles to cover her current living expenses -- but that's not possible, as the court has not yet issued letters testamentary appointing an executor/personal representative/administrator for the estate. Until those letters are issued, the assets in BIL's business are, essentially, in limbo -- nobody has authority to act on behalf of the estate. (SIL has, due to the circumstances, decided to step down as executor; DH is the alternate executor named in the will.)
(3) BIL and SIL had, a few years back, deeded their house out of both of their names and into just BIL's name. (This, more than anything else, is what triggered probate on the will, as far as I can tell.) The house is leveraged 100% (and maybe more; they have a first mortgage that's an ARM with increasing payments each month, a second mortgage, and a maxed-out HELOC), and because the house is solely in BIL's name, there's nothing that can be done with the house until the probate court allows.
(3.1) BIL chose to build an addition onto the house last year rather than, say, make necessary repairs to the house. So my SIL is facing a huge amount of repairs that will need to be done before the house can be sold (if she chooses or the court orders), and she doesn't have the money to pay for them. And BIL took out a loan to build that (IMO, unnecessary) addition.
(4) Despite the fact that the house is deeded solely to BIL, both his and SIL's names are on the various mortgages, so she's responsible for all that debt and has no current income to cover the monthly payments. (SIL is a realtor and has not had any commissions recently.)
The end result of all of this is that DH and I have paid for the biohazard cleanup of their house (BIL was killed at home), paid for the funeral expenses, and fronted several thousand dollars for living expenses and debt payments. The probate process has been started, but it will be at least a month (so our probate attorney says) before the court will issue letters testamentary. The life insurance proceeds will be paid at the life insurance company's convenience -- the soonest we can hope for is about a month.
In the meantime, SIL is back to work, getting listings and working on closing deals. DH and I aren't sure how much more money we can loan her for living expenses and we're being thankful that we have what most reasonable people consider an obscenely large emergency fund that we've been able to draw from to help her to this point; most of the rest of the family doesn't have money to spare, though those who do are willing to loan what they can.
DH and I knew that BIL and SIL were struggling; we hadn't known just how badly in debt they were/are. It turns out that BIL really liked to live high off the hog and apparently didn't care how much debt he racked up to do so. He's left SIL in a precarious situation, helped only by the fact that he had a life insurance policy that we THINK will cover the debts. He's left nothing for his three children -- who are all about ready to start college.
So -- a couple of take-away lessons:
(1) Get a will. Right now, today. I don't even want to think about what we'd be facing if BIL hadn't had a will. Consider a trust if you have significant assets; if you decide a trust is not for you, then please consider how your assets are owned - and what that ownership arrangement means for your spouse/partner/SO/children in the event that you die tomorrow. Nobody thinks they'll die tomorrow; my BIL spoke to SIL just an hour before he died and had no idea what awaited him that day.
(2) Look over your circumstances and make sure that every legal document you have (business papers; deeds; and so on) are in the correct names for ease of transfer of assets should you die tomorrow. Talk to the relevant professionals and consider the money spent to be buying your spouse/partner/SO/children's peace of mind. In SIL's case, having the house and some other accounts in both names as joint tenants with right of survivorship might have streamlined the process. It also prevents bank accounts from being inaccessible.
Here's what SIL is facing:
(1) When BIL died, he and SIL had only about $100 in their bank account. And six figures of debt. On top of that, they were looking at about $20,000 in capital gains taxes owed for the 2006 tax return. BIL had his own company and was, the week he died, supposed to start new jobs that would've put money in the bank and brought all of their debts (which they were behind in payments on) current. He died, and those jobs will never be completed.
(2) BIL owned his own business as a sole proprietorship. There's nothing wrong with that, of course, but what it means is that not only his personal assets, but his business assets are now locked in the probate process. SIL would like to sell one or more of the company vehicles to cover her current living expenses -- but that's not possible, as the court has not yet issued letters testamentary appointing an executor/personal representative/administrator for the estate. Until those letters are issued, the assets in BIL's business are, essentially, in limbo -- nobody has authority to act on behalf of the estate. (SIL has, due to the circumstances, decided to step down as executor; DH is the alternate executor named in the will.)
(3) BIL and SIL had, a few years back, deeded their house out of both of their names and into just BIL's name. (This, more than anything else, is what triggered probate on the will, as far as I can tell.) The house is leveraged 100% (and maybe more; they have a first mortgage that's an ARM with increasing payments each month, a second mortgage, and a maxed-out HELOC), and because the house is solely in BIL's name, there's nothing that can be done with the house until the probate court allows.
(3.1) BIL chose to build an addition onto the house last year rather than, say, make necessary repairs to the house. So my SIL is facing a huge amount of repairs that will need to be done before the house can be sold (if she chooses or the court orders), and she doesn't have the money to pay for them. And BIL took out a loan to build that (IMO, unnecessary) addition.
(4) Despite the fact that the house is deeded solely to BIL, both his and SIL's names are on the various mortgages, so she's responsible for all that debt and has no current income to cover the monthly payments. (SIL is a realtor and has not had any commissions recently.)
The end result of all of this is that DH and I have paid for the biohazard cleanup of their house (BIL was killed at home), paid for the funeral expenses, and fronted several thousand dollars for living expenses and debt payments. The probate process has been started, but it will be at least a month (so our probate attorney says) before the court will issue letters testamentary. The life insurance proceeds will be paid at the life insurance company's convenience -- the soonest we can hope for is about a month.
In the meantime, SIL is back to work, getting listings and working on closing deals. DH and I aren't sure how much more money we can loan her for living expenses and we're being thankful that we have what most reasonable people consider an obscenely large emergency fund that we've been able to draw from to help her to this point; most of the rest of the family doesn't have money to spare, though those who do are willing to loan what they can.
DH and I knew that BIL and SIL were struggling; we hadn't known just how badly in debt they were/are. It turns out that BIL really liked to live high off the hog and apparently didn't care how much debt he racked up to do so. He's left SIL in a precarious situation, helped only by the fact that he had a life insurance policy that we THINK will cover the debts. He's left nothing for his three children -- who are all about ready to start college.
So -- a couple of take-away lessons:
(1) Get a will. Right now, today. I don't even want to think about what we'd be facing if BIL hadn't had a will. Consider a trust if you have significant assets; if you decide a trust is not for you, then please consider how your assets are owned - and what that ownership arrangement means for your spouse/partner/SO/children in the event that you die tomorrow. Nobody thinks they'll die tomorrow; my BIL spoke to SIL just an hour before he died and had no idea what awaited him that day.
(2) Look over your circumstances and make sure that every legal document you have (business papers; deeds; and so on) are in the correct names for ease of transfer of assets should you die tomorrow. Talk to the relevant professionals and consider the money spent to be buying your spouse/partner/SO/children's peace of mind. In SIL's case, having the house and some other accounts in both names as joint tenants with right of survivorship might have streamlined the process. It also prevents bank accounts from being inaccessible.