Legal Question in Wills and Trusts in Massachusetts

Re: Declaring bankruptcy on my deceased father's estate

How could I possibly know your sister's motives?

Re: Declaring bankruptcy on my deceased father's estate

Your sister should sit down with an attorney before taking such drastic action.

Perhaps the debt can be settled. Perhaps the house can be sold or rented to pay for the debt. Perhaps the debt is not valid and should not be paid at all.

If the home is located here in Massachusetts, you should contact an attorney here to guide you through this process.

Estates do not declare bankruptcy, they declare their insolvency. Do not hesitate to contact my office if you would like to discuss this matter further.

Re: Declaring bankruptcy on my deceased father's estate

I do not think your sister is thinking clearly. She should speak to an attorney. If the multi-family home was in your father's name or held in a nominee trust the credit card companies and other creditor may be able to obtain money from the proceeds of the sale.

The estate would not declare bankrutpcy but would indicate that there are insufficient assets to pay its debts. However, the credit card company's could challenge any gift that rendered the estate insolvent as a transfer to defraud creditors.

Your sister best contact an attorney to deal with the issues.

Re: Declaring bankruptcy on my deceased father's estate

Please note that probate law varies from state to state, and can be affected by whether a will exists, and whether there is probate property in more than one state. This makes it difficult to comment on a hypothetical absent more information (and nothing you read here is legal advice anyway - it absolutely requires consultation with an attorney face-to-face or via telephone or written communication- many more facts would have to be obtained to properly advise you)

Broadly, if an estate is insolvent, there can be no distributions to beneficiaries. All creditors have to be paid before beneficiaries get anything. If an estate is "illiquid" (i.e., doesn't have enough cash to pay all creditors, administration expenses, and taxes), it may be necessary for estate property (real estate or personal property) to be sold to pay debts. Normally, this will require court approval and proof that the taxes, debts and administration expenses require such sale of real estate which would otherwise pass to beneficiaries.

As to real property in joint ownership, it can be subject to claims of creditors, but turning a judgment into cash is a little more complicated if the decedent did not own the property outright (i.e. if it was as a tenant in common- assuming that if the decedent was a joint tenant with right of survivorship, the decedent's interest was extinguished upon their death.)

Frequently, credit card companies are aware of the difficulties, and may be amenable to payment of less than the "face amount" simply to accelerate payment and or make sure that they are paid at all. When a will is probated or an intestate estate is administered, initiation of proceedings, along with notice to creditors, starts the clock ticking on creditors claims. There is a short statute of limitations for estates once proceedings begin and creditors have notice. They have to follow certain procedures if the executor or administrator does not agree to pay their claims.

Needless to say, it would be wise to consult with an attorney.