[quietblissgirl]

Hi- hope someone can help. Can't get a straight answer from my lawyer! My mother passed in 2004 with a large $20,000 hospital bill. They did drain their savings to pay about 25,000 of it! My dad had been making payments on the balance until he got sick. My dad died last March. He willed the property to my sister and myself. The lawyer had my brothers and uncles sign off on the properties (5 lots) and he filed the quit claim deeds with the county. The property is now in our name. The hospital did not place a lien on the estate, nor have I received a statement from them since Last June. The property is only worth about 40,000 - although it has been on the market for 7 months with no takers. If we do sell it, does the Hospital have right to collect on my mother's unpaid debt even if there is no lien on the house? My sister thinks that since it is in our name, they have no claim to it- especially if there is no legal lien on the property. However, I'm the executor- so they'd come after me! I would sell it for much less, if I knew I didn't have to pay that 20,000 debt - just to be done with it all! Thanks so much.
Margi in Illinois

[ScottGem]

I started to say no, but then I thought more about it. When a person dies, any outstanding debts they have are supposed to paid from the estate. So when your mom died, the executor of her estate should have paid the bills before distributing an assets to her heirs. So the question is, who was her executor and what was the value of her estate?

Note that any properties held in joint tenancy arre not part of the estate and pass directly to the joint tenant. Its possible your dad did not have to continue making payments. But its also possible that your dad assumed responsibility for the debt. I have no idea what he signed with the hospital. So if he WAS responsible for the debt, then anything he willed to you should be first used to pay his debts. If you don't do that, you may be prosecuted for violating your fiduciary responsibility as executor.

[quietblissgirl]

Thank you for your response. My father did sign for my mom's medical bills because she had no insurance. Therefore, the debt transferred to him upon her death. My mother had no assets of her own, everything was in her and dad's name.-therefore no assets to transfer to any heirs. The only thing they had is the house and two cars. The cars were left to my sister and I. And even though the house is in our name now, via the quit claim, (as per dad's will) - if we sell it, because it is proceeds from my dad - we must pay that debt. Am I getting that right?
I argued with my sister that they would come after ME as the executor- but she insists that since the house is now in our name, they can't. (as if she has any legal reference!) So- if we can get 40,000 for the house and lots- pay the hospital the 20,000, the lawyer 2500 and the funeral home 2000 - that would leave 15,000 for she and I to split. Right? The problem is no one has offered us more than 33,000 for it - in which case that leaves 8000 to split. For that amount, I would rather keep the darn property. By law- if I can't get what the house appraised at, can they force me to sell it? I haven't heard one thing from the hospital since last April when I asked for a copy of my mom's statement.
Thank you so much for taking the time to help me out.

This is the last thing I heard from our lawyer when asked if we had to do any paperwork if we wanted to just try to rent the house out (since it wasn't selling)

As we’ve discussed before, because it was decided no to open a probate estate, there is no mechanism to permanently eliminate the possibility of any of your parents’ creditors asserting a claim (e.g. the Hospital). Thus, while as I noted on the 5th there was no lien filed at the Recorder’s office against the house as of December 29th, it remains possible that such a lien (meritorious or not) could be filed at a later date. Similarly, it would be possible for a creditor to file a lawsuit to collect amounts the creditor believes are due to it. Any such lawsuit would require that you be provided notice of such action. So, as time goes by and you receive no such notice (by mail or publication in the NewsTribune), and you keep an occasional eye on the Recorder of Deeds records relating to the property, the chances of a creditor claim, while not “permanently eliminated”, becomes ever smaller.

[Fr_Chuck]

Yes, the hospital and any other outstanding bills had a right to be paid from any money from the estate, If family members wanted to keep the house, they would have had to take a mortgage out on it, and pay the estate bills.

The hospital most likely have a right to come after the family members who got money or property from the estate, since it was done improperly.

Next whoever was the one over the estate may have some personal liablity above the others since it was there duty to see all the bills were paid.

At this point with no lien, they can not automatically collect any money, but they do have good grouds to sue the individual people.

Now most likely if they are just notified that both the man and wife are passed away ( send them copies of death certificates) and there are no funds to pay them. They most likely won't even look into it, and just drop it and write it off. But if they have already been told all the details or know the details, they can sue personally the people who took deed of the house, they don't have to go after the house, merely the people who profited from taking the property without properly paying the debts first

But as the attorney saying, the longer the time goes by, the less likely they will do anything, but they do have a legal right to do several things at this point and time

[ScottGem]

OK, the lawyer is saying pretty much what Chuck and I are saying. I would ask the lawyer to check on the Statute of Limitations (SOL) for this type of debt.

The thing is, if the property had been left in the estate, then you would be fine, but because the property was distributed you have violated your fiduciary responsibility as executor to satisfy existing debts first.

You can just sit tight as the lawyer is suggesting (though I would make sure to pay him) and wait out the SOL for the hospital debt. I would not try distributing any assets without paying the hospital before then.

[Fr_Chuck]

Yes it appears they already transferred the deed of the house, but if the house sales, yes I would keep that in a bank account until the full SOL is over from that debt. And remember the date of that would be the last payment your father made on it.

Now of course what I just said means you know of a valid debt, and you are merely refusing to pay it and hiding the money till you don't have to legally pay. This is not illegal or we could not tell you that it is possible, but it is not moral, since there is a valid debt and there is money in the home to pay the valid debt.

[quietblissgirl]

Oh my gosh. What a mess. I am surprised that the lawyer advised us to transfer everything into our name. Perhaps it had to do with the fact that only one of the 5 lots was in my parents name, the other 4 were still in my grandfather's name and he died in the 60's. My parents continued to pay taxes, but never had the deeds for those lots transferred. The lawyer had my two uncles and my brothers sign off on them so they wouldn't make claim to them. Anyway, I think I am just going to call the hospital and try to negotiate with them, then sell the darn house- pay the hospital and be done with it. It is so not worth all the aggrevation and worry.
BTW- there were no proceeds from the estate - nothing was sold. And there was a few thousand in life insurance, but the attorney assured us that that was legally untouchable by creditors - as it was left to my sister and myself.

Thank you again- I appreciate your help on this matter.

[ScottGem]

Well now, this changes things. If the other 4 lots were not in your parents name, then they are not part of the estate, so they have no bearing on the debt. IF your parents were willed them when your grandfather died, then they might be, but unless granddad's will was probated there would be no record of it.

Going back for a second, it doesn't matter whether items were sold or just distributed as is, they are part of the estate.

What is the value of the ONE lot that was in your parent's name. If that is less than the hospital bill, go to the hospital and tell them, that dad had one small piece of property in his estate. The value of which is $x. If they will accept that as payment in full, you will be glad to sell it and give them the proceeds. Or you might even offer to transfer that one lot to them. Then you can sell the other 4 and split the proceeds.

[quietblissgirl]

Thanks Scott. No- those other 4 lots were not "willed" to my parents, they just took over paying the taxes and took possession of the property as my father's other two brothers had no interest in it. After dad died, we then found out that only the house was ever transferred into my parents name- thus we had my two uncles sign the quit claim on the other 4 lots. Truthfully, I am only interested in keeping the empty lots- as the house is in bad shape and since I live 2.5 hours away from it- have no interest in fixing it up.
Thanks for the help- I am so glad I found this site! You and Fr_Chuck have been so much more helpful than my lawyer ever was.

[Fr_Chuck]

I am sure the lawyer was telling you what he though was best, since perhaps he did not know of the hospital bill, Or if he did, since there was no other money in the estate, figured they would just not do anything to collect. ( which I expect they won't do anything to collect either)

I could argue from a point of law, that since the granparents died first the lots in the grandparents name actually did pass into the ownership of the parents even though they never actually did a deed transfer, but I doubt if anyone is going to be looking that close

But I do agree that scott is correct and has given good advice

[quietblissgirl]

Thank you Fr_Chuck. The lawyer is well aware of the hospital bill, as he did the title search for me to see if they had a lien on the house. I really like the idea of selling the house, settle debts and just keeping the 4 extra lots.
Thank you again- I really appreciate it.